Unfortunately...we now skip to the afternoon, and making business in China

MCAA had several concurrent sessions including one that I and Shari Worthington were teaching, so I can't blog about any of them... After lunch I am attending one of the sessions: Making Business in China, by Niko Krueger from Endress+Hauser. Krueger is 47, has over 25 years in automation, and most of that with E+H. He is director of marketing globally for E+H. China must build the infrastructure of Houston every month in order to absorb the number of people moving to the cities. China expects to be the largest automobile market by 2020. China has 320 million people under the age of 14. You can imagine what that means for education. More people use the internet in China than use the internet in the USA. E+H is a family owned company, with a second generation in the leadership. Sales last year are close to 1 billion Euros. The largest chunk of our people are in Europe, but 860 people work in Asia, 600 people in the US and even 83 people in Africa. EBT last year was 121.3 Euros. Almost 10 percent of net is reinvested into R&D. Equity capital ratio from 2002 to 2006 ranged from 43.9% in 2002 to 56.5% in 2006. The core competency of Endress+Hauser is to supply field instruments on a broad scale. We have facilities in Basel, Switzerland, Greendwood, IN, and Shanghai China. Our vision/mission: Customers identify Endress+Hauser as the international solution supplier with a wide range of process measuremnet instrumentaiton and a strong presence worldwide. We develop our employees, we foster a responsible attitude towards the community and our environment, whilst ensuring economic success. Together with our customers and partners, we solve measurement, control and automation tasks for production and logistics in the process industries worldwide. Endress+Hauser strives to be "Simply the Best." Our Employees make the diffference. The identification of our empoyees with E+H is most important for our success. Our ability to compete profitably in the marketplace is based on their knowledge, motivation and flexibility. To improve the exchange of knowledge, we encourage and support the transfer of people among the E+H companies worldwide. Endress+Hauser cooperates with universities, polytechnics, and research institutes. We spend a considerable portion of our personnel costs for training and education. Further on, we promote industrial trainings for apprentices and university students. We separate ourselves into Product Centers and Sales Centers and representatives in 85 countries. We offer leading edge technologies. We started as a level company, and added flow, pressure, analysis, and controllers, recorders, and sampling systems. Our core competence is field instrumentation. We have an industry focus/knowledge/competence organization. The group strategy for 2011+ is taking vision to action for IT, Logistics, Production and IPR. Our organization in China started in 1984, with a headquarters in Shanghai doing sales, service, and production. E+H Flowtec Division has a manufacturing facility in Suzhou (100 km west of Shanghai)with 8650 square meters of shop space and manufactures coriolis, magmeter, vortex, and ultrasonic flowmeters. E+H Maulburg/Conducta/Wetzer Division Suzhou has another 7918 square meters of space, making Capacitance, Radar, Guided Radar, Tuning Forks, Differential Pressure, and Pressure Transmitters. The E+H Sales Center in China is located at Zishu Shanghai, with 6400 square meters of space and more than 400 people in sales and service for China and other international markets. We only produce products there for China and some other asian markets. China only has one time zone... Investment into overall industry in China remains high. Investment in automation is generally much higher than overall investiment. The GDP grows at greater than 10% annually. BRICS-- emerging markets, Brasil, Russia, India, China, Singapore There is a huge concenration of capital investment in China in infrastructure projects. Power and Energy lead the way, with metals, chemicals, food and pharma close behind. A single Chinese biomass refinery project is worth $22 billion. The chinese have a different understanding of what project business is. "We only have projects." All they have is grassroots projects, not much MRO, not much domestic business. it is all infrastructural development and basic industry. China's market is driving the Global Automation Economy. Chinese GDP growth was 10.7% in 2006. They will surpass Germany as the world's third biggest economy next year. Fixed asset investment, the main indicator of state-funded spending on new Productive Capacity, rose 24% last year. Labor costs are still well below the US, and there is huge foreign direct investment. Chinese labor market has undergone significant changes in the past twenty years. Labor costs are much lower than in the US or Europe. The main challenge facing China's labor market in coming years is to support the surplus labor into quality jobs...so Training and Education becomes very key! Culture is different because of different value systems. Change in culture is ongoing. To be successful we have to understand and to accept differences. Chinese engineers are more towards the very details.Chinese customers like products coming from strong brands. Business had no limitation on "working time." It never stops. China, the pirate nation China the world's factory floor, is also the center of the world's $250 billion a year business in coutnerfeit merchandise. All kinds of material, goods and technologies are getting copied and distributed all over the world. The mechanism of copy work does not stop at our door in the automation world. Challenges- Working with Chinese Companies In numerous projects, especially machinery and plant building, detailed engineering has to be done by Design Institutes. For most of the goods produced in China or shipped to China local certificates have to be applied. Western companies are suffering under the pressure of Chinese government to transfer leading technologies towards Chinese partners. Especially in industries like car- or rail business, western suppliers are even getting forced to do establish joint ventures with Chinese companies. China Government is exerting increased control over core industries. China has listed seven industries as critial to the nations's economic security in which the state must retain 'absolute control' and limit foreigh participation. Military equipment, power generation and grids, oil, telecoms, coal, civil aviation and shipping have been deemend 'strategically important sectors.' Environmental constraints are holding some major projects back, and big investments in trainng and education are required.