HARMAN：Consumers Tend to High Quality of Sound

An exclusive interview with David Karch，Executive Vice President Operation Excellence, Head of Automotive Asia.

Gasgoo.com： Harman provides branded Audio Solutions for the electric car, launched by the joint venture of BYD and Daimler, which means that Harman has entered the field of new energy vehicles. What are the considerations for that?

David Karch：Harman has a product that allows us to achieve equal audio performance while reducing the power consumption of the product significantly. It is a more expensive product using different materials designed creatively. Essentially for the EVs, the key point is the range of the vehicle, how far it can go, and we can help them with solutions that give them the ability to allow the car to travel further while not consuming so much power. That’s the primary consideration. The other thing is engine noise. we have a patent called HALO sonic External Electronic Sound Synthesis. Since the EVs don’t make noise, people don’t know the vehicle is coming when they are near it or walking on the street. Especially for the young children who can’t tell where the sound comes from. we have to make sure that we give them solutions that you can generate the noise—making sound like anything you want that allow the people to recognize the vehicle is coming. For example, when the heavy construction equipment goes to reverse, it goes with the sound to indicate people around to notice it. What we do is to make vehicle sounds familiar with engine noise.

Gasgoo.com：What do you think of the development of Chinese EVs?

David Karch：The Chinese government is a big support for EVs, especially with the incentive financial support. I predict that within the next 5 years, maybe 30-40%of vehicles on the road would be Evs in Shanghai.

Gasgoo.com：Harman has always collaborated with the high-end brands. When you started collaboration with the Chinese local brands, such as BYD, Geely, what are the opportunities and challenges respectively?

David Karch：As we have worked with all the high-end customers around the world, they recognized that brand can help them enhance the driving experience of the vehicle. The customers drive a vehicle for the enjoyment of it but also for the pleasure the vehicle can give them in terms of the environment concrete. you think about driving on a highway or in the city, you can isolate yourself from those city sounds.

As the Chinese local brands try to move up the value chain, they are recognizing that the high-end vehicles targeting to compete with all must have brand audio solutions. As the Chinese local manufacturers move to C and D segment, they ask for more convenience and comfort features which we can bring to the audio significantly. Besides, We also tell our local-brand clients how to identify and appreciate the sound quality.

Gasgoo.com：During the next 5 years, what are your market strategies for branding?

David Karch：We have a number of major brands, such as AKG, harman/kardon, Infinity, JBL, Lexicon and Mark Levinson. Earphone would be one of our key products for branding promotion. We also teach students to appreciate music in a different way in universities, to tell them how Harman can help them appreciate the sound and learn about music. Besides, what we do about marketing activities is designing headphones with some artists, and in America we have done this with Quincy Jones, who got 26 Grammy Award as the most recognized music producer in the music history. We actually came out with the series of headphones called Quincy Jones.Also,we are sponsoring the Miss Universe China Pageant in Beijing on July 10th. We have sponsored the Miss Universe China Competition, and Harman Kardon will serve the event with not only the "beautiful voice", but also its eye-catching appearance and design. We hope the beauties also be stylish on the stage.

Gasgoo.com：Top quality and energy saving often seem as a contradiction. How to keep balance between them? Have you taken particular measures in R&D?

David Karch：It is always a challenge to come up with the innovative solutions, and market turns to drive our innovations. We develop environment-protecting solution of audio and entertainment systems according to the market demand In my opinion ,there may be more competition between system cost and energy saving than top quality and energy saving. The large investment initially is to achieve the lower continuous cost. It’s more related to cost, not quality, coming up with more energy efficiency solutions, typically involved a lot more research. It’s not as universally adopted technology and turns to be more expensive to implement. As the economic scale grows, obviously the cost will come down. We can’t sell our products at the level that not reliable, and quality has to be there. You must have very fast response to the market because it is so competitive.

Gasgoo.com：As consumers are asking for higher performance and continuous innovations, in your opinion, what kind of car audio will win the consumers’ heart over the next 10 years?

David Karch：People use technology to win portability of their music. When people use MP3 or compressed file formats to reproduce their sound, audio performance downgrades. I think over the next 10 years, there will be a push to the quality of sound. When you have a CD in the car, it produces much higher quality sound than the MP 3 does. When people connect their phone in the car to play MP3 through the car audio system, we develop a technology: reproducing the sound with stereo effectively And to make people get more clear and perfect music.

Gasgoo.com：Harman is the only company that won Grammy Awards and Oscar Technology Awards twice, and also the audio supplier for Beijing Olympic Games，2010 Shanghai World Expo and the World Cup. Behind all those achievements, what are your competitive advantages?

David Karch：The biggest advantage that Harman won awards is the uncompromising quality. Our goal is no failures. When the professional musicians use our products to have a perforce for an event, we don’t want any failures. So our performance and quality should be absolute top. We can provide the entire system for performance, while most companies sell only components, and someone else needs to do integration. We train our dealers to fit our products together. We also have a product called EV line that allows us to connect our products. When you connect one product to another, it recognizes what product you just connect to, which can help you to be very effective system integrator. We have control room in stadium so you can actually monitor any speaker. If you know you have particular area of the stadium, such as a group of college students there making noise, you can make sound in that area much louder so that the people seat there could hear it, which shows very good control for entire system.

Gasgoo.com：Can you describe your competitive advantages with 3 phrases?

David Karch：The 3 phrases of our competitive advantages should be system integration, innovative& technologies, and brands.

Gasgoo.com：Harman took three years to make China market sales go up from $ 15 million to $ 200 million. In order to achieve the goal of $1 billion in 2015, what actions will be taken to expand your market share?

David Karch：We look to acquire technologies in the market that we don’t have. The option of our products by the local consumers will be much more than before. Chinese market is growing quickly, and our sales here grows. We are going to market our products differently and make them more successful, and we decided to make a commitment in Chinese market with our resources. We are designing products here nowadays while we manufactured product here and shipped it overseas in the past. Our ability could be much more responsive to the customers we serve, not the end consumers, but the OEMs. We are becoming fully capable and functional in China with our engineering and sales resources. Besides, We also look to our consumers who went to tier 2 and tire 3 cities, improving our distribution in those cities with consumer products. The infrastructure of tier 2 and tire 3 cities is our opportunity, such as small stadiums, railway stations and airports. We can provide a full range sound system for the airport for flight information and airport radio announcement.

Gasgoo.com： Will you still regard the auto market sales as Harman’s largest growing part?

David Karch：The current distribution of the company for automotive is 70% for sale. Look at the major markets that we serve, and that’s our market share compare to the total market shares. We think China will follow the same way. We will maintain the same distribution of overall sales for the whole company.

Gasgoo.com：As for the car audio, is there any special characters or demands for Chinese OEMs?

David Karch：Chinese auto makers place more emphasis on cost, they will weigh the relationship between performance and price. But some manufacturers also have special requirements, such as the 19 loudspeakers placed in the car, and this part will be paid by the end consumers.