SHANGHAI – China is playing a leading role in terms of innovation drivers of tomorrow especially in the field of artificial intelligence, and Faurecia stands to benefit from that available knowhow from the big Chinese technology companies such as Alibaba and Tencent, according to CEO Patrick Koller.
Koller made the comments in an interview on the sidelines of the opening of the French supplier’s new Clean Mobility R&D Center in Shanghai on November 29.
“We are very much interested to collaborate with these big Chinese companies,” Koller told CBU/CAR in response to a question on how China will play a role in the transformation process of Faurecia. “China will play a leading role (in terms of innovation drivers of tomorrow) and it’s important for us to be present in China to benefit from this knowhow, and this is why we are looking at installing an innovation platform in Shenzhen.”
The new China and Asia Pacific R&D Center in Shanghai for Faurecia’s Clean Mobility division marks another important milestone in Faurecia’s development in China, which dates back to 1992 when Faurecia first entered the country and set up its first joint venture in 1994.
On the 45,000-square meter site, Faurecia will employ 620 employees, including 350 engineers, who will work with cutting-edge equipment to develop clean air technologies for passenger cars and commercial vehicles.
“This new site will strengthen Faurecia Clean Mobility’s innovation capabilities; specifically for commercial vehicles where new regulations which will enter into force in 2020 and which will require breakthrough technologies to reduce emissions,” said Koller.
The new Center becomes the sixth globally after existing ones in Germany, France, the U.S., Korea and India, and reflects a strategy to have in China the latest technologies, a commitment that Faurecia had from the beginning, according to Koller.
“This new building is reflecting our new intentions, investment and commitment to China. With this state-of-the-art facility, we will accelerate our innovations and contributions to clean mobility here in China,” said Koller. “We believe in this market which is the first automotive market (in the world). If we want to be seen as a leader in this market, it’s through technology and product innovations.”
Koller is quite bullish on the Chinese market, predicting that annual automobile sales in the country will grow by at least one million units until it reaches 40 million units.
The growth in China is fueled by three mainstreams: the market itself, the market to Faurecia and the content growth of the vehicle, according to Koller.
The overall market growth will reduce in percentage terms but the country will remain the growth driver for the auto industry globally. Faurecia is also expecting to benefit from partnerships with Chinese OEMs in the form of joint ventures which will help increase available market. Through such measures, Faurecia is targeting to have a market share of 70 percent in clean mobility solutions in the Chinese market, up from the prior benchmark of 30 percent.
“We know that if you achieve 70 percent, you are in the leading position in China,” said Koller, who also expects its content value in cars produced in China to increase by about 50 percent from 2017 to 2022, largely driven by regulations and product innovations fueled by the four megatrends of connectivity, autonomous driving, shared economy and electrification.
Because of these positive trends, Koller expects revenues in China to increase from approximately ¥18 billion in 2017 to ¥34 billion in 2020 and further to ¥40 billion in 2022, and headcount to increase by 50 percent from 19,000 to 27,000. Faurecia will also open 19 plants (new plus extensions) by 2020, or one every two months until then.
Over the last decade, Faurecia Group sales in China have increased by five-fold but future growth will be largely driven by the Chinese OEMs, according to Koller, who expects them to account for 40 percent of sales in China by 2020 and account for at least 50 percent of the automobile market in China.
“Logically, if you want to be a leader in this market, you need to consider the 50 percent represented by the Chinese OEMs,” said Koller. “When I give you a target for 2020, the very significant part of it is already acquired.”
Koller said that Faurecia needed to be close to two types of customers who are more willing to take risks in innovations: newcomers in the industry which are Chinese and premium brands in particular the Germans. “It’s with them that you will implement your innovations first,” said Koller.
Faurecia Clean Mobility currently accounts for 30 percent of Faurecia’s global sales but is a major profit driver, and turnover was about ¥10 billion in China in 2016, according to Jiang Yongwei, China Division President. The new R&D Center not only develops technologies for the Chinese market but outside of it as well. “About 20 percent of the projects are dedicated to overseas markets,” said Jiang. In fact one of the projects the Center conducted was a global development program for Ford’s new Ranger produced in Thailand, Argentina and South Africa, according to Christophe Schmitt, president of Faurecia Clean Mobility.
“Today we have the same kind of expertise in China as in other parts of the world. We can do all testing, innovation and product development for the local industry but also for the global carmakers in China,” said Schmitt.
To become the leading supplier of clean mobility solutions in China, Faurecia is investing in air quality, acoustics systems, real time measurements, materials, lightweight solutions, battery (including fuel cell) storage and thermal management systems.
“All these technologies and innovations will be available here in China and developed in this new building,” said Koller.