Bosch Plans Major Chinese Expansion

At the opening of a new development and manufacturing facility in Wuxi, China, Franz Fehrenbach, the Chairman of the Bosch Group Board of Management, announced intentions to significantly expand activities into the region.

The number of Bosch manufacturing facilities in the People’s Republic of China has doubled to 20 in the past five years. At the end of 2004, Bosch had invested some 550 million euros in the establishment and expansion of activities. The company now plans to invest a further 650 million euros during the next two years across the country. “Bosch has a strong focus on China. We see it as a core country for our business in the entire Asia-Pacific region” explained

The new Wuxi site covers 300,000 square metres and is situated 200 kilometres west of Shanghai. By 2007, Bosch will have invested 200 million euros into the facility for the production and development of advanced diesel systems.

The aim of the investment programme is to strengthen the company’s ongoing activities in China. “This year, the sales of our Chinese companies are likely to exceed 1.2 billion euros. Year on year, on a comparable basis, this means a 20 percent increase” Fehrenbach added. By 2007, Bosch intends to have more than doubled the sales from its companies in China to 2.5 billion euros. This also applies to its purchasing volume, which currently stands at 670 million euros. During the same period, the number of employees will rise from its current level of 14,000 to almost 18,000.

The Chinese market is seen as a key component in Bosch’s Asia-Pacific strategy. Over the past decade, sales in this market have increased fivefold, with expected sales this year amounting to 6 billion euros. Fehrenbach explained that the Asia-Pacific share of Bosch’s worldwide sales is currently 14 per cent, which is expected to rise to 25 per cent in 10 years’ time. This will be achieved through activities including the investment of 100 million euros in the production of common rail diesel systems in India by 2007 and a further 100 million euros on new diesel technology products in South Korea by 2010.

Bosch automotive technology is now present at three engineering centres in China – in Shanghai, Suzhou and Wuxi – and has a comprehensive marketing and aftersales network, with eight sales branches and over 430 car service workshops. Fehrenbach explained that he expects the Chinese market to continue to grow in the ranks of car producing nations, overtaking Japan and Germany to occupy second place behind the US in just six years. Bosch intends to share in the rapid growth of Chinese manufacturers who will also be playing a greater role in international markets in years to come. “We want to accompany China’s development with technology ‘invented for life’, to quote our company slogan. Our innovation policy is geared to conserving resources and to protecting the environment, and thus matches the declared aims of the Chinese environmental protection agency.”

Fehrenbach believes there is strong potential for the introduction of state-of-the-art diesel systems in China. The low consumption and positive eco-balance of the ‘clean diesel’ make it a strong product for the market. “In Western Europe, every second new car is a diesel, while in China this share is currently very low. In the next 10 years however, it may increase to some 15 per cent.” By increasing its diesel share, China’s dependence on imports of crude oil could be significantly reduced, and carbon dioxide emissions could be lowered. This would, in-turn, bring the country closer to achieving the targets set out in the Kyoto Protocol.

Bosch also expects to see significant growth in fitment rates of the active safety system ESP (Electronic Stability Program) in China. In 2004, only two per cent of all newly manufactured cars in China were fitted with the system, but it is predicted that this figure will increase to as much as 10 per cent by 2009 following an increased demand for safety. Currently, the number of road deaths in China is double that of Europe, despite significantly lower traffic density.

Through diesel systems and systems such as ESP, Bosch aims to bring about significant improvement in environmental protection and accident prevention across China.