ZF Friedrichshafen sees domestic market as key to Asia-Pacific region

German automobile driveline and chassis technology supplier ZF Friedrichshafen AG turned a lot of heads during last week's Auto Shanghai exhibition with its innovative products.

Jurgen Holeksa, the group company's chairman of Asia Pacific and also executive member of the management board, said that he has high hopes for the market.

Last year, the company's China sales reached 2.1 billion euros ($2.7 billion), accounting for 20 percent of the total sales in the ZF group. Holeksa said he aims to increase sales by about 15 percent this year.

The growth rate of the Chinese market reached 22 percent in 2012, slightly outperforming the Asia-Pacific region as a whole. Together with North America, sales in the region are driving the growth of ZF group as the market in Europe continues to stall.

"While the entire ZF group's growth rate came to 12 percent, it would have been much lower if China had not contributed so much. This is why we are quite happy with China last year," he said.

By offering outstanding technologies and products, the company aims to be a part of the tremendous growth taking place in the nation.

"There are a lot of growth opportunities for the automotive industry in China. China is the biggest automotive market commercially, especially already in passenger cars," he said.

The company intends to increase its footprint here by offering and delivering outstanding products, extending production capacities and increasing engineering capabilities.

As of the end of last year, ZF has more than 5,000 people working in China. Holeksa said they intend to increase that number by 20 percent in 2013, which means an additional 1,000 new employees will be hired during the year.

The company plans to increase the number of engineers in its Engineering Center in Shanghai by as much as 70, which means a good proportion of the new employees will be working in engineering-related divisions.

ZF has been working in the Chinese market ever since 1980. Over time, it has achieved considerable growth here, with 24 production facilities, three after-sales service stations and trading companies, as well as 34 service centers.

The very first domestic operation was a joint venture. Last year, ZF set up another two on top of that.

"The majority of our businesses are still joint ventures. It is very important for us to have partnerships with local OEMs and local buyers," said Ye Guohong, president of ZF China.

The company also set up the engineering center in Shanghai in 2010 that networks with seven other main R&D centers all over the world.

Ye said they only have about 10 Germans working in the center, while the remaining 140 are all Chinese.

When asked what markets the Shanghai Engineering Center will serve, Holeksa said it is mainly dedicated to research and development of applications for Chinese customers.

"It is envisioned that the center will be the heart of the entire Asia-Pacific region because of the size and the importance of the Chinese market," he said.