Paul & Co Asia, a producer of paper cores and edge protectors, sees an opportunity to grow further in Asean as the region moves towards value-added manufacturing.
Paul & Co has a specialised manufacturing model of being small with high growth and a high margin, says executive director Khuned Sachdev.
The company is a joint venture between Germany-based Kunert Group, which holds 70%, and Thailand-based iLab, which is part of the MR Amarnath Group.
Its main customers are in the automotive, paper, plastic wrapping and copper and aluminium foil industries.
“We see that Asean will continue to be the manufacturing base of Asia and become a value-added manufacturer,” said executive director Khuned Sachdev.
He said the quality of paper cores was previously of no concern because machinery lacked sophistication but Asean manufacturing had become more sophisticated in recent years.
“People often mistake paper cores as a packaging material instead of their function as part of the production process. As machines become more sophisticated, the core also need to be stronger or it will delay production," said Mr Sachdev.
“It also affects productivity because if the manufacturer wants to run efficiently, the strength of the paper core has to be considered.”
Paul & Co is a made-to-order business because customers have different requirements for machinery even if they produce similar products.
The company not only targets new producers of paper and plastic wraps but also existing producers looking to upgrade their machines to handle higher-grade paper cores.
Mr Sachdev said no one in Thailand would buy a slightly more expensive product 10 years ago but now they want to add value to their products for exports.
The Thai operation was established in 2011 to serve the growing domestic market and neighbouring countries. It also exports to the Middle East.
Since 2011, the company has grown by about 30% per year due to the lack of competition.
"We have a specialised manufacturing model of being small with high growth and a high margin,” said Mr Sachdev.
He said the lack of competition was because Paul & Co's competitors lack access to technology that would improve product quality.
Paul & Co manufactures its own machinery and paper.
The company is profitable even though it operates at about 50% capacity, which is different from mass manufacturing, Mr Sachdev said.
The Asian unit has factories in Indonesia and Thailand with a combined output of about 3,000 tonnes per month. Indonesia produces two-thirds of the output.
Mr Sachdev urged the government to attract smaller German companies because they are always looking for partnerships and are willing to share technology and know-how that will benefit Thailand.
Paul & Co recently expanded its Indonesian factory and will add more equipment at its Thai base to produce different grades of products next year.