Having received the İkmi̇b award in the wet-wipes category arsan chemical lends impetus to the sector with a disciplined and humanoriented approach. Arsan chemical’s board member and foreign trade director mesut kömürcü tells us their success story.
You set off in 1999 with the mission of buffing up Turkish chemical industry in the global market. Can you tell us about how the company was established?
Established by Ahmet Kömürcü in 1999, Arsan Chemical is a successful company with a trade history of nearly 20 years. Kömürcü’s experience in the sector dates back to 1980 and it is only natural that his experience has played an important role in our company’s increasing success. For the time being Arsan Chemical’s area of expertise includes fast moving consumer products like hygienic wet wipes, personal care and home care products. With a production volume of more than 90 million packs a year, Arsan Chemical is one of the leaders of the sector in Turkey in wet wipes category. We implement the highest production standards of the leading global companies with a staff of experts at our new production facilities in Gaziantep which we moved in 2015. Located on an area of 12.800 square meters the new production facilities are equipped with state of the art technology. Our product range feature more than 200 products under Ultra Compact, Happy Fresh and Private Label brands.
What were the shortcomings in the sector that you thought you could make up for and how successful have you been so far?
Wet wipes are personal care products that should be produced in hygienic conditions, otherwise they may cause serious harm to human health. Especially those that play an important role in the personal care of babies up to three years of age should be of utmost quality in terms of raw materials and production conditions. We are making business against the unfair competitive practices of many so called ‘under the counter’ companies. Although some consumers prefer cheaper products without knowing anything about the circumstances they are produced in, such products pose a great danger to public health. By contrast, Arsan Chemical has established the notion of quality in wet wipes production. The quality of Arsan Chemical’s wet wipes production is recognized by the whole industry. Today we own one of the most technologies advanced machine park in Turkey. All the raw materials we opt for meet international microbiological, chemical and physical standards, they don’t contain components that are known to be harmful to human health and they are of the highest hygienic standards. In other words we combine state of the art technology with best quality raw materials to develop products that shape the sector.
Do you think there are areas you dominate in the market?
In the past, when production was more labor-intensive, Turkish chemical industry had an advantage since labor was cheap. However the world has hifted to a more technology-intensive production understanding and chemical industry has become a more technology/capital intensive sector where large scale multinational companies that invest in technology dominate the market. A new competitive environment triggered by technological developments, changing business processes and prices force companies to be alert all the time and look for new profit opportunities. On the other hand profit margins shrink and competition becomes harder with fixed prices. With little options in terms of pricing, companies are obliged to bring ‘cost com petition’ to the table. As Arsan Chemical we set off by eliminating all elements that may cause wastage in our operations as the most rational way of reducing production costs. We devised our logistics master plan from a supply chain perspective and moved our production facilities to Gaziantep in 2015. This gave us a logistic advantage since we are now closer to our raw material suppliers as well as our target markets in the Middle East and Turkic Republics. On average four to 20 percent of a product’s price is made up of logistics costs. Thanks to the proximity of our new production facilities to our suppliers and target markets we have been able to gain a serious cost advantage. The investmentwe made in technology has enabled us to produce better quality products at better costs. On the other hand we have differentiated our products from those of our competitors in terms of concept and contents. We are acting as a trendsetter in the sector with various concept products we launch. Our ultimate aim is to become a popular brand that can compete with global giants in terms of product diversity and innovation and the innovative and creative strategies we develop to achieve this have been to our advantage in the competition.
Now let’s forget all of the above for 15 seconds and go back to your office. What do you do there?
We are servicing 73 countries in five continents with a wide logistics network and market accessibility. Eight or nine hours workdays are not enough to talk to or negotiate with people from diverse cultures. We begin with Far East where the sun rises the earliest and close the day with America when the sun sets the latest. The experience I gain from working with people of diverse opinions, skills, experiences and histories is a great source of motivation and keeps my energy level high.
One of the main objectives of your company is to provide the sector with low cost and high quality chemicals. How do you do that?
Chemical industry depends on imports. 70 percent of the raw materials have to be imported while only 30 percent is locally produced. Possible fluctuations in foreign exchange rates constitute a risk factor in terms of our production costs. The fact that exchange rates have been quite stable for some time is an advantage. On the other hand raw material supplier preferences and their management is an important element in maintaining our competitive advantage in supply chain management. We work with the world’s best suppliers in order to be able to provide healthier and quality products to consumers. We develop long-term strategic alliances with our suppliers. We include them into our product development processes to benefit from their experiences and to have them contribute in our innovative efforts. Such strategic alliances help us to constantly improve our product quality.
What is the most delicate raw material in production?
I believe it is fragrance. Fragrance is the most important means of creating an emotional bond with the end consumer insomuch that not only products but also corporate companies try to differentiate themselves by developing corporate fragrances to forge an emotional bond with their customers. The right fragrance is one of the most important criteria for a wet wipe to stick to the mind of the consumer. We develop our regional products with different fragrance attitudes that are relevant for different cultures. In addition to regional criteria, how the fragrance changes the product is also very important; after all, our products have direct contact with the skin. We prefer fragrances that meet IFRA standards in all our products. We also conductshort and long term stability tests to measure the compatibility of the fragrance with the product. Some of the raw materials in some fragrances may have an impact on the color and the smell of the product in time. Especially when choosing vanilla, strawberry, coconut, coffee and caramel notes the appeal of the fragrance should not be the only determinant since these notes may perform poorly on long term stability tests.
You have long established relationships with many prominent companies in the sector. What is the formula of forging good relationships and maintaining them?
Today, even concepts like B2B and B2C in brand communication are giving way to new strategies like ‘human to human’. In other words, being human oriented is on the rise, which is in fact a strategy we have been employing for many years. Approaching people within the framework of human values and communicating with them from a respectful, loving and empathetic standpoint is the best was of adding zest to our lives. I believe one of the main reasons behind our success in the sector is our human oriented communication strategy with our partners.
You have been a quite active exporter too and export to many countries including Russia, Georgia, Morocco, Saudi Arabia, Iraq and Turqic Republics. Which country is the easiest to operate in? Which one is your greatest importer?
Approximately 40 percent of our exports go to Middle East and Africa, 40 percent go to Asia and 20 percent go to Europe and America. Global recession and the developments in the Middle East force us to look for other options. While the markets in which we have a strong position begin to shrink we maintain our growth by entering in new ones. Our exports to Far East showed a significant increase in 2016. In addition we are also conducting market research in Eastern Europe and America as our prospect targets.
Are you ambitious in terms of exporting to the US?
Although USA is the world’s largest chemical products exporter, it is also the second largest importer in chemical products foreign trade thanks to its imports that worth about one and a half times of its exports. When we take a closer look at the world’s wet wipes consumption figures, 25 percent of the total sales which is expected to reach 13.5 billion in 2018 will be made in North America. Within this framework, because of the intensity of demand, USA is one of our largest target markets. Taking into account the different market dynamics, purchase structures and business conduct in different states, it is advisable to develop different approaches for different states rather that tackling the US market as a whole. At the moment we are conducting market researches. In addition, when we take a look at global online sales, USA is the second country in the world with a sales volume of 340 billion dollars and the market expands very rapidly. Amazon alone enjoys a sales volume of 79.2 billion. In order to seize the opportunity we made our first sales in the US in June through a distributor company UltracompactUSA and our products will be available to the US consumers at amazon.com platform.
You received the İKMİB export award in wet wipes category. And you came the second in export rankings… What would you like to say about that?
Our chairman of the board Mr. Kömürcü has a nice saying: “There is a thin line between dreaming and being a dreamer.” We dream of tangible, discernable dreams that can be realized. If you set your targets and work hard with passion and honesty, and more importantly with faith and patience, success comes by itself. This is why we are greatly honored by the İKMİB’s second runner up award. We set ourselves new targets thanks to the motivation and happiness this award have given us. We will be working harder to be the best.
Talking about exports, can we say that you travel a lot? Where did you go on your latest trip?
I have been to more than 70 countries so far and my last trip was to Dubai. Every trip has inspired me to come up with brand new ideas. You see things you normally don’t see very often in your daily life. Things that are very ordinary for a particular culture can be very extraordinary for you. Such instances contribute to your creativity. A different city, different people means a brand new field of observation. Such observations have been quite helpful especially when developing new products.
What kind of routine do you set for your personal care amidst such a busy schedule?
I exercise regularly and I am interested in Muay Thai lately. This exercise not only burns a lot of calories and relieves stress but also I feel very fit in terms of both mind and body.
Is there any aspect in business life that was once challenging for you but not anymore?
As an executive I have to plan and coordinate a lot of different things within the day. In time I realized that the most important thing is to be able to manage yourself. In order to be able to improve oneself, one has to gain experience in hard and disciplined work, being aware of the environment and taking responsibilities. You realize your strengths and weaknesses in time. I believe by trying to improve my strengths and making use of the lessons I learned from negative experiences I am now able to make decisions more rationally.