As manufacturers refocus on building market share in Asian markets – China in particular – Brian Heckler, Global Lead Partner for Johnson Controls and US National Sector Leader, Industrial Manufacturing, sat down with Kim Metcalf-Kupres, Vice President and Chief Marketing Officer at Johnson Controls to find out how that company is creating new opportunity in new markets.
Brian: What makes China such an important part of Johnson Controls’ growth strategy?
Kim: China really epitomizes the macro trends we are seeing around the world – growing urbanization, the rising consumer class and demographics that indicate growth. So both in terms of near-term growth and long-term strategic footprint for a global company, China is extremely important. That is why our investments into China have always been about supporting our Chinese customers rather than creating a base of export. What we produce in the region is intended to support the region.
Brian: What role have Joint Ventures and partnerships played in achieving your growth strategy in Asia?
Kim: One of the keys to our success in Asia has been the long-term relationships we have been able to develop with both our customers and our suppliers in the region. In some sectors – such as automotive – partnerships are the only real way to enter the market. But even in our battery and HVAC businesses, our preference is to partner with people because of the richness it brings into our business models and the access it provides to the markets we want to serve.
Brian: Last year, you launched a China-based joint venture with Yanfeng, creating the world’s largest automotive interiors business. Was that part of your market entry strategy?
Kim: The Joint Venture with Yanfeng was partly driven by the recognition that the automotive interiors sector was in a state of overcapacity. Rationalization was clearly needed and when we looked at the market we decided that it would not be a strategic focus for Johnson Controls going forward. So we were naturally looking for a partner or an acquirer. Yanfeng had been one of our key suppliers in China and we had a strong relationship. Yanfeng had been developing their capabilities for some time and so we recognized that – through a partnership with them – we could build the strongest interiors company in the world.
Brian: Do you see the potential for more Joint Ventures and investment into China?
Kim: Johnson Controls has gone through a tremendous amount of transformation over the past 2 years. We have become much more focused about the deliberate choices we make in our business portfolio and what we need to do to win in the businesses we do pursue. China is an incredibly important part of that strategy. I think no matter what manufacturing sector or business you are in, China needs to be part of your strategic roadmap. Whether or not you are investing in China, the reality is that you will certainly be competing with China.
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Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.