Having worked for some of the biggest names in the OP industry throughout Europe, Anders Kristiansen is now firmly established as Lyreco’s main man in Asia. Here, he speaks to OPI about being at the forefront of one of the most committed foreign businesses to enter the Asian marketOPI: Hi Anders, thanks for finding time in a hectic schedule to do this interview. Just a couple of questions to set things rolling. First up, can you tell me a bit about your role at Lyreco now, and what that currently involves?
AK: I am the managing director for Asia Pacific. Actually, I’m the managing director for Asia today, covering all the Asian markets that we have, but from 1 July, I will take over our Australian subsidiary. So as of 1 July, I will be managing director Asia Pacific.
Currently we are in Korea, Hong Kong, Taiwan, Japan and Thailand, plus Australia.
OPI: When did you join Lyreco and what role did you come into?
AK: I came to Lyreco in 2000 as managing director of European subsidiaries. I did exactly the same as I do now, but just for the European market which, of course, in terms of sales volumes, is significantly bigger. It’s a much more mature market. And Eric (Bigeard, Lyreco CEO) offered me the chance to go and develop our Asian subsidiaries in February 2003.
OPI: So, how did Eric sell the idea of moving from Europe to Asia to you? It appears that your move to Asia really set down the increasing importance that Asia was going to have for Lyreco. Is that how he worded the move to you?
AK: Absolutely. It was one night before I was off on a management training course for four weeks, and he put the question to me: "Why don’t you go and take over our Asian business- I was gobsmacked and I couldn’t really answer him. So I said, "I’ll think about it," and I was convinced that was not what I wanted. I mean, I really did not want the job at first. But the more I thought about it, the more people I spoke to, the more I knew it was the right thing. Asia is where you have the growth. Asia is the market or the continent you read about all the time. This is where the action is. I’ve done Europe for many, many years and I know Europe inside out, so I thought that could be the challenge.
OPI: On a personal level, was it difficult when you first moved over here? Obviously it’s a big difference. I seem to remember you were living in Belgium at the time.
AK: Yes, you remember correctly. I lived in Belgium. Our head office is in Valenciennes, which is just south of the Belgian border.
So yes, it was a big challenge and a big change. The culture in Asia is significantly different. When you move from Denmark to Germany, and Germany to Belgium, yes, it’s different, but it’s still more or less the same. When you move from Europe to China, I can tell you, it’s very different.
We moved to Shanghai and it was important to make sure that the family settled in and that they felt good. And we were so unlucky when we arrived because that’s when SARS broke out.
OPI: OK Anders, I’ll stop you there, because I want to touch on SARS a little later. So, after you moved, did you give yourself a settling in period on a personal level before you got things going on a business level or did you have to hit the floor running?
AK: No, I had to get into the business immediately. I have got a good wife who has moved around the world with me many, many times. She knows how to make sure that the kids feel OK, and how to settle in and so on. I focused on the job immediately, and that’s what I’ve done ever since.
OPI: Why does Lyreco, in particular it seems in terms of office products companies, view Asia as such an important part of its future development?
AK: Well, it’s clear. If you look at Europe, you can look at the sales growth of all players in Europe and it’s not significant, and then you look at the GDP growth that you have in Asia: China 9.5 per cent, Hong Kong is 8 per cent, Thailand is around 8 per cent. They all have massive GDP growth. The economies are getting stronger and stronger, and it’s important for us to get a foothold in this very important market. It’s not so important today but, for sure, in the future it will be extremely important.
OPI: Lyreco hasn’t been shy in making the move into Asia and it seems to have been pretty bold in its strategy, certainly a bit bolder than some other companies. Would you say that is down to the general Lyreco philosophy?
AK: Well, it’s our shareholders. Our CEO has a philosophy that Asia is important. We need to be established here, and when we do it we need to do it 100 per cent. That’s why we have significant investments out here, and also why I was asked to come out here.
In Europe, we’re not in Finland today. Finland has got a population of 5.6 million. Yes, we could be in Finland, but it’s not really interesting. You can go into Korea where you have 40 million people. You can go to Thailand which has 60 or 70 million people. There is a totally different growth potential.
But Asia is far away from the rest of our subsidiaries. Transferring the knowledge has been a challenge in the past, but I think today we have got so much knowledge out in Asia that that’s no longer an issue.
OPI: What would you say, looking at the region as a whole, are the major problems that a multinational company like Lyreco faces when it moves into Asia in a big way?
AK: It’s definitely understanding the cultures, because it’s not just one culture, it’s many different cultures. You have to understand, and understand fast, what you have to do to make people in Thailand do one thing, and what to do in Japan to make people do another thing. That has been a challenge and that takes time. You will have people saying, "yes, we understand what you are saying," and you will walk away thinking, yes, they’re going to implement it. They say, "yes" but mean "yes, we understand, but not necessarily that we want to integrate," so that’s a challenge, but that’s a fun challenge. Dealing with people, understanding people – that’s what takes longer in Asia today than in Europe.
It’s how you direct your communication so people can understand what you are saying without being rude. Because, again, you have to make sure that you do it in a polite way as well.
OPI: Did you find dealing with the cultural differences was more difficult than you imagined it would be or did you prepare yourself for a rough ride and see the problems coming?
AK: It has been difficult. Some people said it would be impossible, but no, it’s been difficult but not impossible. Today I know exactly how to sell a message in Japan, and I know how to sell a message in Thailand, which is two different ways, and today it’s good fun doing it, but it takes time learning it. I think that’s why many companies give up because there’s a steep learning curve.
OPI: So that commitment has to be there from day one.
AK: The commitment has to be there. You have to understand that things will initially take longer out here than in your backyard.
OPI: But ultimately, Lyreco is obviously a firm believer that it’s worth that effort, and it’s essential.
AK: Absolutely. And that’s the good thing about being out here. Eric is a firm believer in Asia. We want to be here – as he always says, we have never pulled out of a market. We will not pull out of Asia. Asia is very important for us. We keep opening in new markets. Korea was opened a month ago. And we’ve got two more markets to open up later on this year.
OPI: Moving on to your newly-launched fifth subsidiary in Asia then, what do you think South Korea will bring to your Asian network?
AK: I think Korea will be a great success. We have not been operating long, so it’s very early days, but we’ve had some of the best results we’ve ever had from a start-up company, if not the best results. It’s a market dominated by mail order companies so they don’t really know the concept of having reps, and that’s what we have, and that’s going extremely well.
It will help us on the international business side as well, so when we do global deals we can cover one more market, and Korea is a market that is increasingly important from that aspect.
OPI: Was there a particular reason why you went for South Korea now? Was it the mail order side?
AK: No, it’s basically a mature market. It’s probably in between Hong Kong and Japan – closer to Japan. It’s a structured market. You get well educated people there. There is a high spend of office supplies per white collar worker. That was one of the main drivers.
OPI: So then, Lyreco’s future expansion in Asia – can you tell me a bit about this? You alluded to possible new subsidiaries a couple of questions ago.
AK: Yes, but I think you know already where we’re going because you always seem to get the news first (laughs). We have now informed suppliers where we’re going, so it’s no longer a secret. We’re going to open up in Singapore and Malaysia this year. So that will be subsidiaries number six and seven – or six and seven markets that we’ll have, plus Australia.
OPI: Aside from just broadening your scope in Asia, what are you looking for these two new subsidiaries to add to your overall Asian network? Is there anything in particular that you think they’ll bring to your group of Asian subsidiaries?
AK: Singapore as a source is very important for global customers, because many have got their Asian headquarters there. It’s a well developed market. The Malaysian market is more like the Thai market, and in the Thai market we have had a lot of success. It’s not a mature market, but it’s a market that is not dominated by any big players.
OPI: With your remit expanding, are you going to be getting any additional help out here Anders?
AK: I have additional help out here. I have lots of additional help because we have lots of people based in France that are connected to Asia – finance experts, logistics experts, marketing experts, and I’ve drawn on all the other people that are experts in different fields. I don’t believe in building up a big headquarters in Asia. We will draw on our expertise from the people we have at a corporate level.
OPI: Aside from the fact that you have growth in Asia, are there other areas that make it an attractive proposition for a company?
AK: What we are seeing more and more is that before what we had were European deals with big customers like GE, Philips, Merrill Lynch, Daimler-Chrysler. Then they expanded to be European-US deals – that’s why we have our partnership with Staples.
And what we now have is that they want to include Asia, and that’s a clear advantage for us because we now cover many markets out here. So we benefit from that. Our corporate guys in Europe make a global deal with Philips and we implement it out here from one day to another. We’ve got significant additional business. That has been a real plus, and that is a plus today.
OPI: Moving on to a differnt area now that you briefly touched on earlier, can you tell me about the health issues of doing business in Asia. I know you had, just recently, the Asian bird flu outbreak and, as you said, very soon after you went out to Asia you had the SARS outbreak in 2003 which I know hit business when it was at its peak. How much do these things affect a business, and how much of a concern is it?
AK: In 2003, it affected our business but not to the extent I thought it would. In other markets it didn’t have any impact. Bird flu? Again, back in the days of SARS, I was often in Europe at that point in time for various meetings and there was a lot of hype about it. It was far less hyped out here. So I think the press in Europe was making a big deal out of it, when there was less concern out here. It did have a business impact, that’s for sure, but not as much as I thought it would have had.
OPI: Nevertheless, I know that you took a lot of precautions during the SARS outbreak. Can you tell me a bit about these?
AK: Yes. We had all our people wearing masks. Our delivery boys were wearing masks. Our delivery boys would not enter customers’ offices. They would make eye contact, they would put their parcels outside in order to avoid being in contact with too many people. We did not have any cases of SARS in the company, nor in the close family.
OPI: I guess it must have been something of a jolt though. You hadn’t long been out here, you were just starting a new role taking care of Asia, and then something like this happens, which obviously you wouldn’t have seen a comparative example of in Europe. So it must have been another thing that gave you food for thought at that time.
AK: Absolutely Bruce, you are right there. It had just started when we came out here. Hong Kong was deserted. I kept on travelling. When I went to the hotel where I was staying there were five people having breakfast, where there would normally be 500 people having breakfast. So it was scary. Everyone was wearing a mask, and so on.
It was probably more scary for the family because if it should happen and we were infected, how would we make sure we could come back to Europe? But then again, with Lyreco we had a plan if something should happen, a plan for us to get out of the country. We were pretty organised, and we didn’t walk around being excessively nervous.
OPI: Can you put any sort of estimated figure on the kind of annual revenue that you’re doing in Asia at the moment?
AK: I could, but I don’t want to (laughs). It’s too early to give people an idea of what we’re doing in terms of sales because I think we will be revealing too much. What I can say is that we are today on target in terms of what we had planned for sales growth, and also on margin growth.
OPI: So everything is going as planned?
AK: It is. We’ve been fighting hard. It’s going as planned and we are extremely pleased. It is a market that is different to Europe in the sense that in Europe we measure growth on last year, which is quite normal. In Asia we measure growth on the previous month, because that’s how fast we grow.
OPI: Just looking at the subsidiaries that you have, what would be your key subsidiary that you think has the real optimum growth potential? Perhaps China could be the key component in the future?
AK: Well, as you know, we’re not in China today. I’m based in China, but that’s all. We’re looking at the Chinese market. Today we question if the market is mature enough for our concepts. We’re still not there. The most important market that we are in is Japan for sure. It’s got a population of 120 million and you’ve got one of the highest GDPs per capita in the world, so it’s a very important market for us.
OPI: That’s interesting because Japan’s traditionally been thought of – and proven in some cases – as a tough nut to crack for foreign firms, full stop. Certainly, foreign office products firms such as Office Depot and OfficeMax are obvious examples of companies in our industry that struggled. How is Lyreco confident and able to make Japan work in the way that large multinationals like Depot haven’t been able to? What do you think is the key difference? What are the mistakes that can be made that Lyreco seems to be avoiding so far?
AK: I think that’s again where our shareholders make a big difference. They are pretty pragmatic. The shareholders understand that if you enter a difficult market like the Japanese market, you are not going to have success tomorrow. You need to build up a strong foundation, and then grow the business from there. And that’s what we have done.
Our shareholders – and again that’s the advantage of being a privately-held company – are never looking for the return short-term, ie quarterly, yearly. They view it as a long-term commitment and, as long as they see we are sticking to our budgets and we are hitting those targets, they are fine.
So I think we have had the time to build up a strong foundation and that has cost a lot of money and lots of investment, but the strong foundation has been there for the last year and a half or so. Now we are building on that firm foundation and we are seeing a significant growth rate and marked improvement.
OPI: So it is possible, as a foreign company, to make Japan work?
AK: Absolutely. And again, we hear the stories about people that are not successful. But there are foreign companies, unfortunately not in our business, that are successful, but it is possible, of course. Japan is a lot about tradition. They don’t switch that easily from one supplier to another. It takes time to convince a supplier we deal with that it’s the right thing to invest in Lyreco. But we’ve got a bunch of good people here. We have, and we have had, people who have worked all over the place in the group, that are now here, and people that speak Japanese.
OPI: Something I just wanted to move onto a little bit here is the environment. There is a lot of pressure around the world being put on companies to ensure that their supplies are as environmentally friendly as possible, whether it’s a matter of corporate social responsibility, or adherence to countries’ regulations. Can you tell me a little bit about how difficult it is, or how stringent Lyreco is in ensuring that its suppliers are meeting these environmental standards?
AK: Well, today we have good standards because we are ISO 14001 certified in all our markets. In Korea we’re not, as we’ve just started, but we will be in time. So we need to set standards, because if we don’t set standards towards our suppliers, we won’t be able to achieve those certifications that are important to us for two reasons: one reason is that we believe in taking good care of the environment, and secondly, many of our customers simply demand that from us. So it’s two way.
I think the environmental part of this is extremely important and we take it seriously. We have a number of green products in our catalogue, and I would say that while environmental stewardship is mainly a European thing, it is certainly something that is coming to Asia now – especially Japan – where it’s very important as well.
OPI: Obviously you said it’s important, but there’s always this feeling that adhering to environmental regulations is often something companies have to do rather than them really having it at the top of their agenda. But you would say that it’s not just a fact that Lyreco is put in a position where it has to adhere to these things – it’s a choice that Lyreco would make as a company to ensure that its suppliers were sound environmentally.
AK: I think it’s something to do with our values. We believe in it. We do it. Yes, there are some customers that give you additional points if you have it when they make a selection, but not many of them. We believe in it. We think it’s very important to us. In Asia it’s not important to have lots of green products – apart from Japan. But still, we are ISO 14001 certified because it’s important to us. And again, we believe when we select suppliers, we cannot select suppliers who have child labourers and so on. Again, we don’t have to, but that is what we believe in.
OPI: Is there anything that you’d like to add that you feel is of importance about Lyreco’s performance in Asia?
AK: Well, I’m extremely proud of what we have achieved over the past two and a half years. We are moving the company, Lyreco in Asia, in the right direction. We have the belief in what we are doing out here. And we are starting to see lots of very competent people out in Asia.
Before – if we go back two and a half years – when we had to do some training, we would send people from Asia to Europe. Today, we send them to markets where we have expertise. So if it’s in terms of sales management, we will send them to Hong Kong; if it’s in terms of customer service management, we’ll send people to Taiwan. So we’ve built up expertise in Asia which we didn’t have before, and that’s great. People out here are very, very proud of that.
OPI: Anders, thank you very much for your time and good luck with Asia Pacific.