JV
China's OE market heading for exciting times
By Hu Yang (chinadaily.com.cn)
Updated: 2009-08-28 17:30
TMD Friction Group, the world's leading manufacturer of brake friction materials, has streamlined its joint ventures in China in an effort to consolidate and strengthen its leading position in this emerging market.
Derek Whitworth, CEO and president of Germany-based TMD Friction, told chinadaily.com.cn the company is going to take "bolder steps" in China as the nation is emerging as a further center of the automotive and original equipment (OE) market. Their target is to have over 1 billion yuan ($146.4 million) in sales by 2012, about 30 percent of the OE market in China.
TMD Friction originally had two local partners in China: Taihang Machinery Industrial Company (HTM), which cooperates with TMD Friction in the Shijiazhuang plant in Hebei province, and Hangzhou Hangcheng Friction Material Company (HFMC), a shareholder of TMD Friction's Hangzhou plant in Zhejiang province.
A share transfer agreement, in which HFMC sold its entire equity to TMD Friction and HTM, was signed in Beijing on Aug 27. After the transfer, TMD Friction holds 70 percent of the Hangzhou plant's shares and HTM holds the rest.
HTM, a subsidiary of China North Industries Corporation, has been very supportive of TMD Friction throughout their decade-long cooperation, according to Whitworth, and HTM's strong background in industrial manufacturing is also of great help.
Consolidation will help TMD Friction shed duplication in its Chinese operations and improve staff efficiency, making TMD "more ambitious" in expanding its business in China in terms of both sales and market share, Whitworth said.
China is TMD's vital market, Whitworth noted. On the one hand, the domestic OE market and aftermarket are developing very fast as Chinese people's passion for cars keeps surging. On the other, Chinese carmakers' ambition to enter the global market also opens more opportunities for TMD Friction, Whitworth said. The company plans to not only meet the increasing demand on the domestic market, but also make its Chinese ventures an export center to other Asian countries, such as Japan and South Korea.
The CEO, a veteran in the automotive industry, predicts China will not only own more cars, but will see more premium cars, because Chinese people demand better products and services as they now can afford those.
He also expects to see "Chinese vehicle manufacturers rising to compete on the world stage with the big existing carmakers in Europe, Japan and the US", and is ready to cooperate with Chinese carmakers. Whitworth believes TMD Friction, which is well recognized in the global market, will help these Chinese brands open the global market.
China's aftermarket will grow very fast in the future, according to Whitworth, and thinks TMD Friction, a major player in the European aftermarket, has an advantage in that aspect too, as their principle is to offer the same services to customers in different regions.
The company is now expanding its research sources in China and is preparing to launch a technical center to test risks in Shanghai. The center, which is already recruiting engineers, is expected to be completed within two years.
