Through our intelligent insights, Kline and Company is proud to share perspectives on topical growth and value creation issues with a clear point of view, concisely and relatively jargon-free. Please enjoy the brief examples below, and contact us for more insights into your industry.
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Intelligent Insight:
Chinese Mega-Players in a Flat World
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In his book The World is Flat, Tom Friedman’s overarching message is crystal clear: globalization is fundamentally altering not just macroeconomics and geopolitics but our everyday lives, and that includes the work we do and who we work for.
The chances are you work for—or run—a multinational company (MNC). Today, you would be hard pressed to find an MNC that isn’t treating China as a priority. Few MNCs, however, are giving much thought to the potentially game-changing role of large Chinese firms in their own backyards. China has already spawned a range of formidable domestic competitors, and as the Chinese economy expands, so will these firms’ambitions. Some will evolve into Chinese mega-players (CMPs), some of which will be as powerful or more powerful than the largest of today’s multinationals.
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Intelligent Insight:
”I just want to say one word to you - 'Plastics.’
– The Graduate
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| As many plastic products have become commoditized in recent years, the use of higher-performance plastics and thermoplastic elastomers continues to show significant volume and value growth in both developed and developing regions. For example, higher-performance plastics are enabling the evolution of materials that are essential for end uses such as packaging, automotive parts, electronics, and medical devices (far exceeding profitability and growth of most commodity polymers and associated end uses). These higher-end uses can also be a significant target for basic chemical consumption, as well as new value-added end uses. Don’t overlook new opportunities in the plastics and elastomers sector.
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Intelligent Insight:
To Be or Not To Be – in Asia
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| We have often been asked the question, “Why invest in Asia?” Every client has a different opinion on Asian expansion or entry strategy. However, Kline’s view is simple: You must recognize that Asia, driven by growth in China, will soon be the largest regional market and production location for chemical and consumer products, with trade impacts affecting global producers' costs, revenue share, and profitability worldwide. Therefore, you need to have a participatory strategy in order to stay close to this dynamic and evolving Asia-based "value chain sink," whether or not you want to pursue market opportunities in Asia. Otherwise, China (or India) will eventually eat your lunch, wherever you are in the world.
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Intelligent Insight:
A New Plague from Europe
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| The retail fuel business is a highly competitive and aggressive market where the consumer enjoys the benefits of several different types of players vying for their euros. Mega-majors like Shell, Esso, and BP; key regional brands like AGIP, Q8, and Jet; large supermarket chains like Tesco and Sainsbury’s; and hypermarkets all play a key role in the marking of diesel, gasoline, and LPG. In some European markets, supermarkets and hypermarkets already account for more than 50% of customers’ fuel expenditures.
The same chain transformation is now being seen in the United States, the largest fuel market in the world. Supermarkets like Red Lion and Kroger, as well as big box retailers like Costco, Sam’s Club, and Home Depot, are beginning expand their share of the wallet by becoming a gasoline supplier.
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Intelligent Insight:
Creating New Diamonds from Coal
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| Although coal-based chemicals have become mostly obsolete in past 50 years, the escalating costs for raw material hydrocarbon liquids may soon drive many chemical producers to again look to coal as the “diamond in the rough.” Certain producers such as Eastman and Sasol, as well as key producers in China, have leading state-of-art technologies in coal conversion. Investing in coal or other non-petroleum-based feedstock will be essential for future industry success.
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