I was at a Dow Corning press conference yesterday for the launch of an expanded Xiameter platform in India, another step in its effort to tackle commoditisation of the silicones business.
The no-frills Xiameter, a web-based ordering service, was launched a few years back as customers had become familiar with silicone products and were no longer interested in paying for expensive technical service.
Now as competition for standard grades gets stronger and more speciality grades turn into commodity, the number of products offered via Xiameter is being doubled to 2,100, nearly one third of the company's 7,000-strong product portfolio.
The successful Xiameter business model helps differentiate price-driven customers from innovators, explained Jean Paul Mollie, region president for India, Middle East and South Africa at Dow Corning.
While the Xiameter brand offers standard silicones at market prices, the Dow Corning brand offers speciality products and new applications for customers wanting customized solutions and technical support. Interestingly, nearly 40% of sales of the two brands is now web-based.
The expansion of the Xiameter platform illustrates an ongoing challenge facing speciality chemical companies. As no product remains a speciality forever how should companies handle commodity products without diluting the essence of the specialities business - innovation and service? Should portfolios be continuously reassessed to reduce focus on maturing products? How much time and money should be invested in developing new business models to maintain cost-leadership in commodity grades? How can commodity markets be serviced most efficiently? Is Internet the answer?
Mollie declined to estimate the size of the Indian market for silicones and would only say that the country was seeing strong double-digit growth. Dow Corning will be focusing on opportunities in the transportation, construction, solar energy and life science sectors in the country.
Dow Corning has a strong focus on solar power globally and has plans to expand capacity by 90% within the next four years. A new solar solutions application centre is being set up in South Korea to cater to the Asian market.