Slowdown of sales growth yet flourished development opportunities in the Chinese auto market

tesa (Shanghai) Trade Company, Ltd. Marketing Director Thomas Gassner

As one of the world’s leading producers of self-adhesive solutions for industry, trades, and consumers, tesa possesses more than 120 years of experience in coating technology. The company markets over 7,000 products and system solutions in over 100 countries around the world. tesa is one of the best-known consumer brands in Europe and a worldwide technology leader in the industrial field. tesafilm® is even listed in the authoritative Duden dictionary of the German language. In 1995, tesa expanded its company footprint in Chinese mainland. By 1999, it had not only established an independent enterprise in Shanghai, but also become a domestic market leader in many application fields. tesa currently possesses branch offices in Beijing, Tianjin, Guangzhou, Wuhan, Suzhou, Changchun, Chongqing, Shenzhen, Hong Kong and Taiwan. In order to have a better understanding of tesa's operation in Greater China and its business development in the future, Thomas Gassner, Marketing Director of tesa Greater China, has agreed to be interviewed by Gasgoo.com.

Gasgoo:Many believe that the current market for automotive in China is influenced by heavy competition, with domestic sales falling short of expectations and exports still very low. Do you agree with this perspective?

Thomas Gassner :Of course, competition in the Chinese Automotive Market is fierce similar like in many other markets or countries in the world. But the Chinese market dynamics still offer additional opportunities to companies willing to invest. We would not agree that the domestic automotive sales are falling short. We believe that a market growth of around 5% is more sustainable than the growth rates we saw in the past. Currently the International JVs are strong but we see mid- to long-term growth from the domestic OEMs as well. Exports are low due to current capacity constraints with JVs in Greater China. This picture could change dramatically after all planned investments in new productions lines have been realized and led to the challenging situation of over-capacity in China.

Gasgoo:Industrial adhesive products developed by tesa are widely used in the production of automotive, electronics, household appliances, smart cards and other fields. What portion of tesa's overall market operations does the automotive industry operations? What goals does tesa have for the automotive market over the next two years?

Thomas Gassner :Due to its global footprint, Automotive business is one of the biggest and most important market segments of tesa worldwide. Our Chinese operation is influenced mainly by the strong growth of the electronics market but we see also excellent chances to develop our Chinese Automotive business over-proportional in the next 2 years.

Gasgoo:According to reports, 79 percent of tesa's global profits come from industry purchases, while the remaining 21 percent come from customers in the aftermarket. As far as the automotive industry in China is concerned, what are tesa's primary customers? How have the company's profits been over the first half of the year?

Thomas Gassner :We don’t target every Automotive customer in China but have a strategic focus on global OEMs and OES. This makes sense as our global organizational set up matches very well with global players and their requirements. An additional approach in China is to bring the benefit of our global expertise to all successful local domestic OEMs. And by doing so, we achieved profitable growth in the first half of this year.

Gasgoo:Thanks to its high-quality products and comprehensive customer service, the value of tesa's products has been increasing globally. In regards to the automotive industry, what primary products do you supply for Chinese customers? When ensuring high product quality and supplying outstanding customer service, do you have any personal experiences or thoughts you would like to share?

Thomas Gassner :tesa offers a broad range of tape and process solutions within 4 different modules: Exterior, Interior, Body and Temporary Applications. Within these modules we cover applications like Attachment Part & Cable Mounting, Mirror Assembly, Hole Covering & Security Labeling, Permanent & Temporary Surface Protection or Design- & Paint-Masking.

We recognized in the last years that, beside a competitive price, factors like localization and reliable quality are getting more and more important for all OEMs in China. tesa is able to meet these requirements and is ready to serve more quality and brand focused customers.

Gasgoo:Following the establishment of the tesa Limited Company's Chinese headquarters in Shanghai, the company has since opened branches in Beijing, Tianjin, Guangzhou, Wuhan, Suzhou, Changchun, Chongqing, Shenzhen, Hong Kong and Taiwan. Which of these locations are primarily focused on the automotive industry and what is the state of tesa's operations in the country? What steps is the company taking to further develop its industry operations in the country?

Thomas Gassner :Currently we have branch offices with automotive business in Shanghai, Beijing, Wuhan, Guangzhou, Changchun and Chongqing. We are developing and producing tapes in our plant in Suzhou. With strong network of local partners we are able to fulfill all logistic requirements of our OEM and OES customers – now and in the future. We are planning to invest in additional production capacity and in local R&D and Sales Resources to be prepared for future challenges in the demanding China market.

Gasgoo:tesa first entered mainland China in 1995. What prospects do you have for the company's development in the country? In regards to the automotive industry, what prospects do you have?

Thomas Gassner :tesa Greater China has been very successful in the past and there is no reason for us to expect something different from our future. We have established stable business and good relationships with strong customers in all market segments that we are focusing. Additionally the China market will continue to offer the unique combination of an attractive market size with comparable high and stable growth rates. By taking this in consideration it is tesa’s strategic target to invest over-proportional in its China operation and in product solutions that fit the local requirements. We see a bright future for tesa’s overall industrial business in China based on continued strong growth in the automotive market.