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Global Sales of Chemicals: Present and the future

10.10.2018

The shift from the old way of doing sales to today’s version has taken a huge developed step due to the digitalization. Around the globe the amount of production has increased due to the  advanced technology which has created faster ways to produce, sell, and deliver much quicker and cheaper in all the industries. Chemical industry is also no exception now we have more products manufactured due to technical advancements, and you need a talented sales team  to make more profit to increase the revenue. It means that the companies need to focus even more on how they are going to be the leaders and stand out from the competitors. The sales team of each chemical company must improve their sales performance frequently, so they can provide the best customer service experience, and have long lasting relationships with their customers to keep up with the ongoing development with technology and innovation.

To get a better understanding of the history of chemical sales, the current moment and what is predicted for the future, let’s first have a look to the 2017 statistics from Cefic Chemdata International. The first insight is the latest information of the top 10 countries by their chemical sales in 2016. In the figure above, it is possible to see clearly that China is the market leader with the significant huge amount of sales compared to the other leading countries. China has the biggest sales with worth of 1 331 billion euros and it has become one of the most important countries in the world especially for chemical industry, because it is cheaper to produce and sell chemicals there. Due to this fact many companies have shifted their manufacturing to China, the production has increased explosively in the recent decades, which has led to more possibilities to grow the sales. Because of the globalization, there are more products and customers available for the companies to help them expand the business to different countries: cheaper ways to produce more products and make more revenue from selling the goods to a wider range of international customers.

In total the world chemical sales in 2016 were worth of 3.4 trillion euros and it is predicted to almost double in the next 14 years. The pie chart on Cefic Chemdata International divides the growth from 2016 to 2030 with different sections globally, a glimpse of the chart can be seen from the above. In 14 years, China is going to have the highest growth rate of 4.4%, where Latin America and the rest of European countries outside of European Union are having a small increment as well. The rest of the world is expected to face challenge with the reduction, as it can be seen from predicted numbers for EU, NAFTA (North American Free Trade Agreement), and Japan. According to the website, despite of the recession EU is able to benefit from China’s growth with the high amount of innovativeness and technology that exists in EU. It is going to improve exports and local investments, which is going to be an important part for boosting the sales.

The global competition in chemical industry is going to shift, when China keeps growing even bigger and the rest of the world is trying to keep up with it. The diagram above takes a deeper look into what has been going on in the Europe the last years by describing the whole amount of sales compared to the world share percentage. Between the years from 2000 to 2012 there was growth of 219 billion euros, but there has been a recession after that with the chemical sales. The world share has decreased continuously, and it is now already half of the amount it was 15 years ago, only 15.1%. Cefic Chemdata International gives reasons for the downfall “A study of EU chemical industry competitiveness commissioned by Cefic from Oxford Economics (2014) blamed high energy prices, currency appreciation, high labor costs, and regulatory and tax burdens, among other factors of the loss in competitiveness”.

After having the insight to the chemical sales development and the prediction, it is time to explore the ways how companies can use the digitalization to boost the revenues and improve the efficiency of company’s sales team. In the end of the day, chemical sales are like selling process in any other industry: the focus is to get as many customers on board as possible and offer the best service to ensure long lasting partnership.

How these partnerships can be achieved in the best way?

The sales team has the possibility to offer better and longer customer service experience because they can be in immediate contact any time with the customers around the globe in different time zones. Touchpoints, any interactions with the customer concerning the products or services have developed with new innovative ways. The touchpoints such as social media marketing, online helping center, and thank you emails are helping to have more customer engagement to boost the sales. Various touchpoints can be done in different parts of the purchasing process: before, during, and after. It is easily forgotten the importance of engaging with customers also after the purchase moment: to gather feedback and show them that their opinion matters to the company. As the picture below from Tom De Baere’s slide in The New Role of Sales in a Digital Word represents, the sales team needs engage with the customer throughout the whole cycle: from raising the awareness to attracting them to make a new purchase. Like said before, selling chemicals is the same in any other industry, so the life-cycle can be implemented easily and with digitalization it is easier than ever before.

According to Digitalist Magazine there are 3 approaches to boost the sales:

-Product-only pricing was taken into an account by Down Corning in 2002 with Xiameter. The main idea of the approach is to separate services from the product itself: selling with lower costs is possible when there is no need for support services. As it is stated on the article “This is an ideal application for the IoT, where chemicals may be ordered machine-to-machine, and many sales may proceed entirely without human intervention”.

-With digitalization and new technology, automation is going to be the key aspect to make business more cost efficient. Offering multiple service levels, which means that companies could offer standard products and additional services with extra costs. Digitalization and advanced technology help to enable customer segmentation and real-time tracking.

-Separate business units are a good way to deal with pricing pressures. “Companies can be low-cost providers without the risk of “cross-contamination” with services they still provide to customers who are paying high prices for chemicals that retain specialty status”.

As the diagrams prove, the competition in the market is going to shift and China is growing its power continuously. Europe has a lot of potential with innovativeness and technological development, but companies in each country needs to work on creating new ways in order to stay competitive. For every chemical sales team the goal needs to pursue long lasting relationships, which are accomplished with having touchpoints in every part of customer life-cycle such as raising the awareness of the chemical products with ads and blog writing, being available for any questions, and not forgetting to ask for the feedback to improve the performance. Product-only pricing, offering multiple service levels, and having separate business units are considered as an opportunities to boost the sales. Now that the threat of the competition is seen before hand, the actions are needed as soon as possible to prevent more fall down.