Penguins in Asia: Jotun’s Expansion Strategy Abroad
By Eric Baker, for Thai-Norwegian Chamber of Commerce
Why does a global leader feel the need to set up production in every market in which it sells? Jotun chief executive Morten Fon took the microphone at the 2015 Norway-Asia Business Summit to provide some insight on his company’s unusual foreign expansion tactics.
“Why are we in Asia? We follow our customers. It is that simple,” said Mr Fon. “Our logo is a penguin, and we think it is fitting because it is an animal that can take harsh weather, is very loyal and take care of its community. Our leading sector is marine, so our coatings have to be able to handle harsh weather. And our staff, who we like to call penguins, get sent in to different communities where we try to build something from the ground up.”
“Our main strategy is organic growth. We don’t often buy other companies. And we like to start everything from scratch. This means we can build up using our values, we don’t have to try and mix them with other cultural values, which can sometimes water down the values. This is why we send in our penguins initially to get the message across.
“We also follow growth figures internationally. As economies become more developed, in general they use more paint.
“Another facet of our strategy is we are in it for the long haul. We started a factory in India in 2008 and I just received an e-mail from our country manager there last week that the plant finally broke even.
“We believe in order to succeed, we have to produce locally for each market. Paint has a lot of water in it. It doesn’t make sense to ship water around the world. But we also do it because it gives us a better idea of what the local market wants, meaning what we produce in that country is to be used in that country.
“You have to adapt to the local market. For example, in Norway we don’t dilute the paint much, but in China they mix paint with 50% water. So you have to make sure the kind of paint you are selling is appropriate for the market.
“Yes, we pay local wages in the countries where we operate but we also sell at local prices. Jotun still does its research in Norway.
“I feel it is very important for our company to get into Myanmar now. In 1991 India opened up and asked us to come invest. I wish we would have because we would have had a leading market position much earlier. You need to get in early and develop with the country if you want to build your brand. Maybe we can put some paint on the buildings there and brighten life during their growing pains.”
Jotun is a Norwegian chemicals company that deals with paints and coatings. It has 36 production factories in 21 countries and 9,500 employees. The company’s products have been used on the Eiffel Tower, the Petronas Towers and Burj Khalifa in Dubai.