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A talk with KSPG China expert Lothar Schneider

“China will also continue to grow in the coming years,” says Lothar Schneider, who will coordinate all KSPG Group business activities in China going forward. Among other things, Schneider has been responsible for managing the Chinese casting joint venture KPSNC since 2001.

Heartbeat spoke with him about his new assignment in Shanghai and the chances for future forms of propulsion in China.

// The KSPG (China) Investment CompanyLtd. was recently founded. Why this new company?

At the moment, we have nine different legal units in China, some are joint ventures, and some are fully owned subsidiaries. The aim of KSPG (China) Investment is to comprehensively coordinate the activities of these companies and to ensure that all of them can profit from the development in China.

// How does one achieve that?

Above all, the task of this position is to improve communication among the companies and also to expand the Shared Services Division where reasonable, possible, and feasible in order to boost cost efficiency.

// Does the new management function also apply for the joint ventures there?

Yes. We also have a “Total Management View” included in the business economic perspective of the KSPG Group, which of course therefore also includes the joint enterprises in China. You must see that the Castings Division now achieves over € 800 million in sales volume and did very well in 2015. Two thirds of this came from China and we generated a good € 260 million inNeckarsulm.

// How do you approach this very broad-reaching task?

The whole thing can only work if it runs in a matrix because the product and development responsibility must of course remain with the parent companies. I therefore serve a coordinating function with the aim of ensuring that all companies represented in China are able to participate in the market growth. Our aim is to continue to grow sustainably in China in 2016.

// Is the pace of the Chinese market actually still so high?

I don’t gauge the current situation quite so dramatically as others may. The measures taken by the central government at the end of the third quarter to revive the market have worked and when we look at the sales in November and December 2015, we once again see a reasonable growth rate there. For this year, we assume that the light vehicle market in China will grow by around 6%.

// What goals is the new boss of KSPG China pursuing?

We of course want to grow profitably. My colleague responsible for Finance and Controlling, Wen Jiang, and I have set ourselves various tasks for 2016. On the one hand, we have taken over two additional foundries in the Castings Division—one in Shanghai in the form of an asset deal and one in Yantai in the form of a share deal. That’s the company Cosmopolitan. This represents a considerable task. The aim is then to continue to grow in this area with gearboxes, gearbox casings, and structural components.

// And what about the other activities?

Additionally we need to achieve strong growth for Pierburg products and further establish both the large-bore pistons location and the replacement parts business.

// Now your headquarters in Shanghai is moving—from Pudong to Hongqiao?

Yes, Pudong was originally the base for Motorservice in China. The decision to locate in Pudong was certainly the right one at the time because Motorservice also had its bonded warehouse there in the area.However, we now need a headquarters as close as possible to all the companies, and we’ve therefore decided to move to a location close to the Hongqiao airport, which recently already took place. The near offices will also certainly afford us enough space for the next five to eight years.

// The city government of Shanghai was very fast in managing to ban scooters with combustion engines from the city. Can you imagine something similar happening with motor vehicles at some point?

I think one can see that from a great many different perspectives. Consumers in China can surely identify with electromobility far more easily than we can here in old Europe. We’ve grown up with gas and diesel engines— that says something to all of us. The situation is a bit different in China. And it’s easier to identify with electromobility there, because it perhaps also allows the people of China to say “we Chinese” helped to advance this idea. It’s not a technology that we’ve adopted from A or B, it’s something new. If I come from a nation that effectively hasn’t “inherited” any affinity for a particular drive concept, then I’m of course far more objective when it comes to other forms of propulsion. That’s why I definitely believe the electric motor has a future in China.

// Does environmental protection play any role at all in this framework?

The central government must do something and it does a whole lot, and I find it impressive how rigorously and consistently it is being done. By the way, that applies not only to the central government, but also extends down to the local governments. There are measures in China and incentives for the consumer to go into electromobility.

// And how do things look from the other perspective?

On the other hand, the electric motor hasn’t yet proven its reliability and durability in China—and perhaps proven it even less than has been the case here in Europe. China is currently the fastest-growing market for electric vehicles. However, electromobility also requires a certain infrastructure for the charging stations, and I don’t yet see them everywhere. I think a great deal of homework is still left to be done there. But, as we know, nothing is unsolvable. As long as you believe you can solve it, you’ll solve it.

Lothar Schneider (58) has worked for KSPG in Shanghai since 2001 and has successfully led the joint venture KPSNC for more than 12 years there. In 2013, he came back to Germany and took over the CastingsBusiness Unit in Neckarsulm. In addition to his responsibility for the present-day KS HUAYU AluTech GmbH (which has been converted into a joint venture) and the other KSPG casting activities, he will also be managing and coordinating the entire KSPG automotive supplier business in China.