'3M Pakistan operations to continue grow in double digits' Vice President, 3M Middle East and Africa

Ippocratis Vrohidis has been the Vice-President-Finance for Asia Pacific from April 2013. A 24 years veteran of 3M, Vrohidis served as Vice President 3M International Operations and Corporate Staff services since April 2011, after having served as Finance Director for Industrial & Transportation Business since 2006. BR Research recently met Vrohidis on his visit to Pakistan. Following are edited excerpts from the conversation.
BR Research: How is 3M's business shaping up in Middle East and Africa, which is believed to be one of the fastest growing regions?
Ippocratis Vrohidis: 3M is doing very well in the region growing in double digits, both in top line and profitability. We are one of the fastest growing regions for 3M. We are a $32 billion company, having operations in more than 70 countries around the world, doing operations in 200 countries. Middle East Africa is expectedly our fastest growing region. If we look forward to five years from now, we see ourselves continuing to grow at double digits.
BRR: What is the Middle East Africa region's share in 3M's global business pie?
IV: Middle East Africa in the bigger 3M context is about 2 percent of global operations. So we are small relative to 3M global, but we still have a very substantial customer base in the region. We have a lot of key accounts for the company and the opportunity is enormous.
BRR: So does 3M have a different set of strategy for different regions or is there a global strategy that is followed?
IV: We have a global set of strategies. If you look at the principles of how we go about doing business, they will remain the same. But as we come to every country, we use a little bit of a tailor-made approach. That is especially because the products are technical; we count on 46 different technologies to go to market. So we usually tale a combination of those technologies that best makes sense for local market instead of using an approach that may make sense for one country, but does not make sense for another one.
We leave the decision of defining the portfolio down to the subsidiary, as it is in the best position to assess what mix makes the best business sense.
BRR: Do you further bifurcate the region in Middle East and Africa or it is just counted as one region with uniform strategies and business patterns?
IV: Within our management structure, we have separated Africa from the Middle East and even the Middle East has more granularities. In certain cases, when it comes to back office operations and some transactional processes, we are looking more and more to regionalise and streamline the operations, improve productivity and have more time for the customer.
If you are spending your whole day at the office, you are surely not spending enough time with the customer. The front customer facing, most of the time is left to the country. In few cases, we have some key accounts, which make more sense to be handled globally.
BRR: How do you see 3M's prospects in Pakistan alone?
IV: There are actually some very good prospects. We do not have a lack of opportunities in Pakistan. We have to do three things to further improve our business in Pakistan. One is prioritising. We have 55,000 products officially, I can tell you we have more than 300,000 SKUs in the company. So you can really get lost, it is that big. You have to discipline yourself to focus in the areas where you can really make a difference that is relevant to the customer.
The other thing is continuing investment in innovation. Globally, we spend about 5-6 percent of our sales in Research& Development. That is a big chunk of money, as we are a $30 billion revenue generating company. That is the value proposition for our customers. We do not offer products that are the same; we offer engineered and innovative solutions that you normally would not think about.
So the investment in the science behind is the key. We have done that so far in Middle East Africa, where we have customer technical centres and customer innovation centres in UAE, South Africa and Saudi Arabia. And we want to continue to expand that. So as I look five years from now, the resources we have for R&D side are going to double for this region. Pakistan being part of this region will get its fair share.
There is no shortage of smart people in this country; I actually look forward expanding even more in Pakistan. It will all come down to the types of opportunities that we are going to see.
BRR: Do you see the 3M Pakistan business right on track? Are there things that 3M Pakistan may want to do differently to be smarter?
IV: There is no operation in the world that does not have room for improvement, you can always get better. As I look at our Pakistan operations, we have some very strong business in consumer and a very good set of solutions in healthcare and if we look at the industrial and transportation business, we also have very good opportunities there.
Remember that 3M has five business groups. We have healthcare, retail consumer, industrial, safety and electronics businesses. In any given country, we create a unique special sauce of combination of those businesses with the technologies in the background.
I think we have cracked the code in the consumer side very well, we have done some very good start in healthcare. The next is going to be the industrial and transportation, where little more effort can reap good results. There is absolutely no shortage of opportunity for 3M in Pakistan.
BRR: Do you see expansions in all business lines simultaneously or is there a particular business category you would want to expand first and more rapidly?
IV: They will all expand, but healthcare, consumer and industrial business are going to expand faster than normal.
BRR: Is there any specific challenge that Pakistan as a country presents to 3M, in relation to other countries in the region?
IV: We treat every country differently and study the uniqueness of every country. Specific to Pakistan, I actually wish it was much bigger for us because the opportunity is there. If you look at the limiting factors, certainly one is always aware of the security concerns. Then there are stability, predictability and transparency, which are key variables. We want to make sure our investors are safe, and we operate in a predictable and transparent environment.
Specifically to Pakistan, if you look at the ease of doing business, there is an opportunity there. Red-tape and power outages are not good for businesses, and you are operating in a globally competitive environment. If Pakistan can improve on the infrastructure and bureaucracy, the country would grow at potential. Right now Pakistan is surely not growing at potential.
BRR: The perception goes that 3M is not active on media, particularly social media. What are you views on that?
IV: I will give you data to dispel that myth. We are very active. Our consumer and retail businesses are the one where we interact the most. For example, if you look at our customer innovation centres, they have received 15,000 visitors in two years. If you look at 3M Pakistan specifically, they recently ran a campaign on Scotch Brite, which is our flagship brand here. We have almost a 100,000 likes on our Facebook page and probably about 6,000 people talking about us on twitter. I think we are getting pretty good media coverage. I do not think we are not active, we may be humble.
BRR: In terms of competition, what is the scenario in the region?
IV: We love competition and we like the challenge and welcome the chance for not being complacent. It pushes us to create better solutions for our customers. Pakistan with its unique location has competition from many different markets. We like our chances in this stiff competitive environment. We think that we have excellent quality products and we bring innovative solutions.