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Sandvik is growing its Asian hub
By Liu Jie (China Daily)
Updated: 2009-10-19 08:52
With its largest mining and construction assembly center officially launched last month, leading high technology and engineering group Sandvik further accelerated its China expansion plan. The new 120,000-sq-m center, located in the Shanghai Jiading Industrial Zone, is seven times larger than the old factory built by Sandvik Mining and Construction (SMC) in 2005 at the same location, and can produce more than 3,000 units for domestic and global mining and construction machinery clients of the Swedish group. The center, involving an investment of millions of yuan, will also act as the assembly and logistics hub for SMC's global business. Its annual production value is expected to reach 2 billion yuan ($292.95 million) by 2012, according to the Sandvik Group, which has three business sectors: mining and construction machinery, cutting tools and new materials. Global strategy
The new center also represents an important positioning in the China market for Sandvik's global development strategy, according to Svante Lindholm, president of Sandvik China Holding Co. In addition to the new assembly center, the Fortune 500 company opened six new plants in China during the last two years, even though the world is experiencing an economic downturn. Three new factories were built in Wuxi in Jiangsu province. They are operated by the Sandvik business sectors of SMC, Walter and Sandvik Hard Materials. Respectively, they manufacture cemented carbide tools for mining equipment, design and produce cutting and specialty tools, and cemented carbide-wear parts. A new plant in Qingdao is engaged in the production of new materials. The other two plants are in Zhenjiang in Jiangsu province and produce high technology tubes. "The financial crisis really affected the global economy, including China, but we still obtained significant development in China. China is still the best-performing market in the downturn, and China is expected to be one of our largest markets," Lindholm said. Sandvik cut production in Europe and North America due to shrinking demand in developed countries hit hard by the recession. Its business in Australia, Latin America and Africa is flat, according to the company. Asia, especially China, has become the Swedish company's focus. For example, the new assembly center in Jiading replaced a plant in Finland to become SMC's largest production facility in the world. In addition to local orders, 45 percent of its products will be exported. The emerging market is currently the sixth-largest arena for Sandvik, with revenues reaching 4.4 billion yuan last year, up 26 percent from a year earlier and up from 1 billion yuan in 2003. SMC performed even better. Its annual growth rate reached 75 percent in East Asia, and the figure for China is even higher, Antonin Beurrier, president of SMC East Asia, said. Sandvik has approximately 50,000 employees in 130 countries. It generated global sales of $12 billion and profits of $1.35 billion last year. With registered capital of 100 million yuan, the company entered China in 1985. Today, Sandvik China has 25 representatives, 10 production sites and 1,800 employees in China. Its sales network covers more than 70 cities. Competition Most of Sandvik's products in China are for local consumers. They are meeting chemical engineering, automobile, space and aerospace, mining and new energy needs in alignment with the country's 4 trillion yuan stimulus package. A large number of Sandvik's products are for infrastructure and construction, the demand for which is booming in China. The National Bureau of Statistics reported that total investments in fixed assets, including infrastructure and construction, in China amounted to 17.23 trillion yuan last year -- up 25.5 percent by 2007. However, there is also fierce competition as the emerging market becomes more attractive to domestic and foreign counterparts.
Lars Pettersson, president and CEO of Sandvik Group, said domestic and foreign competitors in the Chinese market do not discourage Sandvik. "That's a good thing. Competition results in improvement and better products and services for customers," Pettersson said, adding that Sandvik has segmented the market and is niche-oriented. Lindholm of Sandvik China Holding Co emphasized that Sandvik also has advantages in its safety and environmental protection efforts. Sandvik's mining machines, for example, can efficiently reduce mining accidents, since all products can be operated under remote control, Lindholm said. Small-sized machinery can facilitate operations in small mines, he added. The company also provides training for clients to increase safety and cost-efficiencies. So far, Sandvik has six client training centers in Shanghai, Tianjin, Guangzhou, Xi'an and Beijing. Every year, the centers provide training and services for more than 2,000 clients in China. A 'green' advantage "We combine high technologies with green concepts to reduce energy consumption and emissions, as well as to increase recycling," said Beurrier of SMC East Asia. SMC has introduced large mobile construction rubble recycling machines to China. The machines can treat demolished buildings and urban garbage on site and crush the rubble. The machines then automatically sort the powder into concrete materials, road building auxiliary materials, brick-making powder and recyclable organic materials. The machines are fueled by diesel oil and equipped with zero-dust emission technology. Recycling drilling tools represent another innovative technology introduced by the company, according to Sandvik. The core technology is a hard alloy developed by the group's new materials sector. Drilling tools made with this hard alloy can be reclaimed after use. Sandvik then recycles the hard alloy to make new tools. "We are not eyeing China as a single market. Since many Chinese large enterprises have to go abroad to develop, we would like to cooperate with them to exploit foreign marketplaces," Beurrier said. For example, some Chinese clients have contacted Sandvik about running businesses in Australia or Africa. "We would love to share our experiences and knowledge with our customers in China and to help them to become competitive in the global market," Beurrier said Lindhold of Sandvik China Holding Co added that China's manufacturing industry is evolving from low-end manufacturing to high-end manufacturing, and innovative technology can play a role in this process. "We can and would like to help with this," Lindholm said. (For more biz stories, please visit Industries)
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