Valeo's expansion into China shifts into higher gear

Valeo Group, the French automobile components and system supplier, aims to make China its largest market in terms of sales in the next two to three years, its president said on Thursday.

The company, which already has 22 plants in China, plans to add four new factories in the country and expand three existing ones in Foshan, Wuhan and Nanjing this year, according to Edouard de Pirey, the president of Valeo China.

An employee of Valeo Group checks the quality of an air-conditioner compressor in Changchun, Jilin province. The French automobile components supplier aims to make China its largest sales market in the next two to three years. [Photo / Xinhua]

In the meantime, Valeo will also hire 1,500 managers and engineers this year in China, which will eventually become the largest country for the company in terms of the number of employees in 2014. The company currently employs 12,000 people in China.

"Our long-term strategy is to make our business in China equal our European business," Pirey said.

China represented 10 percent of Valeo's total sales globally in 2012. In the first quarter of this year, the company saw 13 percent sales growth in the Chinese market year-on-year, according to Pirey. Doubling the sales in China by 2015 has been a key objective for Valeo.

Pirey said that developing the customer base and securing future orders for the next two to three years are essential for the company to achieve the objective.

The French company invests nearly 10 percent of its sales in innovation and its R&D centers, according to Pirey. So far, the company has set up 10 product development centers and three R&D centers in China.

When asked about rising labor costs in China, Pirey said that it is a fact that all companies have to deal with.

But instead of moving plants out of China, he said, Valeo will continue to add new plants.