Voith sees China as spur of its business

Updated: 2012-12-15 11:21

By Li Fangfang (China Daily)

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German technology supplier to invest 400m euros in 5 years

The German technology and industrial supplier Voith Group sees China as the main driver of its global business, according to its chief executive officer.

In its 2012 fiscal year, which ended on Sept 30, the group invested 110 million euros ($143.8 million) in the Chinese market, its largest single-country market outside Germany, almost half of its total investment of 272 million euros worldwide, said Hubert Lienhard, Voith president and CEO.

"We plan to invest 400 million euros in China in the five years from 2012," he added.

The investment includes an expansion project at its Paper City in Kunshan, Jiangsu province, one of Voith Paper's largest integrated manufacturing centers in the world.

"China is the core of our global investment activities. We will continue our investment in China and accelerate localization as part of our commitment to long-term development in the country," said Lienhard.

The company also said it received orders in China in 2012 valued at 769 million euros, an increase of 3.2 percent year-on- year, amid a difficult global economy.

"The performance ensures Voith stays on a long-term path for further growth in China, one of our key focuses and core of our expansion in Asia," said Lienhard.

Hit by a slowdown in some industries, especially China's slowing investment in high-speed railways following an accident in Wenzhou, Zhejiang province, in July last year in which 40 people died, Voith's sales in China in the past fiscal year fell to 825 million euros. However, global sales increased by 2 percent to 5.7 billion euros.

"We remain optimistic about the prospects for the Chinese economy in the years to come despite the market slowdown in 2012," said Lienhard.

During the fiscal year, Voith secured several landmark orders, further consolidating its leadership in many key industries, including an 87.5 million euro contract with State Grid Corp, the country's largest power supplier, to provide four pumped storage units to the Jiangxi Hongping Pumped Storage Power Plant.

Lienhard also said the Chinese government's increasing focus on renewable energy, public transport and sustainable paper-making technologies to help the country's economic transformation will present Voith with unprecedented business opportunities in coming years.

"Our technologies and portfolio are well aligned with the mega-trends and priorities in China's 12th Five-Year Plan (2011-15) and we are primed for future growth thanks to a well-established leadership position in key markets," he said.

The government stated in its 12th Five-Year Plan that for development of renewable energy it will add 61 million kilowatts of installed hydropower generation capacity by 2015, and renewable energy will account for more than 20 percent of the country's total electricity generation.

Voith sees potential for its hydropower business, which comprises about a quarter of the installed capacity in the sector in China.

"We also expect our railway- system business to recover, as China is planning to invest 600 billion yuan ($95 billion) in the rail system in 2013, with 60 percent going to high-speed rail," said Lienhard.

Although Voith's global paper business has been hit seriously by the worldwide slump in demand for graphic paper, including newsprint, the company saw an increase in the sector in China, with a rapidly growing appetite for packaging paper.

This sector's output in China is now the source of nearly 55 percent of the country's total paper demand, compared to 39 percent in 2002, according to the China Paper Association.

"More impressive, the growing trend for Chinese companies and multinationals in China to outsource their non-core businesses is also presenting Voith Industrial Services with an unprecedented opportunity," said Lienhard.

In the 2012 fiscal year, Voith Industrial Services sales recorded an increase of nearly 50 percent year-on-year in China.