Thierry Laurent, CEO of Roquette Asia, came to China as the general manager of Roquette’s first Asian plants in China (Jiangsu), and Korea (Ulsan) in 2001. Since then, he has gradually developed and organised the company’s Asia operations, which today has offices in China, Korea, Japan and Singapore. He spoke to EuroBiz about the growing market for starches in China, Roquette’s acquisition strategy, and levelling the playing field for foreign firms.
Q: What industries are you manufacturing your starch for?
A: We sell ingredients which are from vegetal raw materials (such as maize or cereals) to basically every application we can find for them, including food, household goods, chemicals and paper-making. The main sector is food. Some of our products, such as texturising ingredients, including starches, will give a function or behaviour to our customers’ products. We also sell sweeteners, proteins and fibres which have nutritional effects. Then we sell the same and other ingredients to pharmaceutical companies, but we don’t generally provide active ingredients. We sell excipients mainly used to make medicine made for over-the-counter consumption.
Q: Are there any differences in the quality of the raw products you use in China compared to other countries?
A: There are differences in agriculture in various countries. One of our concerns is food safety quality. In China, there have been issues with what farmers or traders in the food chain may be doing. There’s no reason to hide the concerns about melamine. There has been an evolution of regulations, such as the Food Safety Law, that goes in the right direction, but there are many concerns about how changes are implemented. We see things evolving positively. There are differences, but there are not fundamental differences which cannot be reconciled: They are differences between stages of development in various places. Another issue is the cost of raw materials. China is not fully linked with the world markets. Sometimes that’s good news, sometimes not.
Q: How have you had to adapt to suit the tastes of the Asian consumer market?
A: Globalisation also happens in food and we are part of that. Asian consumers are different in terms of what food products they buy, but Asian markets are starting to adopt Western food and products. Confectioneries are converging as well – people in Asia now buy chewing gum, hard-boiled candies and chocolate. It’s still less than Western people, but it’s increasing, as is consumption of dairy products, which we also supply with some of our ingredients. I would also say local products are using more modern ingredients. In that sense, there is an industrialisation of food everywhere in the world, which drives the consumption of ingredients. In addition, there’s an increase of concern about nutrition, obesity and various health problems which have a relationship with food. Consumers turn to similar solutions: improving the quality of the food they are consuming and decreasing their consumption of so-called "junk food". The needs and solutions are more developed in Europe, North America and Japan, but we are seeing these concerns coming up more across Asia, and markets for these products are starting to exist.
Q: What about the investment atmosphere in China in terms of regulations?
A: We are concerned and impacted by the choices China is making with regard to foreign investment and foreign products. When restrictions impact the whole industry – including local companies – it creates concerns, but no imbalances. But some of the restrictions seem to target foreign investors or foreign companies and this is worrying. There is also a move in China toward more professional behaviour, so it’s hard to discriminate between positive and negative changes. We like to see positive change – we want to be good citizens in the Chinese economy – but we are worried about policies like the indigenous innovation policy: Are they meant to become restrictions? We would like to see a levelling for all firms foreign and Chinese, and no tightening or regulating based on the nationality of a company.
Q: In terms of competition with Chinese firms: Are you competitive on price? If not, where is your value-add?
A: We compete on service, quality and price. Our sector would be described as a basic materials sector with a lot of specialities, and we are stronger in specialities. While we are in direct competition with Chinese companies, we try to be at the higher end of the market. We leave low-price, low-quality commodities to our competitors.
Q: So there aren’t any producers in your league here?
A: More and more the field is levelling. Production methods are becoming more similar, and the local competition is improving and gradually incurring the costs of using such methods, so the field is becoming less skewed in that sense.
Q: How are you expanding in China and elsewhere?
A: We are in a sector which is very influenced by international raw material markets. The cost of energy, biomass, green energy and bio-fuels has a huge impact on the agricultural markets that give us our raw materials. We try to be active in new developments in those markets. Also, we develop new ingredients in nutrition and health. For instance, in China we have acquired a plant in Wuhan, a joint-venture which we control, producing the compounds popularly known as Omega 3 and Omega 6. Another area is green chemistry or white biotech. Here, the idea is to gradually replace the basic products that come from the petrochemical industry, or plastics, with products coming from the starch industry, or vegetal raw materials. In this context, China is becoming a place where we want to innovate, where we want to develop products for the world, not just local markets – as long as the country remains open, of course.