The Norwegian paint manufacturer, Jotun is a truly global business. Still, each subsidiary operates very much like a local company. This way, Jotun’s international way of operating business is being applied locally within each company within the group.
“Our coporate philosophy is ‘Access and work in the local market’,” explains Mr. Per Harald Engesaeth, Managing Director of Jotun Thailand.
“This means that the country we are in creates the company. In each of the countries, in which we are present, we are influenced by the local culture and so on. Secondly we also believe that there should be as few foreigners as possible in the local companies,” Per Harald Engesaeth adds.
“We believe in local market access and employing local people.”
Mr. Engesaeth says that in Thailand his company has overcome any problems caused by trying to use a Western approach in a foreign local market, since Jotun has been here for so many years.
“I think we have maybe learned our lesson and the local market is the focus for us. For me and my operation, focusing on the Thailand market is my task, and Thais occupy all key position except mine. So my management team of course knows the culture, the people, many of the written and unwritten rules and so on.”
Mr. Engesaeth is the only foreigner in Jotun Thailand, which employs 246 Thais.
“We never talk about the Norwegian way of doing things, we try to build an understanding that the headquarters is in Sandefjord for a reason. But now two divisions are headed from Dubai and this is a sign that Jotun are doing whatever they can to bring the management closer to the market,” says Per Harald Engesaeth.
“But I think our Thai staff feel as if we are a local company but with an international context, because they see that we are increasingly working regionally,” he continues and mentions the new marketing campaign with a commercial, his team travelling in the region and development of new products as examples. Jotun staff collaborate internally in the region and have regional setups for their R&D, marketing, sales and HR functions, so their people understand they are a big family of penguins (Jotun’s icon is a penguin).
Since its foundation in 1926, becoming an international company has been one of the goals of the company and today Jotun consists of many penguins, active in many more places than the real animals – in fact in 55 countries, on all continents, and competing among the 20 biggest paint suppliers in the world. With an ongoing restructuring of its organisation in the Far East so that it can become more systematically market-driven, Jotun is also seizing new markets with optimism and confidence. Receiving the ‘Best Factory Award’ from the Ministry of Labour and Social Welfare, will most certainly contribute to this self-assuredness. When ScandAsia met up with Per Harald in May, they had just had a reception at the factory in Chonburi with all the employees to celebrate the award.
Jotun’s idea that paint should be produced locally and sold by locals is considered necessary in order to gain access to markets like Dubai, Malaysia and China, and supply products to international customers within e.g. marine coatings.
In Southeast Asia the market is growing intensively so Jotun is not sitting idle – new factories are being built in Jakarta, Shanghai and Dubai – and more areas are yet to be explored. And the reason that motivates Jotun to expand in the region is to access new markets that suit their focused and long term market approach.
The method is to enter new paint markets early on and invest, and take the fight for the leadership in the quality premium paint segment. By learning to understand the local paint market they can discover when it is considered mature enough – then they go in with all resources ready for production, distribution and marketing.
Jotun choose markets where they can be among the top three players to be able to make profit.
“Not necessarily at the top from the start but we are committed to becoming the leader in those markets. Number three is not good enough,” says Per Harald.
Even if a few of their bigger global competitors (most of them from the U.S.) have many more resources, Jotun can fight for a share of the market in certain segments. Very few competitors are more focused than Jotun.
The vision is ‘Growth and profitability by exceeding customers’ expectations’ and to achieve this they segment the market by targeting niches where they are strong, and do not target the entire market.
“We have to make sure at what point we go in, that we can make a difference and provide value for the customer and also achieve a large return. We select customers we can serve well.”
In addition, with new premium paints like the anti-fungal “Jotun Majestic”, developed in the region and being launched in 2004 in all markets, they believe they can take market share from competitors and from the low-premium paint segment. Jotun strongly believe that being best at long-term cost effectiveness for the customer will pay off. Heavy sunlight and pollution from traffic are the biggest sources of problem for paint so the potential need for high-quality protection of buildings is huge.
However, reality is that non-environmentally concerned competitors are part of the market. Jotun expects and welcomes stronger laws and enforcement in the near future and is ready with its own criteria that are always higher than the countries’ national regulations demand, and is in general introducing high-quality environmentally-friendly products, aimed at improving value to the customer and to the environment. Its company factory in Thailand has been certified by the Environmental management system ISO 14001. Also Jotun is trying to include more of its products to the “Green Label”.
In some cases when the market is not fully ready they find a collaborator, as in Cambodia, where they are setting up a dealers’ network with ISI Limited to meet the demand for premium-quality paint from, for example, all the hotels springing up in Siam Reap.
Next on the expansion list could be Laos: “We have done a study, but for the time being it is premature and too costly to enter this market. Per Harald believes, however, that within three or four years time Jotun might go in.
Jotun Thailand, which is part of Jotun Paints, is focusing mainly on the Decorative products which are achieving continued success in the Middle East and Southeast Asia. Jotun has taken the lead regarding colours and was a pioneer with the introduction of the “Jotun Multicolor” Automatic Tinting System. The first computer-controlled mixing machine was launched in Norway in 1985 and there are now more than 3,000 such machines worldwide.
Tintable products, the opportunity to select whatever colour you like, is very popular now and Jotun is working on implementing the concept in more stores all over Thailand. With its Multicolour system that comes from the Natural Colour system (NCS), they can now produce, as Per Harald says, “more or less whatever colour the client requires. In addition we can tint (blend) whatever colour the consumer wants.”
The company can claim to be the colour expert with the most innovative tintable premium products available, offering more than 16,000 colours through their tinting machines.
“Today, all suppliers are talking about colours, but nobody has actually taken the position in the market for real.” Jotun is now working on building the concept within its organisation and all marketing activities to grab this position in the market.
“We are going to develop this further and are now introducing worldwide ‘all the colours in the world’.”
Said Per Harald at a presentation of the company earlier this year: “Paint in itself is not sexy at all. It’s just a can. So we have to wrap it up attractively.”
“We would like to build up shops as showrooms with more inspiration, more attractiveness for the clients, so we are now working closely with the paint shops to build the next generation of these.”
New technology allows customers to visualise colours prior to painting to be sure that colours match the other elements in the home, such as the curtains and the floor.
Jotun will continue delivering new products and marketing concepts developed by the company’s joint R&D for Malaysia, Thailand, Vietnam and Indonesia. By collaborating in the region they can come up with products suitable for many markets.
“The more regional concepts we can come up with, the more positive that will be. Then we can launch things in several countries at the same time,” says Per Harald, as in the case with Jotun Majestic. This is especially important in Decorative, Jotun Paints’ core business.
And what are the biggest challenges in Thailand for Jotun?
“It is basically to get profitable growth in the Decorative segment, the segment that is growing most on a yearly basis. We have to ride the market now and we also have to grow more than the market so we can eventually gain market share. This is a key challenge for us,” says Per Harald. Furthermore, in Protective Coatings, they want to be an even clearer number one.
And like the penguin that never lets its family down, Jotun takes good care of its people, focusing on good social security arrangements and giving “quite motivating bonuses” for their employees, according to the country manager.
“We are determined to take good care of our people. This is very rooted in the culture, to be people-focused, organisation-focused, because you have this family orientation, the penguin culture. The penguin is the icon for Jotun. You can recognise, that whatever Jotun company you come to, what you first sense is a very friendly atmosphere, you are very well taken care of. People stay a long time in Jotun, not because we pay the most, but I think because of the total package, the way we treat people. I think they really appreciate that.”
