Faurecia: International Auto parts Leader with Strong Localization in China

Exclusive interview with Jean-Michel Vallin,President of Faurecia (China) Holding Co., Ltd.

On July 15, Jean-Michel Vallin, President of Faurecia China accepted an exclusive interview with Gasgoo.com, regarding Faurecia’s development plans in China, career training for its staff and other issues.

Gasgoo.com: Sales for Faurecia China have increased rapidly, but still only account for less than 10 percent of the group's total sales. What are your investment and R&D plans for the next five years?

Jean-Michel Vallin: In the next five years we want to achieve a sales total of 2.5 billion Euros, compared to 1 billion last year. We also plan to double the size of our industrial network from 25 plants to 50. From north to south, east to west, we will continuously develop new business districts.

As well as manufacturing capabilities, R&D capabilities are also very important for our company. We are proud to have R&D centers in China for all of our activities, as this makes us fully autonomous in terms of development. In April we celebrated the grand opening of our new tech center for emission control technologies. In addition, we have started construction of a tech center in Minhang district of Shanghai for seating, interiors and exteriors and other activities, and we will transfer all people and testing capabilities by the end of 2012.

From now to 2015, we will double our R&D capabilities. It is important to note that in China, there is a rapidly growing number of cars, and extremely diverse customers. In order to adapt to the Chinese market, we are making increasing investment into R&D, but I think this is very worthwhile.

Gasgoo.com: Are your main partners joint venture companies? What about your cooperation with local brands?

Jean-Michel Vallin: In the past, we mainly cooperated with Western or Japanese OEMs. This is still our core approach and brings in our main customers, but we are now paying great attention to building up a good relationship with Chinese OEMs. One of the advantages of Faurecia is that our production bases are widely distributed across each area of China.

Gasgoo.com: Just now you mentioned that Faurecia has established production bases in the central and western regions of China. What was the strategic thinking behind this? What do you think of the potential of these regions in China?

Jean-Michel Vallin: Faurecia’s strategy is to closely follow our customers; expanding where they expand. For example, Geely and Volvo moved to Chengdu, so we went there as well. We also followed Geely to Lanzhou. Generally speaking, many of our customers are increasing their investment in the central and western regions of China, so we are also entering these regions to build new bases. Most recently, we announced plans for three new plants in Foshan, with our partner Xuyang Group, to support FAW-VW’s development in this new region.

From the point of view of China’s development, the Chinese government is pushing to develop out from eastern and southern regions towards the west of the country. So, our expansion into these regions is also a strategic move that supports the aims of the Chinese government, and we are pleased to be contributing to the industrialization of these areas. Cities in central and western China are very important and we believe they have a very bright future in terms of the automotive industry.

Gasgoo.com: What do you think of the special demands of Chinese OEMs during your cooperation?

Jean-Michel Vallin: The Chinese market is not the same as the Indian market. The Chinese market is developing not only in size and volumes, but also in quality. We have found that Chinese OEMs are expecting increasingly high quality products. One of the reasons we developed our partnership with Geely is because they were looking for additional technology to improve safety and lightweight properties of automobiles, and we are able to bring this to their cars.

Faurecia’s goal is to find ways of making conventional engines more efficient and make vehicles lighter, which are effective ways of reducing carbon emissions. We have been developing products that can reduce the weight of cars for many years. This is also something our Chinese customers have come to expect from Faurecia.

Gasgoo.com: Geely seems to be a very good partner for Faurecia.

Jean-Michel Vallin: Definitely! Chinese OEMs are growing, as is their global market share. Geely’s acquisition of Volvo was a very impressive event. As we were a significant supplier of Volvo, it was a natural move for us to provide our services to Geely. Of course, we do not plan to work only with Geely. We also have some relationship with Chery and BYD, as well as working with self-owned brands from joint ventures.

Gasgoo.com: Safety and high quality are very important for your customers. How does Faurecia effectively control costs while still meeting these requirements?

Jean-Michel Vallin: Firstly, there is procurement of raw materials; 80 to 85 percent of Faurecia’s procurement is local, which gives us local cost competitiveness. Secondly, all management teams at our plants are local Chinese. What’s more, during our development, we purchased machines and tools step-by-step from China and then shipped to our other plants worldwide. These three aspects have all helped to make us as cost competitive as other Chinese companies. In other words, Faurecia considers itself as Chinese in China.

Gasgoo.com: Just now, you said that Faurecia has a strong localized team, how do you attract and train talent?

Jean-Michel Vallin: As a foreign-funded enterprise in China, I think it is very important for us to build a strong local team. First of all, Faurecia is very keen on employee empowerment, which allows our people to be autonomous. We give them a very clear role and responsibility, and then give them a large space to plan the work for themselves. But of course, if they need any support, they will get it.

Second is transparency, this ensures that there are no problems with communication, and any argument can be dealt with clearly in a short time. Respect is also a very important part of that. We all work following the Chinese tradition of harmony, and always listen to the suggestions of our people and solve their problems in time.

In short, Faurecia pays a great amount of attention to the training and career development of our staff; we make people feel respected and empowered rather than using the traditional imperative management method, so that they can enjoy working here.

Gasgoo.com: As the leader of a world-class auto parts company in China, what changes do you believe will occur in China’s automotive industry in the next five years?

Jean-Michel Vallin: I believe the market will move from the eastern and southern areas to the central and western regions. We have already seen evidence of this trend and we have already started raising funds for new market development and investment.

In addition, at present there is still a gap between China and other developed countries in terms of safety and emission control technology, but I think this will soon change. It shows that the Chinese market is becoming mature. Bringing more and more innovation to China is part of Faurecia’s commitment.