Finnfund

A specialist in transport packaging materials, Eltete TPM Limited has expanded production to China, India and Brazil in the past couple of years. Prior to setting up production units, it carefully charted the new markets and built up a sales organisation.

“In every country you need to start envisaging future market conditions a couple of years before beginning production,” says Eltete TPM’s managing director Bo Österman. “The first thing to do is to construct a marketing and sales organisation and recruit key personnel.”

Österman emphasises that the company’s international success depends on precise knowledge of local conditions.

“We are a global company but local awareness means everything in marketing. Success depends on an understanding of the local culture. The only way to achieve it is with local people.”

The employees of Eltete TPM’s plants in China, India and Brazil are all local professionals, right up to the managers. The only Finns employed are in temporary project work.

“From time to time you wonder whether a Finnish manager might make a contribution but, in long term, the policy we have chosen makes sense. For example, if we want to succeed in China, we have to do the job using Chinese skills,” Österman says.

Production in China, India and Brazil

The TPM in Eltete TPM stands for transport packaging materials. This Loviisa-based Finnish company is a specialist in producing, marketing and selling recyclable packaging materials. Its product range includes pallets and edge boards made of cardboard. The company has manufacturing operations in nine countries and sells its products in more than 40.

Its Chinese plant, in Shanghai, began operations in April 2001. The following year production began in Gujarat India and in the state of São Paulo in Brazil. Eltete has about 45 employees in China and about 20 each in India and Brazil.

“We set our sites on China back in 1996,” Österman explains. “The Chinese market was growing apace but we couldn’t win a share of it without having an efficient sales and marketing network already in place. A company starting up in China today would be shut out of the market.”

Promising prospects in Brazil

Österman regards Brazil as a market area of the future. The country has plenty of raw materials and a large domestic market in which there is so far little competition.

“India is another interesting market area but it is a developing country in the real meaning of the word, for example regarding infrastructure.”

He says that the Gujarat project was four months late because monsoon rains washed away roads and caused other damage. Political unrest in the state also delayed the project.

“But despite these surprises, operations have got off to a fairly good start,” he adds with satisfaction.

Seeking growth from developing countries

In Bo Österman’s view, a company seeking growth has very little choice but to expand into the developing countries.

“In the industrial world there is tough competition in transport packaging materials. In the United States, for example, the division of most of the market between rivals is firmly established.”

Overcrowding in the US market was one reason, Österman says, that Brazil was chosen for his company’s production site in the western hemisphere. In addition to large international producers there are numerous local competitors in the packaging materials sector.

“Our company succeeds by focusing on the critical matters. By concentrating and specialising we’ve created strategic synergy and we believe that these changes benefit our customers, too. An important part of our strategy is comprehensive management, from product development and productive machinery to sales and marketing,” Österman says.

Uncertain economic prospects have curbed the growth of world trade, and this has been reflected in the packaging sector, too. On the other hand when times are tough companies seek more effective logistic solutions, he points out.

“There’s also a clear trend towards taking environmental matters into account. Previously packaging used a lot of wood. Now customers want replacement materials that have less environmental impact and are easier to recycle. At the same time they can save costs.”

Finnfund had participated in financing Eltete TPM’s production units in China, India and Brazil.

“Finnfund has been a skilful and unprejudiced source of finance,” Österman stresses. “Faith in the business is what you need from a financier.”


For more details please contact Ms Paula Sundberg +358 9 3484 3331, email firstname.lastname@finnfund.fi