AKZO Nobel NV, the world's largest coatings company, said sales in China rose 18 percent last year driven by strong demand and expansion.
Revenue in China was US$887 million in 2006, against US$750 million a year earlier, Anders Brostrom, president of Akzo Nobel China, said yesterday.
The company, which also makes chemicals and is in the process of divesting its drugs unit, has set a sales goal of US$1 billion in China by 2010, which Brostrom said could be met ahead of schedule.
Netherlands-based Akzo has 21 manufacturing sites nationwide now. He said two more will be operational later this year.
In August, Akzo formed a 50-50 joint venture with Feixiang Chemicals (Zhangjiagang) Co, China's leading specialty surfactants supplier. Under the deal, Akzo will be the exclusive distributor for most of Feixiang's products outside China.
"Chinese companies are strong in products requiring basic specifications, where they can compete fiercely on cost," according to a KPMG report. Foreign firms may take advantage of this by partnering with, or acquiring local operations and then integrating the products into global supply and distribution chains.
Akzo provides a good example of the strategy and other foreign firms will likely follow, KPMG said.
Brostrom wouldn't disclose sales figures for the Akzo-Feixiang venture to date, saying the operation has just started.
US-based Schering-Plough Corp recently agreed to pay US$14.4 billion to acquire Akzo's Organon BioSciences unit.