BAKU, Azerbaijan, April 10. The Qemtex international company plans to enter the TOP 10 powder coating manufacturers, said CEO of the company Alexandr Glukhov in an exclusive interview with Trend together with Chairman of the Board of Directors Jandos Temirgali.
- As we know, your company began operations in Kazakhstan and became the country's first powder coating manufacturer. The company grew over time, and Qemtex Chemical Holding was formed last year. Could you tell us about the company's development and growth?
- Alexandr Glukhov: Our company in Kazakhstan was founded in 2003, and last year it celebrated its 20th anniversary. Initially, it was created as a trading and distribution company to sell powder coatings produced by foreign companies in Kazakhstan’s domestic market.
We were the first in Kazakhstan to start importing and selling these products, as the powder coating industry did not previously exist in the country. Over time, we not only expanded our product range by adding products from neighboring countries but also pushed the development of local production facilities in the design of polymer-painting workshops, the supply of painting equipment, and the training of enterprise teams to work with this type of product.
From 2003 to 2015, the company developed and expanded, representing powder coating brands from Turkey and CIS countries in the Kazakhstan market. With the creation of a single economic space, the situation changed: in 2015, Kazakhstan's borders opened up for goods from the EAEU member countries. Russian powder coating manufacturers began entering the market directly, bypassing distributor networks. This not only negatively affected product margins but also led to a decrease in product quality in the local market. The only way forward was to create our own products to meet the needs of the domestic market.
Thus, in 2015, the Asiacolor brand was created — the first and still the only Kazakh brand of powder coatings. Initially, production was established in China; despite extensive experience in selling powder coatings, our team had neither the knowledge nor sufficient resources to organize the process of manufacturing these products.
We approached existing manufacturers in China with a clear understanding of the exact products we needed. At the same time, we fully controlled the quality, parameters, and assortment of goods, which became highly sought after in Kazakhstan. Compared to other brands’ products that came from outside the local market, the quality of Asiacolor powder coatings was higher. Moreover, we thoroughly knew the demands of the local market and placed orders for products that met our customers’ needs.
We continued to produce products in China for three years. While the team was working on supplying the Kazakh market with Asiacolor products, I studied the technology of powder coating production. Since I have a bachelor’s in economics and business and am not a university-trained chemist, I had to dive into the issue from scratch. Also, no such production facilities had ever existed in Kazakhstan, and there was simply nowhere to draw information from. It was necessary to establish cooperation with enterprises in China, Turkey, and the UAE, where such production facilities were operating and technologies were well-established.
By 2018, it became clear that our team’s accumulated knowledge and experience were sufficient to launch our own production. We relied solely on our in-house team; our first factory, the Almaty Powder Coatings Plant, was built by the efforts of our Kazakh specialists alone. Financially, we relied on our own funds while also leveraging government support tools, which allowed us to attract investments and launch the first phase of the project.
Ironically, the launch of production coincided with COVID-19 restrictions: the plant opened in December 2019, and by February of the next year, a lockdown happened. Despite the fact that enterprises and businesses around the world were frozen, our plant not only survived that difficult period but even closed the year with a profit, and the next year we more than doubled our sales.
To this day, the Almaty Powder Coatings Plant remains the only innovative powder coating production enterprise in the country, driving the industry in Kazakhstan. After all, as production continues to develop and mature, we forge ahead in gaining experience, developing technologies, and making a significant scientific and technical contribution to the industry. Entering the international arena became a logical continuation of the enterprise's development. In 2023, we started construction of the Qemtex plant in the UAE.
- How was the decision made to move from the local to the global market? And why was it decided to locate the new production facility in the UAE?
- Alexandr Glukhov: We had accumulated significant potential: scientific, technical, and financial, and we realized we were capable of meeting the needs of customers outside of the domestic market. However, being localized in Kazakhstan, we did not have the opportunity to enter the international market, primarily because the country is landlocked, which is a major logistical barrier. Therefore, the decision was made to build a second plant abroad.
The United Arab Emirates became that country — the largest global logistics hub and an ideal place to find highly qualified specialists in various industries from different countries. Since we planned to produce products not only for the local market but also for export to other countries, the UAE turned out to be a logical place for us to start working in the international space.
- What products do your enterprises currently produce, and in what volumes?
- Alexandr Glukhov: Our production capacity in Kazakhstan is 1,500 tons per year. We meet the needs of local manufacturers, so the majority of our products consist of industrial coatings, mainly for the construction and electrical engineering industries. Companies that produce metal products for the local market, such as radiators and heating devices, are significant consumers of our products.
The enterprise in the UAE will produce a much wider range of products. This is because we plan to sell not only in the local market but also work with customers from other countries, and the needs for powder coatings vary in each region. In this regard, the new plant in the UAE will house a modern laboratory and R&D center.
Also, in the United Arab Emirates and several other countries in the Middle East region, there is currently a surge in demand for coatings due to the construction boom and the development of production facilities. Consumers need architectural and facade coatings and coatings for aluminum profiles, and we plan to meet this demand. In addition, we are also interested in more niche areas, such as coatings for household appliances and the automotive industry. In Kazakhstan, such products are not manufactured, while here, in the Middle East market, these industries exist, and the demand for quality coatings for them is high.
- What will the product volume be at the new UAE Qemtex plant? And what markets is it focused on?
- Jandos Temirgali: The project in the United Arab Emirates is divided into two stages. The first stage, which is already in its final phase, involves the production of 4,500 tons of products per year. In the second stage, which we plan to launch by the end of this year, we plan to expand production to 10,000 tons per year. The decision to split the launch of production into two stages was made for a smoother market entry. We plan to start with a relatively small volume with the aim of understanding the specifics of the market, making the necessary adjustments, and implementing them in the second stage to minimize risks.
Overall, the total volume of products produced by the enterprise will depend on the implementation of our global strategy. We have the potential to increase production at the UAE plant to 20,000 tons per year.
Although the enterprise is located in the GCC region, we do not plan to stay within this "framework." We view the UAE project as a global export-oriented enterprise, aimed at opening representative offices worldwide. We will produce products here and establish connections with consumers based in a wide variety of regions with different preferences and standards, whether in Europe, North America, or Asia.
- Which markets are of particular interest to the holding company and are important supply points? Are there any Central Asian countries among them, particularly Kazakhstan and Azerbaijan, and how much of a priority are these markets?
- Alexandr Glukhov: At this stage, the markets of particular interest to us are, of course, the markets where we are localized. In Kazakhstan, we have shaped the powder coatings market and remain the strongest player in it.
We are also very interested in working with Azerbaijan. Kazakhstan and Azerbaijan currently have excellent relations and strong trade ties. Experience shows that our countries are growing closer, so the Azerbaijani market is very appealing to us. We will definitely consider it, and now we have already entered that market through our project in Kazakhstan.
For the Qemtex plant in the UAE, the GCC market where we are starting operations is attractive, but our plans are much broader. In terms of development, we are focused on the US market, as this region is a hub for industry growth and we see tremendous potential there.
Despite the fact that it is a very complex market with entirely different rules and standards, we are not intimidated. We plan to establish a research center in the United States that will study and develop products specifically for this market. We are also interested in Europe. In the future, we plan to set up a research center in Italy and localize production there. We go where our product is most in demand and profitable.
- How do you plan to cope with competition in the GCC market? After all, unlike the Kazakhstan market, competition in the powder coatings industry is high here.
- Jandos Temirgali: First and foremost, we are not solely focused on the domestic market. Qemtex is open to working with the entire world, and all the conditions for this are available here. For example, large enterprises with plants in different countries around the world are usually aimed at working with local consumers.
We, on the other hand, are taking the opposite approach: we do not have the task of placing the entire order within the region. However, we have a strong scientific base and a multinational team, which includes experts in the powder coatings field from Kazakhstan, Italy, Turkey, India, and Saudi Arabia with up to 30 years of experience in the industry. This enables us to produce a product that is adapted to the requirements of specific regions around the world, regardless of where our production facilities are located.
Fulfilling orders from other countries and having the opportunity to learn how to work in these regions is a great incentive for us. Therefore, we plan to produce about 30% of our products at the Qemtex plant for the GCC market, while the majority will be for customers from other regions.
But if we talk about competition with local manufacturers in general, I don't think anyone in this market will face difficulties. Rather, this market currently requires much more powder coatings than are being produced. There is a noticeable trend of growing demand for powder coatings, not only in the Middle East region but also worldwide.
In the GCC region, the UAE and Saudi Arabia have become drivers of market growth. Demand for products is growing in the USA, Europe, the Pacific region, and Latin America. This is due to various reasons: both the increase in construction volume and individual industries where high-quality coatings are required, as well as a growing interest in powder coatings as an environmentally friendly, functional, and more practical solution for manufacturers than traditional liquid coatings.
I am also confident that if an enterprise produces a high-quality product at appropriate market pricing, then there won’t be problems with sales, even in competitive conditions.
- The company allocates substantial resources to the research and development of new technologies. Could you tell us about this area?
- Jandos Temirgali: As part of our project in the UAE, we have formed a team of experts who will be engaged in research, and I can say that our laboratory, which we will be launching in the UAE in the near future, will be among the top three leading laboratories for this type of product in the region. In the future, we plan to open two more modern research centers in the USA and Italy to develop new products and improve existing ones, which will make Qemtex products increasingly accessible to customers while maintaining their quality and adapting them to specific markets and industries.
One could say that by investing significant resources in research and development, we want to produce products that no one else does. But in all seriousness, the powder coatings industry is not only growing but also actively developing. It requires the implementation of new technologies to adapt coatings to specific customer needs.
For example, a manufacturer needs to produce a certain quantity of products within existing production volumes and specific technical conditions. A standard powder coating cannot meet this requirement; it needs to be adapted or modified for the consumer. Another example is when a manufacturer plans to produce products that cannot be polymerized under standard curing parameters. A special solution is needed to enable this.
There are countless examples like these, and we encounter similar requests regularly: to produce coatings for products with complex chemical preparation, for special climatic conditions, for thinner decorative surfaces, for reducing energy costs in production, and so on. Fulfilling such requests from consumers is only possible if the company has a strong scientific foundation and an innovative research center. That's why we have and will continue to invest substantial resources in research and development and innovations in the industry.
- Today, companies have started to pay attention to environmental protection in production and recycling. What measures is Qemtex taking in this direction?
- Jandos Temirgali: Qemtex prioritizes environmental friendliness and sustainable development. Our new plant in the UAE is being built in compliance not only with local environmental legislation but also with the strictest international environmental standards.
We have zero emissions, and our production is 100% recyclable. The only waste we generate is cardboard boxes and polyethylene, but we send even that for recycling in return for new cardboard and polyethylene packaging. We are proud of our 100 percent eco-friendly, zero-waste production.
- In conclusion, tell us about the holding's plans for 2024 and beyond. Are there plans to build new factories and expand geographically? What investments will be directed toward implementing these projects?
- Jandos Temirgali: In the third quarter of 2024, we plan to launch the enterprise in the UAE. At the end of 2024, we will start the second phase, which should be completed by mid-2025. By that time, we plan to open representative offices in the USA and Europe and increase the production capacity of the enterprise in Kazakhstan to 3,000 tons per year.
In 2025, we will begin implementing projects in the USA and Mexico. We are currently actively negotiating with local authorities and selecting locations for these projects. The total capacity of the two enterprises in North America will exceed 40,000 tons per year. Our largest R&D center will also be located in the USA, and we plan to complete the construction of both facilities in 2027.
Between 2027 and 2028, we plan to open a facility in Europe with a research and development center in Italy. Overall, in the next five years, we intend to increase our global presence to four to five enterprises with locations in North America, Europe, and Asia.
The total investment for these projects will exceed $100 million, and in five years, the total annual capacity of the facilities will surpass 70,000 tons per year.
Our strategic plan is to become one of the top 10 global companies in the production of powder coatings within the next seven to eight years. We are confident that these plans are achievable, as we have assembled a team capable of tackling fresh challenges.