SHANGHAI – Chinese independent brand OEM customers accounted for more than half of Bosch’s Mobility Solutions business sector revenues in China last year, with the other half coming from joint ventures of multinational OEMs such as Volkswagen and GM, according to Dr. Chen Yudong, president of Bosch (China) Investment Co., Ltd.
Dr. Chen made the comments at Bosch China’s Annual Press Conference 2019 held at its Shanghai headquarters on May 15.
Despite the difficult market conditions, sales in the Mobility Solutions business sector achieved a year-on-year growth of 2.9 percent in 2018 to ¥81.7 billion, once again outperforming the overall market and accounting for about 22.5 percent of the sector’s global sales revenues of €47.6 billion. It also accounted for about 72.6 percent of the overall sales revenues of ¥112.6 billion in China achieved by the global supplier of technology and services, which increased nearly 2.5 percent and contributed about 18 percent to Bosch Group’s global sales revenues of €78.5 billion.
“We have grown in China over the years along with traditional local OEMs as well as Chinese smart EV startups,” said Dr. Chen. These companies combined accounted for almost ¥41 billion in revenues in Bosch China’s automotive technology related business, based on the 50 percent share that Dr. Chen mentioned.
Several dozens of Chinese smart EV startups led by NIO, WM Motor, Xpeng Motors, Byton and CHJ Automotive are already customers, according to Dr. Chen, but their business only accounts for several hundreds of millions of RMB, infinitesimal compared to the ¥81.7 billion in the Mobility Solutions sector.
Still, Bosch has actively embraced these startups to help them grow.
“I hope they succeed,” said Dr. Chen. “Their entry will help transform the structure of the Chinese auto industry, which will grow more healthily and competitively.”
Dr. Chen warned however that each Chinese smart EV startup is facing unique problems.
“Their challenge is not on time delivery of cars, but rather consistent delivery of cars long into the future,” Dr. Chen told CBU/CAR in an interview. “I hope they respect the traditional players. Traditional players shouldn’t underestimate the challenges from the startups but in turn the startups shouldn’t underestimate the power of traditional players.”
Dr. Chen suggested that the survival of the Chinese smart EV startups depends on two things: first, they must have highly attractive products and second, they must find ways to become profitable.
“After all, long-term survival requires positive cash flow. That is the responsible way for employees, suppliers and end users. Relying on investor money won’t get you far,” he said.
Regardless, Bosch will continue to deepen local strategic cooperation through co-innovation, according to Dr. Chen.
There is a long list of such local-for-local collaborations. On May 13, Bosch signed a strategic partnership agreement with FAW Jiefang to work jointly on key initiatives in domains such as connectivity solutions, new energy vehicles, powertrains and L2 Advanced Driving Assistant System (ADAS). In a key step expanding the scalability of future connected service development in the Chinese market, Bosch FOTA (Firmware Over-The-Air) will be installed in FAW Jiefang’s medium and heavy-duty trucks, with production at scale expected later this year. In addition, close to 40 models of local auto brands will be equipped with Bosch’s ADAS in 2019. Compared to 2017, Bosch’s ADAS business in China saw 30 percent growth year on year in 2018. In terms of connected industry, Bosch has implemented the leading Industry 4.0 solutions in its more than 25 plants in China, and set up I4.0 innovation centers to share the latest technologies and best practices with local companies.
“Our co-innovation in China will also further boost the implementation of Bosch’s IoT strategy in China. By tapping Bosch’s domain leadership in IoT, we hope to support the high-quality growth of related industries in China,” said Dr. Chen. “Bosch is committed to shaping a connected ecosystem in China focusing on local R&D capability and innovative talents in China.”
Last year alone, Bosch invested ¥7.8 billion in China, up nearly 22 percent from 2017. Over the past 10 years, the company has invested more than ¥45 billion in China.
“Bosch’s sustainable development in China is based on our ‘local for local’ strategy, our insights into new market growth areas and our successful efforts in leveraging these opportunities,” said Peter Tyroller, member of the board of management of Robert Bosch GmbH responsible for Asia Pacific.
For mobility of the future, Bosch has identified automated driving, new energy vehicles, and connected mobility as its priorities. Through continuous investments, Bosch successfully continued to put state-of-art technologies into mass production in 2018, including the iBooster, 48Volt batteries and the e-axle. Later in 2019, to bolster its presence in China for new energy and more efficient powertrains Bosch is going to establish a fuel cell technology center in Wuxi and will start in Wujin plant with the Phase II expansion to focus on the production of ultrasonic radars.
Bosch will also beef up its local software R&D presence and drive the implementation of its IoT strategy in Chin with an investment in its new China Software Center later this year. The Center will provide high-quality software support for all business units within Bosch China, in embedded software, digitalization and cloud-based software, and AI-based applications. Initial investment will exceed ¥35 million, with nearly 500 software innovation talents expected to be working at the facility by 2022.
As a leading global IoT company, Bosch has established and continually enhanced its core competencies in all three key levels of IoT – sensors, software and services. Since 1995, Bosch has produced over 10 billion micro-electro-mechanical sensors (MEMS) for automotive and consumer electronics. Furthermore, Bosch produces sensors that are a crucial part of automotive safety and advanced driver assistance systems. In China, this production for automotive applications only reached 48 million last year.
Despite the difficult environment in industries and regions that are important for the company, Bosch expects its sales in the current year to slightly exceed its 2018 levels. Regardless of the short-term prospects, the company is intensifying its efforts to combat climate change and improve air quality.
The company recently announced a plan to become the first major industrial enterprise to achieve carbon neutrality: all 400 Bosch locations across the globe will be carbon neutral from 2020.
In China, Bosch has been actively taking measures to reduce CO2 emissions and improve energy efficiency for many years. In 2018, the company invested nearly ¥125 million in green manufacturing, including the state-of-the-art environmentally-friendly technologies, production equipment and the continuous improvement of work processes. Since 2014, the investment has grown at a compound annual rate of 10 percent.
Last year, Bosch reduced its relative CO2 emissions per financial basis by about 45 percent compared to 2011 and increased its production of renewable energy by 18.8 percent compared to 2016.
“Bosch sees climate action as not only its corporate social responsibility, but also a driver of innovation. Climate protection and air quality are also taken into consideration when Bosch plans the local development of products and technology,” said Dr. Chen.
“China has long been an important market for Bosch Group, and we’re committed to the long-term development in the Chinese market,” said Tyroller. “Despite the recent slowdown of the economy in China, its massive size and market’s further opening-up as well as innovation-driven strategy continue to offer enormous growth potential for Bosch.” This year marks the 110th anniversary of Bosch in China. Currently it has some 60 legal entities in the country, with nearly 60,000 associates working across its 38 manufacturing facilities and 27 R&D centers to develop cutting-edge technologies and solutions. Over 7,500 R&D associates work in China, accounting for more than a tenth of Bosch’s global R&D workforce of 68,700.