Green Polyethylene Business
Pursuing the widespread adoption of green polyethylene, a product currently drawing attention as a means to reduce dependence on oil and prevent global warming
*Affiliations and titles are current as of the time of the posting of this article
For over 40 years, Sojitz has maintained a business relationship with Braskem S.A. (head office: Sao Paulo), South America’s largest chemical manufacturer, as its largest foreign shareholder. In 2012, Sojitz Pla-Net Corporation acquired the distribution rights to Braskem’s green polyethylene, a bio-plastic resin made from sugar cane, and commenced sales both within Japan and throughout the Asia and Oceania regions. In this Project Story, we introduce Sojitz Pla-Net’s green polyethylene business--a segment currently attracting attention as a way to reduce dependence on oil and prevent global warming.
Expecting the potential of green polyethylene
Although plant-based plastics have actually existed since around the year 2000, they have started to attract attention in the last few years amid surging crude oil prices and rising environmental awareness. In 2007, Braskem asked Sojitz to distribute green polyethylene in Japan and other Asian countries. Braskem is South America’s largest chemical manufacturer, with whom Sojitz have over 40 years of business experience in the trade of butadiene, a synthetic rubber material used for automobile tires and other products, and bio-ETBE, a bio-mass fuel used as an additive to high-octane gasoline.
Sojitz Pla-Net chose the green plastics sector as the target of one of its new business taskforces sometime between 2007 and 2008. The taskforce put together a feasibility study, arriving at the conclusion that the bio-plastic market was certain to expand in the future. The department itself, on the other hand, were hesitant to move ahead, set in their belief that compared with existing plastics, plant-based plastics were more expensive. It would take more than simply being a plant-based product if bio-plastics were expected to sell.
Afterwards, Braskem made a second offer in 2011. Motoyoshi Kataoka, who was working with Braskem during his assignment to the U.S., felt that Sojitz should start selling green polyethylene considering its potential for future growth. “It may be expensive, but if there’s no difference in quality compared to petroleum-based plastics, then there’s value in handling this product.” This time, Sojitz (through their subsidiary Sojitz Pla-Net) spent a year conducting detailed research into the quality of Braskem’s green polyethylene and investigating market conditions. The results of the market survey were positive. As a result, Sojitz decided that Sojitz Pla-Net would begin trading in green polyethylene.
Dramatic Changes in the Market and the Search for Sales Methods
Attitudes regarding the environment changed dramatically after the Great East Japan Earthquake occurred in March 2011. As it became necessary for thermal electric power plants to compensate for the nuclear power plants running at lower capacity, the heretofore rising calls to reduce carbon dioxide emissions grew to be seldom heard. Moreover, a number of negative factors emerged, such as the arrival of cheap plastics derived from shale gas. These changes in the market environment came just as Sojitz had committed to green polyethylene. This came as a serious blow to the company, since they had already expected it would be difficult to expand sales channels for the product--even without these shifts in the market.
Sojitz was initially unable to sell the product at all. Then, Oyagi tried to sell the product with trial and error. “Although buyers of green polyethylene are processing companies who manufacture plastic films, containers, packaging materials and other products, the end users of these processed goods are the owners of branded products. We had started to directly persuade these brand owners,” reflects Jun Oyagi, former member of Sojitz Pla-Net and the one in charge of this project at the time. In order to persuade them, they adopted a strategy designed to change its image. No matter how strongly they emphasized the product as an eco-friendly plastic, brand owners are not easily persuaded to accept the green polyethylene due to its cost and the perception that adopting eco-friendly materials is akin to volunteer work. Therefore, Sojitz Pla-Net suggested to brand owners that they use green polyethylene to expand their corporate value. It was successful.
In addition, Sojitz Pla-Net introduced this sales strategy into processing companies to get them to use green polyethylene as means to expand their sales. While there is almost no room for differentiation when every processing company makes film and sheets from existing petroleum-based plastics, it means that processors can appeal to manufacturers with lines like, “This film is eco-friendly,” or “This product will enhance your corporate image.” It attracts the manufacturers’ interest and is the way to be different from other companies. Finally the processing companies accepted to buy green polyethylene saying “Even if we are forced to bear slightly higher procurement costs, we will have some benefit which outweighs the costs.”
“We made a significant breakthrough by proposing to processors that they use green polyethylene as a tool for expanding sales. This led to the natural formation of a group of processors who purchase green polyethylene and petroleum-based polyethylene at the same prices, and who have become our strong ally. Thanks to them, the number of processors utilizing our green polyethylene has grown since 2012, to the point where we were able to exhibit 25 separate uses for green polyethylene at an environmental expo in 2013. This number has almost doubled to 45 this year.” said Oyagi.
Making Sojitz Pla-Net “the Go-To Name in Eco-Friendly Plastics”
Approximately three years have passed since the start of this project. With Tokyo being selected to host the 2020 Summer Olympic Games, the reduction of carbon dioxide emissions has returned to being a hot issue. Sojitz Pla-Net also handles other eco-friendly plastics aside from green polyethylene (i.e. other plant-based plastics) and is ready to increase these varieties to lead the domestic market through product diversity. They also started a project in May 2014 which provides market development aid to small businesses which use their green polyethylene. As part of a business tie-up with an environmental consulting firm, Pla-Net works together to help small companies with everything from product development to sales strategy and customer base expansion.
Oyagi said enthusiastically, “I really feel that our business has experienced a tailwind since Tokyo was selected as host city for the Olympics. Even some customers we are not familiar with have contacted us due to our reputation as a green polyethylene distributor. Although it was hard work getting to this point, all we have to do from now on is to take firm advantage of this momentum and produce positive results.”
They continue to work hard to make Sojitz Pla-Net t“the Go-To Name in Eco-Friendly Plastics.”
Examples of products made with Sojitz Pla-Net’s green polyethylene
A Word from the Project Members
Sojitz Pla-Net is a trading company specializing in synthetic resins whose main business is dealing in raw materials for petroleum-based synthetic resins. One of the varieties which we handle are derived from plants. Although this is still a niche market, we have made it our mission to create demand in the market. While keeping in mind the synergy created between each of our products, we hope to expand this niche industry from the base of the supply chain pyramid.
The difficulty in handling green polyethylene is that the customers are different from our existing customer base. To ensure that customers understand the benefits of green polyethylene, we needed to promote the product not only to the plastic processors, but also to the brand owners, and make sure that they understand the product’s advantages. We have spoken to many people and experienced our fair share of failures, but we have now been supported by many processors voluntarily promoting the benefits of green polyethylene. We will continue to push forward in our efforts to expand green polyethylene transaction volumes.
Green polyethylene business is still developing but, I believe that concern for the environment will become more prominent in many sectors in the future. We will continue to promote the advantages of green polyethylene so that customers will refer to Pla-Net as “the go-to name in eco-friendly plastics.”
There are some difficulties to get the customers to understand the merit of Green polyethylene due to the image of its high price. We, however, are trying our best to promote green polyethylene day-by-day, in the belief that it will definitely benefit the world and society in the future. It is still early in the game. Considering what kind of new business we can create through our green polyethylene and the strategy that we can grow with our business partners, we aggressively work towards the green-ification of the polyethylene industry.