Philips: Leading Innovations

An interview with Chi Keung Lau, Senior Commercial Director Philips Automotive LightingChina, and Michael Zhuang, National Sales Manager, After Market Philips Automotive Lighting

Gasgoo.com: Philips started automotive lighting business on China Market quite early, and has become top leader on both OEM Market and Aftermarket. What kinds of changes have you experienced on Chinese market over those years?

Chi Keung Lau: We have been established in China almost 18 years, witnessed a very big change in the market and anticipated the market changes. In the beginning, there are not so many cars in China, many of which are company cars and commercial vehicles, therefore the market demand was basic. Philips has really on purpose built up our position in China for Automotive lighting very early, even the market was very small at that time. During the last 5 years, you can clearly see that the consumers don’t want to be identified as “we are all the same”. Together with the trace change that they all need different needs, Philips has brought a lot of new innovations now, in a few cases, even specially developed for Chinese market. With the rapid growth of China’s economy, we have more opportunities for developments.

Gasgoo.com: There are many fakes on aftermarket，what’s the root for the problem? What kind of measures have you taken to avoid Philips imitation overflow?

Chi Keung Lau : It’s a good question. Of course we don’t like fake at all.

People’s awareness on copyrights is still not high at this moment, so there are still a group a people want to make profit though counterfeit products.

I think the government now sees the importance of protecting people who invent things and innovative companies, which China need now，not only produce the cheaper commodities, which is the big change in China. The government gives a lot of support to help companies like Philips，and the policies and regulations are much strict than before. We have IP&S (intellectual property & standards) department with a number of people, Philips owns many patents, and each one needs to be protected. Although it is resource constraint, we are really focusing to protect our brands. There are lot’s of efforts. We have successful cases that catching people who are infringing our brands or technicals.

Gasgoo.com: Philips sells not only products but services to customers, have you got any innovations on services and support?

Michael Zhuang: There are 3 sections of our aftermarket system: the first one is the pre-service; the second one is salesmen training, such as how to bring customers better value; the last one is customer feedback, such as how to deal with quality problems. Each section is implemented by different teams. Philips set up special training team in the aftermarket, to bring more value for consumer products.

Gasgoo.com: Dealer takes significant part for the whole intermediate links in circulation, what’s your standards when selecting dealers?

Michael Zhuang :With the automotive industry flourishes, the standards for Philips to choose dealers are becoming stricter, not only see how many they will sell, but also take their potential ability which could support future business and channel development into consideration. For example, we found a very good dealer in Xinjiang, with successfully professional sales channels and they hold seminars that invites us to do training. The standards are not only the financial requirements, but their own abilities to learn, whether they can break through the barriers of business, to have a try and find new channels, which is more important for Philips, particularly in mobility business.

The changes of product will bring changes of conception. Dealers need to break the original way of thinking, better service consumers by new channels and methods. They could understand our ideas and changes of business models in a short time via continuous training, and adapt to those changes in order to achieve our sales goals, including their own profits.

Gasgoo.com: What are the development differences for the dealers in different markets?

Michael Zhuang: Different markets have different channels and requirements. As for the low tie cities, we’d like to develop traditional market channel, build up brand effect locally, including dealers’ own image. Not only bring them business, but also automotive industry influences. In big cities, we would like to develop the terminal channel by dealer channel. In OES, what we do is not only as service providers, but also bring more new items to OEMs, leading Philips team to discuss the marketing methods together. To be more and more professional becomes important for dealers in different markets.

Gasgoo.com: As the car sales booms, could you talk about the opportunities & challenges of OES and IAM separately?

Chi Keung Lau: For this year, car production is not as big as before, like 2009 and 2010,there is lot’s of pressure to make it more profit for the company. Everyone recognized that OES is important part of the profit. Car makers are really looking to develop OES even more than before. If the car production growth , there will be less attention for the OES part, but now the growth percentage will not be as big as before, so OES is much important for car makers than before.

Michael Zhuang: Definitely to develop OES is a trend, car makers are quite aware of the value that brought by the aftermarket. The target car owners in China are mostly the ones who buy cars at first time, who always trust 4S shop. The traditional dealer network still works and takes indispensable part in the supply chain, but the focus of dealers in each market could change to adjust the new requirements and market structure.

The greater challenge comes to what kind of value can you provide for your dealers, and why they choose to cooperate with you? In traditional channels, Philips helps them to develop the terminals. At the very beginning of the process will be painful. In OES, we need to bring more projects to get added value.

Gasgoo.com: Lamp modification is quite popular nowadays, what’s your suggestion on modification for car owners?

Michael Zhuang: I guess “tuning” is more suitable instead of “ modification”. We can customize different products accordingly. On one hand, we suggest that customers use compliance products; On the other hand, we also advocate individuality, sending the sense of fashion to our customers, such as our new LED interior festoon lamp that matches personality of its car owner, to transform the mood impacted by the environment via the change of the light.

Gasgoo.com: We heard that the GoPure Automotive Clean Air System was developed and firstly launched in China. What are the concerns behind that?

Chi Keung Lau: China is now the No.1 car market in the world with strong growth trend, one the other hand, Chinese customers are paying more and more attention to the environment, especially to their family’s health. So we choose to lunch our GoPure Automotive Clean Air System firstly in China. This also follows Philip aim which is to improve people’s health and well-being through meaningful innovation.

GoPure is a unique automotive air purifier, has very efficient way to filter out the chemicals which is not healthy for people’s body in short time. Since people are spending more and more time in the car，they need a safer and healthier life not only at home, but also in their cars.

Gasgoo.com: Philips now sells automotive electronics besides auto lamps, how do you manage the distribution channel than before? What did you do internally to better adapt the new business?

Michael Zhuang: Firstly, we not only use the existing mature channels, but also use OES, which is such a closed environment and get feedback better. Secondly,, Philips is also trying to do new channels such as TV shopping and online shopping by our own internal resources. We are initiative to try something new, which we called “Embracing Changes”. No try, no success.

Chi Keung Lau: We live in a changing society. Ten years ago in China, who knows the online shopping? You see today, online shopping is very convenient. Philips has also continued to meet the new demands of consumers.