Harman injects $100m to tap booming market

SHANGHAI - Harman, one of the world's leading audio and infotainment providers, will invest $100 million to bolster its research and development (R&D) and manufacturing capabilities in China after an initial investment of $75 million.

As part of its latest investment, Harman will build two manufacturing operations in Dandong, Liaoning province. The move is expected to cost about $50 million, said Dinesh Paliwal, chairman, president and chief executive officer of Harman.

To push forward its investment strategy in China, Harman held a board meeting in Shanghai this week to seek further cooperation with Chinese authorities and provide a stimulus to its development in the country.

Paliwal said one operation will develop and manufacture automotive electronics and audio systems for the world's luxury automakers, including Audi, BMW, Ferrari, Lexus, and Mercedes Benz. The other one will manufacture audio electronics and loudspeakers for a range of Harman's premium brands in the professional and consumer sector.

"To attract the R&D and manufacturing of Harman's leading brands into the region, Dandong will provide various incentives for the company," said Dandong Party Secretary Dai Yulin. The two projects are expected to be put into operation in the summer of 2011.

Dai said he hopes the city will become an important site for R&D, manufacturing, sourcing and export of high-end audio and infotainment products.

The new facilities in Dandong will complement existing Harman manufacturing locations in Suzhou, Jiangsu province and Shenzhen, Guangdong province. Paliwal said Harman will double its current 1,500 employees in the coming years as Dandong projects become operational.

"Harman is expanding its breadth and depth across China," said David Jin, president and country manager of Harman China.

"We will continue to bring the best of our experience and technologies to China and make our commitment to turning the country into Harman's most important market by 2015."

Harman opened its first flagship retail showroom in Shanghai earlier this week to echo its second-phase investment plan for China, which features products in its range of premium audio brands, from personal audio and multimedia products to professional-grade home audio systems.

"We believe more retail stores will be set up in China in the future based on the experiences we gain from the flagship showroom," Paliwal said.

He said Harman is currently evaluating potential Chinese companies or testing facilities' acquisitions for the remainder of its planned investment strategy.

Paliwal did not give details about the move but said Harman will seek the possibility of investing in Southwest China as a complement to its current industrial layout in China.

"A lot of big automakers are going to the southwest region for expansion, so we should follow suit to meet their demand," he said.

"We will consider acquisitions or mergers of local companies in the process of our expansion rather than just rely on the strength of our own," he said.

Paliwal said that the launch of the second-phase investment plan for China will help Harman increase its sales in the market from $200 million this year to up to $1 billion in 2015.

Harman has set up its China headquarters with a world-class R&D center in Shanghai, which has been a site for major Harman professional audio installations including more than 20 Expo venues such as the China and US pavilions.

China Daily

(China Daily 11/02/2010 page16)