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Stanley Chu (left) and Cui Xiaojun.
Stanley Chu (left) and Cui Xiaojun.

It has been almost a year since KraussMaffei Group, a leading plastics and rubber processing machinery manufacturer, was acquired by China National Chemical Corporation (ChemChina) from Onex Corporation ("Onex") for EUR925 million - by far the largest investment in Germany by Chinese companies in this industry.

An affiliated company of ChemChina, China National Chemical Equipment Corporation (CNCE), and KraussMaffei Group complement each other in product offering to target markets. They work together on various aspects, from market strategy to corporate organization and culture to capture a wider potential market.

So what has the synergy achieved over the past year? What are the hurdles and opportunities?

People

Stanley Chu: Chairman of Adsale Group, Honorary Life President of Hong Kong Exhibition and Convention Industry Association (HKECIA), Chair of UFI Asia/ Pacific Chapter.

Cui Xiaojun: CEO of KraussMaffei Group in China since last September, has been in the engineering field for more than 30 years, playing leadership role at global companies located in China and Singapore.

A win-win German - Chinese corporation

Stanley Chu: Every year before CHINAPLAS, we select one to two or maximum three prominent companies to do an in-depth interview because CHINAPLAS is such a big platform - so many people are coming and they always want to know about the moves of big companies. We are much honored to have the opportunity to meet you to talk about how the KraussMaffei Group is doing, especially after being taken over by ChemChina a year ago.

We know that many multinational companies see China as a big market. But often their corporate culture and way of doing business may not fit in well in the market, despite the desire of Chinese buyers to look for advanced technology.

So it is best to have a combination of the two - international technology and local customer service. It seems that you are putting on a very good formula. People are interested to see whether it would work and what the hurdles are along the way?

Cui Xiaojun: At the beginning, we did have a lot of excitements mixed with some uncertainties. But now, we know that those uncertainties are gone after one year working with our new owners. Our business in 2016 was very strong, a new record year in sales and order income for the KraussMaffei Group. We just expanded our production capabilities in Germany and Slovakia, offering more job opportunities for local people.

We know our new owners are planning for long-term strategy, and like you mentioned, Chinese companies are buying technologies. At the same time, ChemChina is also looking at KraussMaffei Group’s advanced management systems, which can help improving its current manufacturing businesses, including product design capability, quality control & improvement, international marketing and sales network and capability. We have a plan to develop some companies that are currently within ChemChina to the international market players with their well-recognized brands and products/solutions in the plastics and rubber machinery industry.

We have sent some of our German experts specializing in production management and quality management etc. to help improving the management of these factories within ChemChina, together, we aim to build up more 100-year-old lasting brands in global market.

Compared with the group’s previous owners, most of whom Private Equity companies, ChemChina is more of a strategic investor. And we believe the acquisition of KraussMaffei Group by ChemChina could be a model for the industry.

Stanley Chu: KraussMaffei Group will help ChemChina’s companies enter the international market. Would that also mean opening new factories in Europe?

Cui Xiaojun: We do not have the plan for the near future because current production bases are still able to manage the volume for domestic and global markets. Within the next years will utilize KraussMaffei Group’s global sales network and customer base to promote the Chinese products from ChemChina to the international market.

Stanley Chu: I see, and that is also what some other Chinese companies are doing. They are thinking about setting up new factories in Europe, as they believe this is the best way to learn the technology and to operate according to international standards. With KraussMaffei Group’s strong background as a German company, if ChemChina sets up new factories in Europe, the buyers will be confident that the technology offered keeps pace with advancement in the world.

So how do ChemChina and KraussMaffei Group - both giant companies - make good use of their combined advantages? And how do you differentiate yourself from your competitors?

Cui Xiaojun: Very good question. In general, two things are obvious. One is on the quality, Chinese producers, who used to produce products of lower-end quality, are catching up. The other aspect is cost, Chinese companies are doing very well in managing cost, we need to do a better job in managing our cost. It is certainly a challenge for us to maintain the technology and quality leadership, yet stay competitive.

As KraussMaffei Group was established in Germany, we know the developed markets such as Europe and the US. For China market and other developing countries, which have a huge potential, we are developing new products that are suitable for local customers’ needs. But that does not mean lower quality product. It is a product that is still carrying our three brand names - KraussMaffei, KraussMaffei Berstorff and Netstal - and it means that the product still has the same standard of quality. It is something “fit for the purpose”, less complex to meet more users’ needs. With that, we can maintain quality, reduce cost and be able to serve more customers in global markets.

Stanley Chu: Actually we share the same story. We started CHINAPLAS in 1983 as a local Chinese show. And then as the show grew to a certain stage, we reached a bottleneck. In 2005, we co-operated with the organizer of K fair, Messe Duesseldorf, and K became one of our joint-owners of CHINAPLAS.

In 2005, we have 77,000 square meters, and now 2017, we are reaching 250,000 square meters. We are not only covering the Chinese market, but the whole world. Some factories of the international companies are not only serving local Chinese market but also global supply chain. And some local Chinese manufacturers also want international customers. It is very difficult for us to get international customers to get into China to our fair if we don’t have a global branding. So K show is our passport. So wherever we go - the Turkey market, the Pacific market, the Middle East market - we can say “Ok”. I know the K fair for the past 15 years and CHINAPLAS is the Asian version of K fair, which gives us the support to match the international standards.

Next year, we are moving CHINAPLAS to the new fair ground, the National Exhibition and Convention Center (NECC) in Hongqiao in Shanghai. The targeted exhibition area is 300,000 square meters. Growing hand in hand with the Chinese plastics industry, CHINAPLAS has kept on expanding in recent years, we really ran out of space in Shanghai New International Exhibition Center (SNIEC).

Annual double-digit growth – Yes, we can!

Stanley Chu: So are there any new strategic goals in terms of market share or geographical coverage for KraussMaffei Group? What are the industries that you are focusing on? The automotive industry, building industry or E&E?

Cui Xiaojun: Yes, we still have some important goals for China. For China in the next three years, we target an annual double-digit growth, which covers all of the three brands - KraussMaffei (Injection molding, Reaction Process Machinery, Automation) Netstal (Injection molding) and KraussMaffei Berstorff (Extrusion). With some strategic investments, our headquarters will support us to realize these targets.

The local R & D - we call it “engineering application know-how” - is one of the core investments. At the same time, we’re also looking at different sales channels to expand our market coverage. After-sales support is certainly another key element. We are looking at further improving after-market services responses and more capable local technical people.

Our products/solutions could be applied to many different applications, we are doing very well in automotive industry, and we are expanding to other applications, such as, building industry, medical, food and non-food packaging, beverage packaging, logistics and E&E etc.

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