Bayer’s Covestro spin-off joins Alibaba’s B2B e-commerce platform
May 22, 2018 Category Foreign trade, Weekly
Covestro, which was spun off from German drug maker Bayer in 2015, has launched a flagship store on Alibaba Group Holding’s business-to-business (B2B) trading platform 1688.com as part of Covestro’s “digitalization” strategy that will also see the Leverkusen, Germany-based firm plough “tens of millions of euros” up to 2020 to overhaul its production control systems globally. “We want to piggyback on Alibaba’s presence to position our products and services, and attract new small and medium-sized customers who may not have heard about us, but happen to be searching for products on Alibaba,” Chief Commercial Officer Markus Steilemann, who takes over as Chief Executive from June, told the South China Morning Post in an interview.
The firm, which was known as Bayer MaterialScience before it was listed on the Frankfurt stock market in October 2015, is aiming for its store on Alibaba and its own e-commerce trading platform to contribute up to €1 billion in accumulated sales by the end of next year. The e-commerce strategy is also targeting a younger generation of procurement managers, whom are “internationally educated digital natives” with a different purchasing style, according to Steileman. “They are the type who would say, I don’t want to meet you or have a fancy dinner with you, just deliver the materials and give me services, whereas the company founders are used to meeting face to face, building trust, negotiating each and every deal, and ordering via paper and telephone,” Steileman said.
Covestro makes and sells materials such as foams used to insulate buildings and homes, plastic car seats padding and interior panels, coatings that make furniture water and scratch-resistant, as well as adhesives and sealants used in manufacturing. The company’s materials are also used to speed up the production time and cut down the production cost of wind turbine blades, while making them more durable. Of Covestro’s €14 billion of global revenues last year, some 22% came from its largest market, China, where sales grew 8% to €3.06 billion. Its global net profit jumped 152% last year to €2 billion, the South China Morning Post reports.
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