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As a true believer in German technology and a great fan of German products，this is fantastic news。
Updated: 2012-12-10 05:35
By He Wei in Stuttgart and Hannover, Germany ( China Daily)
A group of Chinese visitors taking a tour at Emag factory in Stuttgart, Germany. Emag is a leading global vertical pick-up turning machine manufacturer. The company is a major supplier of Chinese steel giant Baosteel Group. Provided to China Daily
Deutsch manufacturers writing their success in Chinese industry
While the lingering economic downturn plagues the global industrial chain, a group of small and medium-sized manufacturing companies in Germany have managed to weather the storm.
Manufacturing only one set of products today needs a good argument. But positioned as the leading machine tools makers worldwide, these German producers are quietly writing their own success stories by making what many consider to be boring products.
Small in scale, they tend to have a stable business model, are usually family-run, act low-key, focus on one core competence and stay close to the market with it.
Known as "hidden champions", they make an important contribution - some for decades - to Germany's consistent position at or near the top of world industrial production.
And they are eyeing China for new growth areas despite temporary market saturation.
Chinese market
Despite the unfavorable global climate, Trumpf GmbH Co KG, the world's largest maker of laser cutting machines, saw its sales in China advance by 9.5 percent year-on-year.
Located northwest of Stuttgart, the company offers machines for laser processing, cutting and welding that are widely applied across, among many other industries, the steel, automotive and medical sectors.
Trumpf entered China in 2000 and started with just one job shop in Taicang in East China's Jiangsu province, where there was optimal infrastructure with many potential customers and suppliers well in place, said Nicola Leibinger-Kammller, president of the company.
It initially made typical sheet metal parts that normally its customers would produce. In 2005 it added a medical technology production base in the same location.
In a market where rudimentary machines tools call for constant technological upgrading, the company started to engineer change by exhibiting a faster, more precise and more economical production pattern.
For instance, it developed a welding-on-the-fly technology where the laser beam is generated far from the welding cell and can be directed into as many as six points.
The improved beam guidance helped this technology capture additional market share for car body construction. Vehicle giant Daimler AG was quick to adopt this laser welding process.
Trumpf has made unusually aggressive moves in the past year despite the descending economic indicators in China. By overhauling its factory to double annual capacity, the company vowed to raise sales by 500 million euros ($641 million) from less than 200 million euros in 2011.
"We do see market saturation in the short run but we also expect great opportunities as Chinese industry moves up the value chain," said vice-president Peter Leibinger, younger brother of Leibinger-Kammller.
"We want a steady growth that focuses on the premium market, where demand for quality in China is absolutely rising," he said.
While Germany has mostly been the cornerstone of the European economy, in the eyes of many investors, Europe is not as important to Germany as it used to be.
According to a survey by the Association of German Chambers of Industry and Commerce, for the first time China has become German companies' top foreign investment destination, totaling $1.36 billion by the end of last year.
Like Trumpf, this change is also visible in Index-werke GmbH & Co, maker of production turning machines, which pins its hopes on China as the sole growth engine.
"We witness an overall gloomy picture in machinery production and even in Asian markets we fail to see exciting stimulus. But the only driver has to be China," said Reiner Hammerl, managing director of sales and marketing at Index.
Index specializes in multi-functional production centers in which different process technologies can be integrated in one machine. The complete machining means not only quality and precision are higher but, primarily, the production costs are reduced as a result of the shorter throughput times.
More than 40 percent of Index portfolios serve the automotive industry, with the remainder left for electrical engineering and fluid technology.
While its business growth rate was partly hampered by China's cooling car market in 2011, Hammerl foresees good opportunities to regain the battlefield in the premium market in light of the stricter emission requirements the government has imposed.
"As Chinese cars need to meet higher environmental standards, they need more precise technology. Our expertise can make products more eco-friendly. We definitely see growing potential in this regard and this is where we edge others out," he said.
Those delivering a promising sales season in China also include Emag Holding GmbH, the largest vertical pick-up turning machines producer.
In the first half of 2012, the major supplier of Chinese steel giant Baosteel group saw a moderate profit surge, amid ubiquitous contracting demand in and out of China.
The company's products can cover the entire spectrum of machining processes in the metal working industry, including chucked, shaft or cubic components.
Its hit product, the vertical pick-up turning machine, can save up to 85 percent of time in picking up spare parts and minimize manmade errors by achieving transmission automation.
Dieter Kollmar, Emag's managing director, sees the increasing allure of China after the Chinese government pledged to invest annually 10 billion yuan ($1.61 billion) in developing high-end machine tools, helping the industry to grow at a projected 12 percent year-on-year.
Upon the completion of a research and development center in Taicang, Emag is set to invest 4.9 billion yuan in a new plant in southern Jiangsu's Jintan city to mass-produce computer numerical control machine tools.
"I think the trend of industrial transition and moving up the value chain has put us in an advantageous position by improving work efficiency and freeing the labor force," said Kollmar.
Military industry
The output of machine tools in China is increasing fast in both value and the number of units and the growth in numerical-control machine tools is even greater, indicating huge market potential.
According to a recent report by the German Engineering Federation, the market share of boring milling machines currently in China is only 10 percent but the percentage internationally is 24 percent.
The share of machine centers in the world market is 22 percent and that of grinding machines in the market is 17 percent, roughly 10 percent higher than those in China.
While trade undercurrents have been frosty, German manufacturers have more than enough reason to rejoice as they enter a new sector that has not been well tapped in the past: China's military industry.
The 12th Five-Year Plan (2011-2015) outlined the introduction of deepening industrial reforms aimed at boosting indigenous capabilities and propelling State-owned defense companies onto the global stage.
Against lackluster global demand, China's military industry has in contrast proved to be a "stable growth area" for the German manufacturers, said Hermann Hirsch, managing director of sales and marketing at Metabo-werke GmbH, a manufacturer of power tools and abrasives.
Metabo makes electric tools that are widely applied in metal processing and architecture decoration. But the company is poised to ride the military modernization boom as China wants to be more prominent on the global stage.
"We have participated in this kind of 'official bidding' in the past but now we are a lot more focused on this area because we see more possibilities in the future," Hirsch said.
He revealed that Metabo completed a project on ship maintenance in China by mid-2012 and is now in the final negotiation process with military factories of the Chinese navy.
Metabo's small angle grinders and big hammers will have big opportunities to be the selected tools in the future and it also has a good chance of selling impact drills and sanders to the Chinese military factories, he said.
Furthermore, Metabo made successful bids for two electricity generating sites in Zhejiang province in East China and Liaoning province in Northeast China, where rotary hammers, cordless drills and magnetic core drills are the main products.
According to Leibinger from Trumpf, shipbuilding is a niche market in which it has cooperated. But the Chinese presence is not yet strong because the country's yards still need to move up the value chain by focusing on high quality.
There is a more imminent market for aircraft making, which pushes up demand for engine components built using laser welding, he said.
After listing aerospace as a symbol and target of China's "high-value" ambition, the government pledged 1.5 trillion yuan to develop the industry.
Two years ago, Emag started developing a tailor-made machine for blisk manufacturing, a key component used in the turbines of aircrafts, said Kollmar.
In April, it handed over the first such product to the Aviation Industry Corp of China, China's leading aircraft manufacturer, a subsidiary of which is in charge of making the country's first indigenous plane.
"We definitely see growth and potential for turbine manufacturing, as needs will continue to expand. The biggest demand is in Asia and, of course, China," he said.
The turnover of this business sector has doubled every year since its establishment in 2010. Kollmar expected it to form at least 20 percent of its overall revenue in the coming few years.
Hammerl from Index agreed. He forecast the industry in China will enjoy explosive development in the next five years, with demand for making indigenous spare parts continually soaring.
"China is just at the infancy stage. We see great opportunities but systematic training on the basic know-hows of those machines is critical," he said.
hewei@chinadaily.com.cn
A MS22-8 multi-spindle machine from Index. The machine makes multi-tasking possible and greatly enhances production efficiency. Provided to China Daily
The latest generation of siding headstock turning machine TNL18 by Traub, a brand under the Index Group. The machine allows easy and quick changeover between operations with and without a guide bush for long or short parts and the use of multiple tools. The headstock turning machine is designed for multiple purposes within industry. Provided to China Daily
Updated: 2012-12-10 05:35
By He Wei in Stuttgart and Hannover, Germany ( China Daily)
A group of Chinese visitors taking a tour at Emag factory in Stuttgart, Germany. Emag is a leading global vertical pick-up turning machine manufacturer. The company is a major supplier of Chinese steel giant Baosteel Group. Provided to China Daily
Deutsch manufacturers writing their success in Chinese industry
While the lingering economic downturn plagues the global industrial chain, a group of small and medium-sized manufacturing companies in Germany have managed to weather the storm.
Manufacturing only one set of products today needs a good argument. But positioned as the leading machine tools makers worldwide, these German producers are quietly writing their own success stories by making what many consider to be boring products.
Small in scale, they tend to have a stable business model, are usually family-run, act low-key, focus on one core competence and stay close to the market with it.
Known as "hidden champions", they make an important contribution - some for decades - to Germany's consistent position at or near the top of world industrial production.
And they are eyeing China for new growth areas despite temporary market saturation.
Chinese market
Despite the unfavorable global climate, Trumpf GmbH Co KG, the world's largest maker of laser cutting machines, saw its sales in China advance by 9.5 percent year-on-year.
Located northwest of Stuttgart, the company offers machines for laser processing, cutting and welding that are widely applied across, among many other industries, the steel, automotive and medical sectors.
Trumpf entered China in 2000 and started with just one job shop in Taicang in East China's Jiangsu province, where there was optimal infrastructure with many potential customers and suppliers well in place, said Nicola Leibinger-Kammller, president of the company.
It initially made typical sheet metal parts that normally its customers would produce. In 2005 it added a medical technology production base in the same location.
In a market where rudimentary machines tools call for constant technological upgrading, the company started to engineer change by exhibiting a faster, more precise and more economical production pattern.
For instance, it developed a welding-on-the-fly technology where the laser beam is generated far from the welding cell and can be directed into as many as six points.
The improved beam guidance helped this technology capture additional market share for car body construction. Vehicle giant Daimler AG was quick to adopt this laser welding process.
Trumpf has made unusually aggressive moves in the past year despite the descending economic indicators in China. By overhauling its factory to double annual capacity, the company vowed to raise sales by 500 million euros ($641 million) from less than 200 million euros in 2011.
"We do see market saturation in the short run but we also expect great opportunities as Chinese industry moves up the value chain," said vice-president Peter Leibinger, younger brother of Leibinger-Kammller.
"We want a steady growth that focuses on the premium market, where demand for quality in China is absolutely rising," he said.
While Germany has mostly been the cornerstone of the European economy, in the eyes of many investors, Europe is not as important to Germany as it used to be.
According to a survey by the Association of German Chambers of Industry and Commerce, for the first time China has become German companies' top foreign investment destination, totaling $1.36 billion by the end of last year.
Like Trumpf, this change is also visible in Index-werke GmbH & Co, maker of production turning machines, which pins its hopes on China as the sole growth engine.
"We witness an overall gloomy picture in machinery production and even in Asian markets we fail to see exciting stimulus. But the only driver has to be China," said Reiner Hammerl, managing director of sales and marketing at Index.
Index specializes in multi-functional production centers in which different process technologies can be integrated in one machine. The complete machining means not only quality and precision are higher but, primarily, the production costs are reduced as a result of the shorter throughput times.
More than 40 percent of Index portfolios serve the automotive industry, with the remainder left for electrical engineering and fluid technology.
While its business growth rate was partly hampered by China's cooling car market in 2011, Hammerl foresees good opportunities to regain the battlefield in the premium market in light of the stricter emission requirements the government has imposed.
"As Chinese cars need to meet higher environmental standards, they need more precise technology. Our expertise can make products more eco-friendly. We definitely see growing potential in this regard and this is where we edge others out," he said.
Those delivering a promising sales season in China also include Emag Holding GmbH, the largest vertical pick-up turning machines producer.
In the first half of 2012, the major supplier of Chinese steel giant Baosteel group saw a moderate profit surge, amid ubiquitous contracting demand in and out of China.
The company's products can cover the entire spectrum of machining processes in the metal working industry, including chucked, shaft or cubic components.
Its hit product, the vertical pick-up turning machine, can save up to 85 percent of time in picking up spare parts and minimize manmade errors by achieving transmission automation.
Dieter Kollmar, Emag's managing director, sees the increasing allure of China after the Chinese government pledged to invest annually 10 billion yuan ($1.61 billion) in developing high-end machine tools, helping the industry to grow at a projected 12 percent year-on-year.
Upon the completion of a research and development center in Taicang, Emag is set to invest 4.9 billion yuan in a new plant in southern Jiangsu's Jintan city to mass-produce computer numerical control machine tools.
"I think the trend of industrial transition and moving up the value chain has put us in an advantageous position by improving work efficiency and freeing the labor force," said Kollmar.
Military industry
The output of machine tools in China is increasing fast in both value and the number of units and the growth in numerical-control machine tools is even greater, indicating huge market potential.
According to a recent report by the German Engineering Federation, the market share of boring milling machines currently in China is only 10 percent but the percentage internationally is 24 percent.
The share of machine centers in the world market is 22 percent and that of grinding machines in the market is 17 percent, roughly 10 percent higher than those in China.
While trade undercurrents have been frosty, German manufacturers have more than enough reason to rejoice as they enter a new sector that has not been well tapped in the past: China's military industry.
The 12th Five-Year Plan (2011-2015) outlined the introduction of deepening industrial reforms aimed at boosting indigenous capabilities and propelling State-owned defense companies onto the global stage.
Against lackluster global demand, China's military industry has in contrast proved to be a "stable growth area" for the German manufacturers, said Hermann Hirsch, managing director of sales and marketing at Metabo-werke GmbH, a manufacturer of power tools and abrasives.
Metabo makes electric tools that are widely applied in metal processing and architecture decoration. But the company is poised to ride the military modernization boom as China wants to be more prominent on the global stage.
"We have participated in this kind of 'official bidding' in the past but now we are a lot more focused on this area because we see more possibilities in the future," Hirsch said.
He revealed that Metabo completed a project on ship maintenance in China by mid-2012 and is now in the final negotiation process with military factories of the Chinese navy.
Metabo's small angle grinders and big hammers will have big opportunities to be the selected tools in the future and it also has a good chance of selling impact drills and sanders to the Chinese military factories, he said.
Furthermore, Metabo made successful bids for two electricity generating sites in Zhejiang province in East China and Liaoning province in Northeast China, where rotary hammers, cordless drills and magnetic core drills are the main products.
According to Leibinger from Trumpf, shipbuilding is a niche market in which it has cooperated. But the Chinese presence is not yet strong because the country's yards still need to move up the value chain by focusing on high quality.
There is a more imminent market for aircraft making, which pushes up demand for engine components built using laser welding, he said.
After listing aerospace as a symbol and target of China's "high-value" ambition, the government pledged 1.5 trillion yuan to develop the industry.
Two years ago, Emag started developing a tailor-made machine for blisk manufacturing, a key component used in the turbines of aircrafts, said Kollmar.
In April, it handed over the first such product to the Aviation Industry Corp of China, China's leading aircraft manufacturer, a subsidiary of which is in charge of making the country's first indigenous plane.
"We definitely see growth and potential for turbine manufacturing, as needs will continue to expand. The biggest demand is in Asia and, of course, China," he said.
The turnover of this business sector has doubled every year since its establishment in 2010. Kollmar expected it to form at least 20 percent of its overall revenue in the coming few years.
Hammerl from Index agreed. He forecast the industry in China will enjoy explosive development in the next five years, with demand for making indigenous spare parts continually soaring.
"China is just at the infancy stage. We see great opportunities but systematic training on the basic know-hows of those machines is critical," he said.
hewei@chinadaily.com.cn
A MS22-8 multi-spindle machine from Index. The machine makes multi-tasking possible and greatly enhances production efficiency. Provided to China Daily
The latest generation of siding headstock turning machine TNL18 by Traub, a brand under the Index Group. The machine allows easy and quick changeover between operations with and without a guide bush for long or short parts and the use of multiple tools. The headstock turning machine is designed for multiple purposes within industry. Provided to China Daily
