Capturing the Opportunities in China

GAS: Rick Wagoner, the President of GM visiting Shanghai said that Asia, especially China and Indian have advantages in produce the mini-size vehicles. He also mentioned that the demand of mini-size vehicles are being expanded in American market but the cost of making them is not the lowest. Does it mean more US corporation will transfer to make the mini-size vehicle in China? How do you think of the newly brought opportunities in China market?

MARK HOGAN: China auto market with its consumer seeking for a mid or low performance made it a fact to scale-up the production of mini-size vehicles. As the growing of investment in China mini-size market by our global clients, we are enhancing our production capacity. Since we are the supplier, we will meet the client's demand, from North America, Europe, Asia, Japan and South Korea. We are going to support them wherever they make their mini-size vehicles, in North America or China.

GAS: Now there are some Chinese companies sold their vehicles to the Europe or America market, though it's a small scale, it showed Chinese enterprises willingness to enter the Europe and America market. Their products may not suit European for they are unfamiliar with the market there. As a company owned its own auto engineering model, are there businesses for Magna?

MARK HOGAN: The vehicles produced by Chinese company could be consumed yet in its domestic market. There are but a few for export. I believe we are capable to help them when they want to enter these mature markets.

GAS: Li Shufu, the President of GEELY said that they will build a Europe & America auto park in China in the near future, of which the products are oriented at Europe & America market and they employed a famous engineer worked for Chrysler. Self brands are enthusiastic in entering American and European market. So, how do you make the business plan for Steyr?

MARK HOGAN: Now both GEELY and CHERY are intending to export vehicles and rather ambitious. I think they will win out but it is unknown how long it will take since it is not very easy for them to know and to enter the Europe & America market. Steyr focuses on the final assembly for auto makers, meanwhile undertakes some engineering design work. We are entrusted to develop modularization for some models of auto makers, then as an OEM to process some models. Most of the models we do are in relatively small scale. They entrusted us in the consideration of cost reduction.

Currently Magna Steyr works for Chrysler, BMW, and total four clients with an annual output of near 0.2m.

Steyr also have its local clients in China and presented a growing business. Magna Steyr is helpful for Chinese enterprises in the final assembly and engineering R&D since they have great deal of experiences on this. They have a range of experience in this area from R & D to production, all the way to final delivery to consumers. If customers have a demand, Steyr still will be helpful.

Though we have the ability to manufacture the whole vehicle, we merely plan to run a brand. With our experiences, it is rather risky. We intent to advance our clients, never seek to become the rivals but a companion.

GAS: Some local manufacturers in China are regulating their strategies to produce some specially aiming at the Europe & America market with a high attention to the security and environment protection. How do you think of the main difficulties they would face when they start to enter the Europe & America market.

MARK HOGAN: GEELY and CHERY are very young company in China that just have developed for several years. If they want to compete with the companies that have developed for 50 years in Europe and America market, first they should get technically matured gradually, besides, reform the structure systematically.

GAS: From the recent 10 years performance, magna made an annual 20% growth in sale in average. As the most important auto components maker in the world, how can magna keep such a wonderful growth, and what makes its main power to compete and survive in a market?

MARK HOGAN: Delphi and Wisteon have a strategic relationship with their parent company GM and Ford; they have some agreement such as a high salary for their employees, which makes a higher cost for production, which resulted in the problems today. Besides, their businesses are limited in North America market. The reason for Magma’s success is lying on our structure, a decentralized structure; we also have no intention to rely on North American clients, we not only focus on our diversified customer in North America, Europe, and now emerging market, just like Asia and China.

GAS: Magma’s businesses are well developed in China and have made a rapid development, but its fame does not match its actual competence. It is a fact that magna is less known in China. Now some competitors like Delphi has moved their headquarters into shanghai. For Magna, what would the future position for Chinese market like to be, will it make a big change?

MARK HOGAN: China is one of the most important markets in Asia. Not only have we many factories, but also are quite powerful in R&D here. We will continue to develop in China to enhance our integrated competitive strength in Asia.

GAS: Magna have 19 entities in China at present, will it establish new factories in the coming years, and would it be fast?

MARK HOGAN: Yes, we will establish some new factories in China. what impressed me the most is that Chinese market definitely is an increasingly advancing one, we are quite glad to have the chance to develop our business in China, trying to capture it.