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ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
ANALYSTS‘ TRIP: Dürr in China
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ANALYSTS‘ TRIP: Dürr in China

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  • 1. WELCOME ANALYSTS‘ TRIP DÜRR IN CHINA Ralf W. Dieter, CEO Dürr AG Shanghai, October 8, 2012 www.durr.com
  • 2. CONTINUED STRONG EMERGING MARKETSGROWTH EXPECTEDChina, India, Russia, Thailand & Indonesia with expected growth >10% Light vehicle production increase by 27 m units over 5 years! 101.8 CAGR in % 97.5in m units 92.5 86.0110 79.6 2,9 3.0100 74.6 2,8 2,7 90 2,6 2,4 25,9 11.1 80 2,5 24,4 22,2 70 19,5 16,9 15,3 60 24,9 25,7 5.6 23,0 24,2 50 19,6 21,7 40 21,9 22,7 23,6 3.5 30 19,9 19,3 20,5 20 10 17,3 19,3 20,4 21,5 22,7 23,7 6.5 0 2011 2012 2013 2014 2015 2016 source: own estimates, PwC America Europe Asia (without China) China other last update: July 2012© Dürr AG, CCI, Dürr in China, October 8, 2012 2
  • 3. CHINA: DÜRR‘S BIGGEST MARKET Incoming orders Incoming orders Sales revenues Q3 2011-Q2 2012 Q3 2011-Q2 2012 Q3 2011-Q2 2012 (Q3 2010-Q2 2011) (Q3 2010-Q2 2011) (Q3 2010-Q2 2011) 15% 12% (14%) (19%) 29% 31% Mature Emerging (30%) (26%) markets markets 24% 25% (26%) 41% 59% (43%) (57%) 7% (24%) 8% (10%) (10%) 24% 25% (22%) (19%) ■ Germany ■ Europe without Germany, incl. Eastern Europe ■ North and South America Regional business split will remain largely ■ Asia (without China), Afrika, Australia unchanged in future ■ China© Dürr AG, CCI, Dürr in China, October 8, 2012 3
  • 4. DÜRR IN CHINA: ESTABLISHED FOR MORETHAN 25 YEARS since 1985 since 1991 since 2003 Dürr Paintshop Systems Engineering Schenck Shanghai Machinery Dürr Ecoclean China new production plant new common facility operational since 2012 in 2013 Shanghai: Doubling of capacities to around 67,000 m2 until 2013 Comparison: Dürr headquarters in Bietigheim-Bissingen 70,000 m2 Wholly owned subsidaries (100%)© Dürr AG, CCI, Dürr in China, October 8, 2012 4
  • 5. CHINA: STRONG INCREASE IN BUSINESSVOLUME OVER THE LAST 7 YEARS CAGR 2005 … 2012 (e) in % Incoming orders (in € m) 146 900 30 Sales revenues (in € m) 83 700 36 Employees (12/31) 271 1,250 1 25 Orders on hand (in € m) 119 1,050 37 ¹ plus external workers (~400)© Dürr AG, CCI, Dürr in China, October 8, 2012 5
  • 6. STRONG RELATIONS WITH ALL CHINESEAND FOREIGN OEMS© Dürr AG, CCI, Dürr in China, October 8, 2012 6
  • 7. DÜRR‘S BUSINESS STRATEGY IN CHINACost leadership, localization and innovation Expansion of local added value („Local Content“): >75% Import: only core products, e. g. robots Increase local capacities and competencies: in the midterm: >1,500 employees, Chinese executives in the 2nd management level Positioning as „Chinese Player”: strong local presence, less expatriates, more well trained local staff Become centre of Dürr’s business in the Asia-Pacific region, close collaboration with Dürr in Germany Product Strategy develop products for China: automation, handling, high quality „First Mover” regarding reduction of energy saving and cost per unit Future opportunities paint and balancing technologies: grow with the market, maintain share environmental, cleaning, filling and testing technologies: gain market share, localize design and value-added© Dürr AG, CCI, Dürr in China, October 8, 2012 7
  • 8. BENEFITS OF LOCALIZATION IN CHINAImport and localization (since 1985) Customer proximity and development of know-how among local employees Competitive advantages in terms of labor, purchasing, transport costs etc. Basis for improving our competitiveness against local suppliers Less reliance on external factors such as currency, import regulations etc. Fulfillment of local content requirements of the automobile industry Image synthesis: German quality supplier and Chinese player (‘buy local’ argument) Product development geared towards Chinese market requirements Local service network and local project execution with high level of customer satisfactionNext phase (since 2009) Focus on China as export location International use of local engineering and design Export from China in addition to import and localization© Dürr AG, CCI, Dürr in China, October 8, 2012 8
  • 9. PHASES OF LOCALIZATIONFour phases according to Edward Tse (‘The China Strategy’, 2010)Phase 1 Productearly/mid R&D Purchasing Production Marketing Sales Service dev.1990sPhase 2 Productmid/late R&D Purchasing Production Marketing Sales Service dev.1990sPhase 3 R&D Product Purchasing Production Marketing Sales Serviceearly 2000 dev.Phase 4 Productnow until R&D Purchasing Production Marketing Sales Service dev.approx. 2020 Dürr has achieved the highest level of localization Current challenge: Greater focus on the role as global integrator and integration of Chinese activities into the global network© Dürr AG, CCI, Dürr in China, October 8, 2012 9
  • 10. LIMITS OF LOCALIZATION Customer requirements: Request for imports (quality, western standards) Reputation as high-quality German company: Involvement of German employees necessary Socio-economic changes in China: Decrease in labor supply: One-child policy, migrant workers less willing to travel New politics: Government calls for “end of cheap labor” and “social justice”, wages expected to rise faster Increasing shift of mass production: From Beijing, Pearl River and Yangtze Delta to western provinces (e.g. Sichuan) and to more cost-effective ASEAN neighboring countries (e.g. Indonesia, Vietnam) Prevention of loss of know-how and intellectual property: Import of high-tech products (e.g. painting robots) Allocation strategy when awarding manufacturing contracts R&D center in Germany© Dürr AG, CCI, Dürr in China, October 8, 2012 10
  • 11. SUCCESS FACTOR LOCAL DESIGNExample: Schenck balancing machinesChinese product development, also for export to emerging markets Early presence in China has paid off Continuous learning curve Today: Independent development and production of small and mid-sized balancing machines Products suitable for the requirements of emerging markets Significantly lower costs / higher margins Product development and production in Shanghai Schenck headquarters in Germany Group-wide R&D coordination Quality inspection Development of export business Asia-Pacific region, but also US/Europe for standard machines© Dürr AG, CCI, Dürr in China, October 8, 2012 11
  • 12. SUCCESS FACTOR ORDER EXECUTIONExample: Paint shop for Changan Ford, Chongqing Dürr Mexico Dürr China Basic + Detail Engineering Detail Engineering Dürr Korea Production Basic + Detail Engineering Site Management Commissioning Assembly Commissioning Dürr Germany Dürr India Project Management Detail Engineering Global Sourcing Basic Engineering Lead Engineering Standardized ERP system ERP / CAX Standardised CAX interfaces Systems projects in emerging markets have up to 75% local content© Dürr AG, CCI, Dürr in China, October 8, 2012 12
  • 13. SUCCESS FACTOR LOCAL SOURCINGExample: Dürr purchasing organization International Purchasing Local Purchasing China Center (Germany) (approx. 30 employees) Operational support Processing Structural development support Contacts Tools + qualification Acquisition Coordination/pooling Monitoring/quality assurance 50% international presenceCurrent challenges Covering large project volume Building supplier structure in new regions (e.g. Chengdu, Gouangzhou) Further development of export business© Dürr AG, CCI, Dürr in China, October 8, 2012 13
  • 14. SUCCESS FACTOR IT INTEGRATIONStandardized IT tools support localization Enterprise Resource Planning (ERP) CAX Management Reporting/Consolidation Dürr Projects etc. Dürr investment > € 20 m (2006-2009)Benefits Fast data exchange Transparency of information across the Group International project execution and capacity management© Dürr AG, CCI, Dürr in China, October 8, 2012 14
  • 15. SUCCESS FACTOR HUMAN RESOURCESHR challenges in China Recruitment of well qualified employees Retention of experienced employees Minimizing attrition Strong brand, market leading image Delegation, Remuneration independence Loyalty + employee retention Corporate Appreciation community culture Prospects, career opportunities© Dürr AG, CCI, Dürr in China, October 8, 2012 15
  • 16. SUMMARY: STRONG LOCAL POSITION Early penetration of Chinese market has resulted in a major competitive advantage Up to 100% localization possible (depending on customer), 50 to 75% on average Hub for Asia-Pacific business, increasingly as export base for global businessStrategy Further development of localization (quantitative and qualitative) Further integration into global value-added structure (export from China) Development of “Chinese products” for the global market: automation, operation, quality Leadership in terms of investment, operating and energy costs (total cost of ownership)© Dürr AG, CCI, Dürr in China, October 8, 2012 16
  • 17. ANALYSTS‘ TRIPDÜRR IN CHINARalf W. Dieter, CEO Dürr AGShanghai, October 8, 2012 www.durr.com

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