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Price fixing crackdown fails to faze [China Daily: Europe Weekly]
[September 11, 2014]

Price fixing crackdown fails to faze [China Daily: Europe Weekly]


(China Daily: Europe Weekly Via Acquire Media NewsEdge) CEO welcomes campaign and says he does not share the concerns of others The head of one of the world's top engineering groups has thrown its support behind China's crackdown on anti-competitive practices in the country.



Uli Spiesshofer, chief executive officer of Swiss giant ABB, says that despite growing concern internationally that China is targeting foreign companies in its anti-trust inquiries, he congratulates the Beijing government on its actions to make the market more competitive.

ABB is confident about its development in China as it continues to roll out its future development strategy, he says.


"I do not share the same concerns," says Spiesshofer, speaking during the company's annual Capital Market Day briefing in London. "I would like to congratulate the Chinese government for its actions in taking Chinese business practices to the next level. These are efforts that we welcome." "ABB differentiates itself from the competition on technology, on customer intimacy, and value, and we are ideally positioned, especially in the new context, to be a strong partner," Spiesshofer says of its relationship with the world's second-largest economy.

ABB will continue to listen to the Chinese government and stay abreast of its long-term plans, and will continue to make available the right technology to support China.

Spiesshofer also used the event to announce the Swiss group would buy back $4 billion (3.1 billion euros) of shares, seen by observers as a sweetener after a series of problems at its power systems unit and in the face of sluggish global growth.

Presenting his new strategy a year after taking the helm, Spiesshofer also cut the Zurich-based company's medium-term sales and profit forecasts to reflect the fact slower economic growth has crimped capital spending.

ABB's businesses range from industrial robots to power grid transformers, but it now plans to offload operations considered to be outside its main areas of expertise.

The share buyback will run over two years, and some of the proceeds of the sell-offs will be paid back to investors, who have been unsettled by a series of charges related to delays to offshore wind farm projects.

ABB has raised more than $1 billion from the sale of five businesses over the past year.

In recent years it has faced slower-than-expected economic growth, which prompted some of its customers to delay big-ticket capital spending, and led the engineering firm to cut its sales growth target to 4-5 percent for this year in February.

The company said on Sept 9 it expects sales to grow 4-7 percent a year on a like-for-like basis during 2015 to 2020, faster than global economic growth forecasts, but below its previous mid-term goal for annual sales growth of 5.5 to 8.5 percent.

It is now aiming for core profit margins of 11 to 16 percent over the same period.

However, the chief executive stresses that China would continue to be an important market, and a platform to take the company to the next level.

"China has been an important market for ABB for more than 100 years, and it will be a very very important market for us in the next-level strategy." "Not only as a market where we can sell a lot of our offering, we have in China a fantastic technology base." ABB employs more than 2,000 R&D staff in China at various sites and provides its Chinese customers with a wide portfolio of power and automation equipment, through a total workforce in the country of 19,000 people in 109 cities. The group operates in 100 countries and employs 145,000 people worldwide.

Its revenue in China last year was $5.4 billion, about 12 percent of its group total, of which 40 percent was from power, and the rest from automation divisions.

During the year, it invested about $1.8 billion in China, it says.

Despite the recent slowdown in Chinese economic growth Spiesshofer believes that China's 12th Five-Year Plan (2011-15) offers new opportunities for his company.

"This plan is about energy efficiency, smart grids, and renewables, and we are ideally positioned to help with the industrial upgrade, as our robot and automation capabilities are already there." "So while China's GDP growth might not be as high as in the past, the investment in infrastructure, in automation, and in utilities are favoring ABB very strongly." China needs to focus on less energy consumption per unit of GDP through the increased use of environmentally friendly renewable technologies such as solar and wind, he says.

ABB has also revealed that it has signed a strategic agreement with Chinese company BYD Co Ltd to collaborate on energy storage building technology for grid-connected, micro-grid, solar and marine storage applications.

Officials say ABB's leading products and technology for grid storage, electric vehicle charging and integrated marine systems will be combined with BYD's knowledge in battery technology to address worldwide energy storage requirements.

The collaboration will accelerate the introduction of new solutions for electric-vehicle charging, the fast ramp-up of renewables combined with energy storage in off-grid and on-grid solutions, as well as battery and energy storage solutions for the fast growing marine segment.

BYD is a leading firm specializing in the information technology industry, including rechargeable batteries.

It employs more than 180,000 staff at 12 industrial parks in China and has branches and offices around the world, including in the United States, Europe, Japan, and Hong Kong.

"We were chosen earlier this year by BYD and Daimler to support the roll-out of the the new electric Denza car, with our leading-edge electric mobility solutions: that's the charging stations that you have on your iPhone," Spiesshofer says.

China is now the trendsetter in such technology and will be the leading country in electric mobility in the years to come, and the move to join forces with BYD is very much a long-term decision, he says.

"Significant government and private sector investments are all aimed in the same direction - to develop electric mobility at high speed.

"That way of partnering with global technology leaders, whether it is on the vehicle side - the partnership between BYD and Daimler is an example - or on the infrastructure side, the capabilities that we bring combined with Chinese partners is a very strong direction." Besides energy, ABB also attaches great importance to China's automation and robot market and collaborate on innovation projects.

Gu Chunyuan, president of ABB China, highlighted the example of YuMi, a Chinese-built dual-arm robot that was also launched at the London event.

YuMi's capabilities were ideally suited to match the demands of industries that require a lot of small-parts assembly, where robots can work seamlessly alongside human, he said.

With sales of about 37,000 industrial robots last year, China has now overtaken Japan to become the world's biggest buyer for the first time. It is also the fastest-growing market worldwide, with total supply of industrial robots increasing by an average of 36 percent annually for the past five years, the China Robot Industry Alliance says.

In the next decade, China's annual growth in robots is forecast to be about 40 percent a year, industry officials say.

ABB is calling the YuMi the world's first truly collaborative robot. It has been developed to meet the flexible and agile production needs of the consumer electronics industry in the first instance, Gu says.

The project was started after creating an application center for precision engineering in Shanghai. Most of the 10-15 people in the design team were returning Chinese graduates.

The company's latest investment in China is a $300 million Xiamen factory for electrical products to serve domestic and overseas markets, he says.

Spiesshofer predicted China's workforce will peak in the next few years, because of the one-child policy, and then fall.

"At the same time growth is expected to go up, so Yumi is ideally positioned to work in factories side-by-side with Chinese people so that China can increase its productivity and address its labor market challenges.

"We expect to grow this business very strongly. We have been able to grow China ahead of the rest of the ABB portfolio, and we are firmly committed to keep the investments, to educate our people, to train the workforce, and to a future as one of the strongest growing companies in China." Reuters contributed to this story.

[email protected] (China Daily 09/12/2014 page22) (c) 2014 China Daily Information Company. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).

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