International second-tier suppliers are widely perceived to be among the new plant the companies most at risk from emerging competition from the Chinese market. But French supplier A Raymond has turned its Chinese operation into an export base for the region and back into Europe, and reckons that it can compete effectively in the growing local automotive business.
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Grenoble based A Raymond is a global market leader in fastenings.
Over the last three years its operations in China have expanded by almost 50% a year, according to Yu Jin Bing, area sales or observance of the company.
Grow slowed a little to 40% in 2004, but even 2005 is beginning to look “very positive, it’s warming up” according to Bing.
A Raymond has used China as an export base for the rest of the Asian region, and also to the USA and Europe. Up to 50% of Chinese production has been exported, although the share has been falling at the local market has gathered pace.
A Raymond is continuing with its expansion plans for a new plant in Xiang Chung because of its long-term confidence in the market, said Bing.
Bing’s biggest concern is the protection of its intellectual property against local copy shops. “That makes us a little concerned about the situation” said Bing.
The copiers are “very quick, very aggressive” said Bing.
That means that the French company has had to be aggressive on costs, but the company believes it has been able to protect some of its intellectual property by registering patents locally.
And in contrast to some suppliers that have held back from deploying their latest technology in China because of fears of it falling into competitors’ hands, A Raymond has chosen the path of securing a strong market position by transferring its best know-how from other countries.
Bing is confident that the company will be to defend its market position as the Chinese market grows.
She says that the copiers “can give a very good price, but not good quality”.
More importantly, she says, they lack the skills and breadth to be strategic design partners of the OEMs and Tier 1s such as Delphi, Lear and Yazaki – and A Raymond sees the full-service supplier approach as being a key competitive dimension in the fastener business.
A Raymond has a global full-service business that started in Europe with its FACIL joint venture with German fastener supplier KAMAX in 1999. The approach is being increasingly widely adopted, according to A Raymond executives, and has grown rapidly, with the US rollout in 2001.
The know-how and service functions offered by a stable and mature management team are critical for long-term success in the fastener business, believes A Raymond’s Bing, and they will continue to give it a competitive edge also in China, she says.
SupplierBusiness.com
