Company looks at expanding in Chinese market and beyond

Klaus Deller, chairman of the executive board at Knorr-Bremse AG, talked with China Daily on the company's development in China as well as the rest of the world.

How has the global development of your company's rail vehicle and commercial vehicle division progressed in recent years?

In its 110th year, Knorr-Bremse again posted record sales and earnings. In fiscal 2015, the world's leading manufacturer of braking systems for rail and commercial vehicles saw sales increase 12 percent to 5.83 billion euros ($6.62 billion). Incoming orders were valued at 5.67 billion euros, up 3 percent from the previous year.

The global economy showed moderate growth in the year under review. The economic recovery in industrialized nations contrasted with falling growth rates in developing and emerging economies. The global market environment for rail vehicles remained stable compared to the previous year. The global commercial vehicle market showed a further downturn in 2015. Increasing truck outputs in Western Europe, North America and Japan contrasted with declining production in China and Brazil.

How do you feel about your company's business overall?

Thanks to our innovative capabilities and a clear focus on creating genuine added value for vehicle manufacturers and operators, we have again extended our lead in the global rail and commercial vehicle industries, attaining new record levels in all the relevant indicators, including quality, on-time delivery, and customer satisfaction. As a result, last year we posted double-digit growth in both sales and earnings.

How is the current market environment in China? How is your company's business in the Chinese market?

In the Asia/Australia region, sales rose 12.1 percent in 2015 to 1.78 billion euros. The rail vehicle markets in the region were dominated by demand from the high-speed sector in China. Knorr-Bremse supplied braking equipment for 521 high-speed trains in 2015, as well as a proportion of the entrance and heating, ventilating, and air conditioning systems, to a total value of more than 500 million euros.

Knorr-Bremse also benefited from the expansion of the local mass transit infrastructure, where the company was able to secure new orders to supply equipment for metro cars and light rail vehicles. To further reinforce its strong market position in China, last year Knorr-Bremse expanded its plant in Suzhou and concluded a joint venture agreement with partner company Guotong.

How is the operation of Knorr-Bremse's joint ventures in China? Do you have plans to expand or establish more joint ventures in the near future?

Knorr-Bremse has been proactively implementing its localization policy ranging from personnel training to a wide degree of local production. We have operated 14 production plants in China, including group divisions and two joint ventures for train doors and train HVACs - one in Qingdao and another in Wuxi - for 10 years. We expanded our plant in Suzhou last year and will have an opening ceremony in June. Knorr-Bremse Rail's latest joint venture with Guotong began construction in late 2015, which will produce braking, door and HVAC systems for commuter and intercity trains. It will also act as a regional service and maintenance hub for South China, with a plant, which is located in the Guangdong Railway Industrial Park, due to go into operation in 2017.

What will be the highlight of your future strategies for the Chinese market?

There is no doubt that Knorr-Bremse has a very strong position in the sector of onboard systems for rolling stock. We are well-prepared and have taken the right decisions, some of them a decade ago. We are still developing in new fields, such as auxiliary power converters.

Of course, we have also put in place the means to keep our technological leadership on the market. We should continuously improve and have the ambition to always better serve our customers.

We will go on developing rail services beyond the "traditional" spares business: training for customers, maintenance and modernization.

Company profile

Knorr-Bremse is one of the world's leading manufacturer of braking systems for rail and commercial vehicles, with sales totaling almost 6 billion euros in 2015. In 30 countries, some 25,000 employees develop, manufacture, and service braking, entrance, control, and energy supply systems, HVAC and driver assistance systems, as well as powertrain and transmission control solutions.

(China Daily 06/13/2016 page6)