Continental AG prioritizes China in business strategy

German technology company Continental AG expects China to account for a larger size of its global business over the next few years, according to its top executive.

"We clearly believe in the Chinese market and the strength of the Chinese economy," said Nikolai Setzer in an interview with China Daily on Tuesday.

China's GDP grew 18.3 percent year-on-year in the first quarter this year, which was the strongest since China began records in 1992, said the National Bureau of Statistics last week.

The big jump reflects the deep slump in activity in the same period last year. But economists said it keeps China on track for growth of between 8-9 percent in 2021, better the Chinese government's official target of more than 6 percent.

Last year, Europe remained Continental's largest sales region. It accounted for 48 percent of its global sales totaling 37.7 billion euros ($45.41 billion), followed by North America, which generated 25 percent of the global total, and Asia at 24 percent.

"But we clearly see in the long term that China is one of the strong growth engines in the globe for the automotive industry, for our rubber business, where we are growing as well," Setzer added.

The company, which is celebrating its 150th anniversary, started its business in China in 1994.

It serves all major carmakers across all segments and produces materials, functional parts, components and systems for the railway, machinery, mining and other industries.

It now has 28 production locations and 18 research and development facilities in the country. It also offers solutions specific to China, which has been the world's largest vehicle market since 2009.

"Obviously, China is of the utmost importance for us. Not only on the automotive side, but as well due to the rubber business opportunities, which are there. So, a substantial part of our global investments are going, basically, automatically into China," said Setzer.

He added that new technologies, including connectivity, autonomous mobility and electrification, are developing at a tremendous speed. Continental is increasing its investment in local research and development to meet the demand in the local market.

"Chinese consumers are very swift in accepting new trends. The same holds true for Chinese OEMs (original equipment manufacturers). They are very curious about what happens outside, very fast in taking decisions and very fast in following trends.

"The OEMs know very well what the consumer needs and they drive in going forward toward those needs. And so, we're acting to support that, we have all the solutions to offer, and we are with Chinese OEMs in constant exchanges in order to swiftly change and apply and bring new technologies," Setzer said.

On Tuesday, Continental said it will provide a range of innovative products and solutions for the Xing Yue SUV by Geely, the owner of Swedish brand Volvo.

Continental's Full Digital Cluster Silverbox, which was first tested in China, is transforming the design of the vehicle's cockpit with a first-of-its-kind solution. It separates the computing unit from the display, making the cockpit design more flexible.

It also provides an online upgrade service for the model and supports function expansion, enabling innovative functions of multiple displays in one Silverbox.

In addition, Continental also provides a Telematics and Connectivity Antenna Module to enable seamless connectivity as well as data upload services for the Xing Yue.

Its intelligent battery sensors reduce carbon dioxide emissions and increase the vehicle's driving range. Moreover, Continental's brake hoses serve as a safety guard.

Continental said all major trends in the automotive industry, including smart and autonomous mobility and software-defined vehicles, require two decisive pillars.

That is a reliable, high-speed and ultra-low-latency connectivity to the outside world, as well as a high-performance computing unit to process all the data coming in.

Setzer said the company is scaling up research and development in China, adding that they are "local for local" at the first place. But they are expected to develop technologies that can be used anywhere in the world.

"New technologies are coming there, with lots of them coming even first in China, due to consumer interests. They're supposed to get global and use them as platforms in other areas," he said.

Globally, Setzer said the company's top priorities this year are its operational excellence and executing its strategies.

He said there are lots of areas where the COVID-19 pandemic is continuing, so Continental has to work together with partners, customers and suppliers on keeping supply chains going, and keeping operations running to work on the company's efficiency and effectiveness.

"Executing the strategy of growth and value－where growth means keeping operation and technology investments going forward－is crucial," Setzer said.