Conrad Bucheleres: Managing Director

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Wei Hong: Sourcing Manager Pharmaceuticals

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Yong Zhang: Sourcing Manager

Conrad Bucheleres, Wei Hong & Yong Zhang

AZELIS GREATER CHINA

March 27, 2018

Azelis is a specialty chemicals distributor that was formed in 2001 by a merger of the French firm Arnaud and the Italian firm Novorchem. How has the company evolved since then and how has its role in China changed over the years?

CB: During the 2001-2011 period, 24 companies came together through a series of acquisitions to make Azelis a truly pan-European distributor. During this time, around 95% of our business was in Europe, and 5% in APAC (Australia, China and India). Since 2013, we have started investing strongly to enhance our presence in Asia Pacific, which we have since grown both organically and through mergers and acquisitions. We followed this by acquiring the Kodak group, a very large North American distributor, in 2015.

We are currently sourcing pharmaceuticals out of China, exclusively for the international markets.

Many Chinese suppliers want to export their products, but have difficulty offering their local services to end users. We are a speciality chemical distribution service that helps them reach global end users that they otherwise might not have access to or contact with.

Azelis is well-established in EMEA and North America. What is the company’s growth strategy going forward?

CB: Our strategy is to grow both organically and through acquisitions. When it comes to acquisitions, we are always looking for the good strategy fit, shared values and similar company culture. Organic growth is facilitated by our strong technical expertise and the high quality of our people. This strong technical expertise perfectly supports our lateral value chain approach. We want to be a full solution provider for our customers and provide them with all or most ingredients they need for their production process. If we identify an ingredient that is currently not in our portfolio, we will then identify suppliers of such ingredients and we will actively go after them in order to ensure that full and complete lateral value chain. We have a lot of pharmaceutical knowledge in China that we will leverage more strongly in the future, both in China and abroad

China has historically struggled with the perception of the quality of its products. How do you ensure that you are sourcing the highest quality products?

YZ: Quality is our first priority. We select only the top suppliers in China through our own quality control system, and we audit all of the supplies we source. All of our suppliers have to meet not only Chinese regulations, but also very rigorous global regulations, such as those in the USA and Europe.

How has Azelis observed the competitive landscape evolve in China?

CB: To work in this industry, a lot of know-how and investment is necessary. The quality threshold in China is becoming increasingly stringent. This makes it tougher for new entrants into distribution or small players because the regulatory framework is becoming a cost factor that is prohibitive to many individual entrepreneurs. Azelis stands out as a large global distributor, although there are many smaller traders, who are incredibly active and offer lower prices. We have huge advantages in terms of size and scope and in terms of the experts that we have already working all over the world.

WH: Our competitiveness partly comes from the unique services that we offer. Our two laboratories in China provide R&D, refilling and repackaging, and sampling.

We are also always pushing ourselves and assessing the reality of the situations where we operate, and we always strive to be more innovative and to provide better services to our customers through this process. Testimony to those efforts are the innovation awards in personal care that we won three years in a row for the exemplary work of our colleagues from the China lab.

What types of innovations has Azelis introduced in an effort to bring costs down?

CB: Enterprise resource planning (ERP) systems have increased the quality and transparency of the reporting of our work. The near real-time feedback and reporting hugely increase efficiency. However, in distribution, costs have actually been going up. The professionalization of the supply chain has lead to a cost increase. For example, warehouses need to be audited more frequently. In China stronger logistics enforcement is leading to logistics providers’ additional investment in fleet as overloading their trucks is now not an option anymore. . For a distributor to still run a profitable business it must have a strong lateral value chain, good supply chain management, a robust demand pool and most importantly specialty chemical knowhow and experience. That is the exact value-add that Azelis can provide.

Azelis emphasizes the importance of recognizing its commitments in terms of corporate social responsibility (CSR). How is this mandate reflected in the company’s operations?

CB: Over the past ten years we have tripled in size, and CSR only becomes more important to us as we grow.  We all believe that engaging in CSR is the responsible way to do business. We are a member of the AICM responsible care group, but we work far beyond that. We regularly review our operations against a CSR checklist to ensure that we are meeting certain requirements in every country we operate in, for example screening suppliers for forced labor or child labor. Our CSR has become more and more systematic over the years and truly engraved throughout our entire business model.

The Chinese government is striving to assert China as a global leader in innovation. How have you seen this play out in the industry?

CB: Millions of students graduate from their Masters’ and PhD programs every year in China. This talent is not only immense, but well-managed. The innovation cycle is a lot shorter in China than in the West, and quality is improving in all areas. This emphasis on quality is coming from the companies themselves because they need to set themselves apart from their plentiful competitors.

An increase in manufacturing standards has also been mandated by the government. Last year saw tough sanctions and local governments closed plants that were not compliant with environmental discharge regulations. We believe this policy will stay, and that is a very good thing. Over the last few years, there have been more and more requests from other developing countries to come and visit Chinese manufacturers in all sectors as benchmark models.

WH: This year is only the fortieth anniversary of Chinese economic reform and the opening-up policy. We are still developing, but at a very fast speed. We think that Chinese pharmaceutical manufacturers will be world-class very soon. We already have very strong regulatory control, high quality products, and good sales channels. The future is bright for Chinese pharmaceuticals.

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