"Southeast Asia is a growth market underpinned by demographics, which drive not only volume and demand but also higher requirements for performance and sustainability."
Lubrizol launched the “Move Cleaner, Create Smarter, and Live Better” mission in 2020. Could you elaborate on this?
Although we have looked after the environment and invested in technologies for a long time, our newest program is about rearticulating our mission and setting clear targets: the first of these is to reduce 50% of vehicle emissions by 2040. This deadline comes with the recognition that electrification is a long process. We also have targets to improve two billion lives and increase the circularity of our products by 2028, the year when we will be celebrating our centenary anniversary.
How did the pandemic impact Lubrizol?
Our product portfolio is quite wide, so different product classes were impacted differently, but overall our diversity, both in terms of products and in terms of regions, kept us resilient throughout. For instance, the automotive industry was profoundly hit, especially in Western Europe, but in China, this is already starting to pick up driven by governmental fiscal incentives. Nevertheless, we have seen high growth for our products in home care, personal hygiene, laundry detergents, as people spend more time at home and there is a high level of scrutiny about cleanliness in commercial properties too. Meanwhile, this year has been very busy for our business in the pharmaceuticals space, our products being used as ingredients going into personal hygiene products (e.g. hand sanitizers).
How important is Southeast Asia for Lubrizol and what are some key growth drivers in the region?
This is a very strong growth market, underwritten by the fundamentals of demographics. The populations of Indonesia or Vietnam have very young median ages, that will still be early 30’s in the next decade. These young people are increasingly more educated and more sophisticated, with a growing middle class that already represents more than 20% of society; equally, young generations are more discerning and environmentally aware. Besides, the governments in these countries are stimulating the industries- Indonesia, for instance, is eager to use its nickel and lithium reserves into creating an industry around energy storage devices. Lubrizol has an opportunity to engage through our advanced materials that go into the battery market. Ultimately though, our presence extends beyond production and selling, to innovate around these trends. From an innovation viewpoint, we have worked on a recyclable TPU product that finds utility across different industries, and we are advancing our neutraceuticals range. Singapore is seen as a base for the future of mobility and what a smart city could look like, and we are indeed very proud to be part of that.
How do you believe the recent RCEP agreement will impact trade in the region?
The RCEP is helpful on two counts: first, it will be beneficial for our supply chain, which includes our manufacturing hub in China. Secondly, RCEP will make ASEAN more of a unified market: over 650 million people, many of who are young and very aspirational, driving demand in both volume and quality. This is a market that can grow fast, and the RCEP enables greater geopolitical relations and easier business across borders.
How does Lubrizol compete on a price-quality balance?
My main area of activity is around additives, so I would like to use an example from this space: cost is always a challenge, and we strive to develop affordable products with a high level of performance, but some lubricants used in markets like Indonesia have not evolved with changes in vehicle hardware. In this regards, we are collaborating with ALMU (the Asian Lubricant Manufacturers Union) on the issue of improving lubricant performance levels in these markets. We are working together on a white paper to advocate and draw attention so that the industry must use the right oils. This is not only an issue of protecting parts in vehicles but also one of greenhouse emissions. We hope that we can engage national governments in this conversation.
Would you like to share some final words?
I would like to emphasize once more that Southeast Asia is a growth market underpinned by demographics, which drive not only volume and demand but also higher requirements for performance and sustainability. Here in Singapore, we enjoy great opportunities for open innovation and to engage both customers and stakeholders.