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ABB sees China fit ‘next level’ strategy
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BORN in Germany in 1964, Ulrich Spiesshofer, chief executive of ABB Group worldwide, holds a PhD in economics and a master’s degree in business administration and engineering from the University of Stuttgart.
He joined Swiss-based ABB in 2009 after working at Roland Berger Strategy Consultants and at global management consulting firm A.T. Kearney International.
ABB is a Zurich-based multinational corporation specializing in robotics and automation technology.
Q: What is ABB’s strategy in the Chinese market in terms of growth and innovation?
A: Our global strategy is called the “next level.” We will focus on profitable growth, relentless execution and business-led collaboration. What does that mean for China? Here, we will focus on accelerating organic growth. We will work on deeper penetration, both from a regional perspective going stronger to the west and also from an industry focus that taps segments where ABB traditionally has not been that strong, like food and beverages.
In terms of the focus areas, we will keep our traditional strengths in functional hardware and electronics, but we will seek stronger growth through software-led differentiation and through service activities. About 50 percent of our offerings today are software-based. On the service side, we will help our customers in China get more output and productivity out of their assets.
Q: This year, the Chinese economy has shown signs of slowing. Has ABB been forced to make adjustments?
A: China’s 12th Five-Year (2011-15) Plan matches very nicely with ABB’s capabilities. So whilst GDP growth is a little bit slower, I think the adaptation of our technologies is becoming even stronger. We need to make sure we are well positioned in the key priorities of this country. We have the right research and development activities in place to stay ahead of our competition.
Q: What’s the value of ABB investments in China and any plan to increase them?
A: ABB has already invested about US$2 billion since we started business in China. We announced in 2014 an additional US$300 million in investment to strengthen our manufacturing hub in Xiamen. We are also investing in research and development in Shanghai. More than 80 percent of our products are already developed and produced in China.
Q: ABB is growing quite rapidly in big Chinese cities. Do you plan to expand your business across the country?
A: Absolutely. We are active in about 109 large cities today. We will expand to another 100 cities in the next three years.
Q: The Chinese market is really big. Do you have different strategies for different regions?
A: If you want to expand, you need to understand each part of it in a very specific way. Along the eastern coast, there is a relatively mature customer base, good penetration and a strong technical-skills customer base. That is very different as you go westward toward Urumqi. So we are adapting our offerings and our partnerships with customers according to local situations. In Shanghai, there are a lot of engineering needs. Going further west, we may start first by selling standard products and supplying installation assistance. So, yes! Absolutely! We have differentiated offerings for each regional segment.
It is also a matter of different industry segments. If you go to the “3C industry” — computers, consumer electronics and communications — there are tremendous opportunities to do more on the automation side.
Q: Do you have any acquisition plans in China?
A: ABB has a really good track record on acquisitions in China. There will be opportunities in the future to consider additional acquisitions.
Q: Does ABB have a certain proportion of investment in research and development in China?
A: Globally, we spend more than US$1.5 billion a year on research and development, which makes us one of the largest R&D spenders in the world. We have more than 2,000 research and development people already in China. We are expanding that activity even faster than we are expanding our business. We will keep up the momentum.
Q: ABB is a pioneer in robotic production. Any plans to raise that to a higher level in China?
A: Our recent product launch, the YuMi robot, is a two-handed robot. It’s human friendly. In the future, we will have more artificial intelligence in our robots. We already have a self-learning robot that can adapt to different tasks. These robots are being developed in China. I see a very strong partnership between China and ABB in taking automation to the next level.
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