Multinational companies that set up in China often have two apparently contradictory expectations of their ventures: to localize and tap the vast Chinese market, and yet to receive the same standard of support and service as they would in their home countries.
That can be a dauntingly tall order in the hugely demanding and highly technical equipment-manufacturing sector, which has brought industry leaders such as Bosch Rexroth from Germany and SMC from Japan to Beijing ETOWN.
But the effective union of multinationals and a tailor-made industrial zone in Beijing ETOWN has proved a remarkably successful one, with some 80 companies involved in 18 different sectors of industry now operating in the equipment-manufacturing zone.
Access to a broad pool of engineering talent from Beijing’s universities and colleges combined with first-class infrastructure and administrative support from the local government has helped scores of multinational companies become quickly established.
Once they have their foothold in Beijing ETOWN, the benefits of having a base in the Chinese capital and being in a position to produce tailor-made equipment-manufacturing goods for the vast Chinese market are quick to make themselves felt.
Mutual benefits
The strategic thinking behind the equipment-manufacturing area, according to Beijing ETOWN, is to provide big project support and to keep the industries in a cluster where they receive consistently strong supporting services. Among the multinationals drawn to ETOWN by that approach are Schneider, ABB, and Bluestar (Beijing) Chemical Machinery.
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One of the earliest of the foreign enterprises to set up in Beijing ETOWN, also known as the Beijing Economic and Technological Development Area (BDA), was the pneumatic machine manufacturer SMC Corporation from Japan.
SMC, which began operations in Japan in 1959, set up its first plant in the BDA in 1994 and has since set up a second plant in the zone, as well as other factories in China, aiming to produce for export and to expand its presence in the Chinese market.
In an article in the China Daily newspaper, Sekiya Fumitada, vice-general manager of SMC described Beijing ETOWN as a “fortuitous choice” and explained how the decision to set up there had only come after a considerable period of research.
“The company chose to base itself in Beijing for a number of reasons,” he said. “One of the key reasons was that Beijing, as the academic, cultural and political centre of China, had access to a huge array of talented prospective employees. Furthermore, both the development opportunities and the infrastructure offered by BDA exceeded our expectations.”
Cutting edge
The first plant for the new company, called SMC China Co Ltd, was completed in 1996 and within a year its capability was upgraded with the introduction of what was then the most advanced technological machinery available on the market.
By 1997, SMC’s made-in-China products were being exported to overseas markets for the first time and were so successful that the company quickly planned and put into operation further Chinese factories.
By 2014, with more than 5,000 employees in China, SMC’s China facilities were 35 times larger than they were in 1997 and its sales volumes had risen 42-fold in the previous 12 years, according to Fumitada.
The company’s aim, he said, was to continue its capital investment programme with China as the leading production base in its worldwide strategy. By introducing advanced production machinery, the company had increased its competitive edge over rival companies, he said.
Fumitada said he had seen immense changes in the time he had spent in Beijing. “I have witnessed the dramatic changes China has gone through in terms of industrial commercial systems as well as its environmental development,” he told the newspaper.
“SMC will continue to aspire to a brighter future alongside the ongoing development of BDG. SMC have written several glorious chapters together,” he added, concluding:: “Putting it briefly, SMC’s success today is directly due to BDA’s support.”
Importing expertise
By providing a base for some of the world’s leading manufacturers, Beijing ETOWN is bringing powerful reciprocal benefits for the Chinese manufacturing sector as well, luring some of the newest technology and global experts to the country.
One of the biggest names in the equipment-manufacturing sector in Beijing ETOWN is the German company Bosch Rexroth, which sees its highly successful operation there as a key part of its global strategy.
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“The government gives us a lot of support. There is funding available for training both in engineering and in shop-floor labour” |
With a 200-year history from its global headquarters near Stuttgart, Germany, Bosch Rexroth (Beijing) Co Ltd says on its website it is making contributions to “the vigorous development of China’s manufacturing industry”.
It is a symbiotic relationship, with Bosch Rexroth saying it specifically tailors products and solutions aimed at Chinese customers and seeks at the same time to help China become one of the world’s most advanced manufacturers.
Bosch Rexroth first set up an office in the Far East in Hong Kong in 1978 and its China operations now produce hydraulic components and systems, gearboxes for wind turbines and frequency converters.
Manfred Grundke, president of Bosch Rexroth, says of the Beijing ETOWN operation: “We will make full use of these new facilities and take advantage of BDA to strengthen our participation in the fast-growing Chinese market while supporting Bosch Rexroth’s global development.”
Quality labour
Equipment manufacturing is becoming increasingly hi-tech but still relies on labour and one of the issues facing manufacturers in ETOWN and elsewhere is being assured of a supply of quality labour.
The manager of one major manufacturing plant says that keeping the shop floor fully staffed is a challenge for companies in ETOWN and elsewhere. “The living costs in Beijing are not cheap and the inflation rate is a little high, so direct labour is an issue,” he says.
“Retaining shop-floor people is sometimes a challenge. But this is an area where the government gives us a lot of support. There is funding available for training both in engineering and in shop-floor labour.”
That constant and wide-ranging support from the Beijing ETOWN administration is clearly one of the most important aspects of doing business in the zone for many of the companies there.
“The infrastructure is good, the local government is very efficient and they offer us a lot of help,” says the regional manager of a multinational company in ETOWN. “They help us solve problems that enterprise companies cannot solve by themselves. In fact the local government is one of the most important factors in attracting business here. They do an outstanding job and they are always there to help.”