China s Auto Industry Localization, Globalization and Management

Transcription

1 Your Business Partner in China China s Auto Industry Localization, Globalization and Management Global Strategies for Auto Suppliers: Asia Focus 6th Annual Supplying the Auto Industry Jack Perkowski Chairman & CEO ASIMCO Technologies Limited April 20, 2004

2 ASIMCO Technologies at a Glance Company: Founded: Financial Profile: Headquarters: Products: Locations: Customers: Funding: Largest, independent automotive components manufacturer in China February, 1994 $350 million Sales Beijing, PRC Powertrain and chassis components 18 manufacturing facilities and 36 sales offices in China; 2 manufacturing facilities and a sales and service organization in the U.S. 70% China; 30% Non China, primarily U.S. US institutions

3 ASIMCO s Global Operations ASIMCO Tianwei, ASIMCO Casting Beijing ASIMCO Camshaft Grand Haven, MI ASIMCO Intl. Cleveland,Ohio ASIMCO Meilian ASIMCO Shanxi ASIMCO Yizheng ASIMCO Anhui, CR Sub-JV ASIMCO Shendian; DRA Sub-JV ASIMCO Nanyue ASIMCO Guangzhou

4 Localization - The China Market Vehicle Sales - Units ( 000) 4, % 3, % Passenger Cars 2,000 37% GPA Austerity Program, Deflation Buses 1,000 Trucks Asian Crisis WTO

5 China - Next 10 Years Deja Vu All Over Again! Vehicles Produced (Units 000) But, Japan was closed, and China is open!!! 12,000 10,000 8,000 6,000 4,000 2,000 0 Japan 1965 to % GPA China 1998 to % GPA China 2003 to % GPA?

6 Effect of WTO Localization Key % Passenger Car Unit Sales 612,533 1,828,000 44% GPA Different Models % Produced in China Price: Buick Regal $42,322 $31,898-24% Citroen (RLC1.4) $15,919 $10,641-33% Changan Alto $ 7,001 $ 4,813-31% Vehicle Financing None Beginning

7 The China Components Industry Components Statistics ($ billion) Sales A Fragmented Industry 1,540 Registered Enterprises 3,500-8,500 Non-Registered Imports Exports Average Annual Sales Per Supplier: $3.9 to $7.8 million Source: China Auto Industry Year Book; China Automotive Industry Information Network; ASIMCO Technologies

8 China Auto Components - Imports (Millions) Item Body Accessories and Parts* $ 70 $ 121 $2,424 2 Engine & Engine Components 816 1,070 2, Transmission Assemblies Brake Parts Steering Systems Suspension Shock Absorbers Lighting & Signal Units Wheels and parts Electrical Equip. & Instruments Other Products Total ,660 $2, ,430 $3, ,516 $9,588 * Includes mirrors, locks, accessories and brackets, bumpers, seat belts, air bags, regulators, seats and components, seat angle adjusters Source: China Automotive Industry Information Network and ASIMCO Technologies.

9 Globalization The China Manufacturing Opportunity 1950 to 1970 s 1970 s U.S. U.S. W. W. Jap. Since the 1970 s, industrial development has spread to countries with larger populations and lower costs s U.S. W. Jap. (Four Tigers: S. Korea, TW, HK, Singapore) 1990 s U.S. W. Jap. Mexico E U.S. W. Jap. Mexico E. China India Population (Millions)

10 The Global Work Force Now Larger and Lower Cost Than Ever Lowest Hourly Labor Rate Prices $18.50 U.S. W. Jap. $3.00 U.S. W. Jap. As China and India develop their manufacturing capability, pressure on global prices will intensify $1.60 Mexico U.S. W. Jap. E. $0.36 China Mexico U.S. W. Jap. E. India 3.5 billion people

11 But, Biggest Problem Operating in China is Closing China s Management Gap Legacy of State Ownership and Unbridled Entrepreneurialism Developed Economies China ASIMCO s Management Strategy Bureaucratic Entrepreneurial Bureaucratic Entrepreneurial

12 Drafting a Super Bowl Team! Management Old China New China Nationality Local Local Mindset Closed Open Education Engineering Engineering/Management Experience SOE SOE/Global Companies Exposure China Only China/Outside China Age

13 Uniting Behind a Common Vision ASIMCO s Core Purpose To create a truly global company which is unique because of its ability to combine the best in China with the best from the rest of the world. ASIMCO s Core Values Employees of ASIMCO believe in Teamwork and accept Personal Responsibility for meeting goals. As part of an increasingly competitive global economy, they understand the need for Continuous Improvement. Above all, they seek Opportunity and set Significant Goals for themselves and for ASIMCO. ASIMCO s Goal To be recognized as the global leader in all our products.

14 Constructing the Management System 1. Common Vision, Values and Goal 2. Performance Management 3. Leadership Development 4. Incentives based upon Equity Value Added 5. Internal and External Functional Training 6. Best Practices Quarterly GM Meetings 7. Modern Quality Systems 8. Transparent, US GAAP Financials 9. Fourth Shift ERP System

15 ASIMCO One of the 10 Best Employers in China 1. The Portman Ritz-Carlton, Shanghai 2. Microsoft (China)Co., Ltd. 3. Roche(China) Ltd. 4. Abbot Laboratories China 5. ASIMCO 6. Navion (Shanghai) Software Development Co., Ltd. 7. Anheuser-Busch Asia Inc. 8. Shanghai Hormel Foods Co., Ltd. 9. Amway (China) Co., Ltd. 10. Shangri-La International Hotels & Resorts Ltd. * Survey conducted by the Asian Wall Street Journal, the Far Eastern Economic Review and Hewitt Associates in 2001

16 ASIMCO s Strategy Passenger Cars Powertrain and Chassis

17 ASIMCO s Strategy Commercial Vehicles Powertrain and Chassis

18 ASIMCO s Strategy New Paradigm: ASIMCO Camshafts Process Design Raw Material: Casting Forging Bar Stock Assembled Cam Rough Machining Finished Machining Test Inspection Shipping Service Historical US US US US US New Paradigm US/China China China US US China China US US China China Advantage 24 Hour Coverage Lower Cost Lower Labor & Equipment Cost Critical to Quality Customer Safety

19 ASIMCO Technologies Financial Summary (US$ Million) (US$ Million) 500 Sales 80 EBITDA A 02A 03A 04P 05P 0 01A 02A 03A 04P 05P (US$ Million) Profit after Tax 01A 02A 03A 04P 05P Actual: 2001 to 2003 Plan: based on existing programs only