Philips Automotive Lighting: Chinese market gold dealers marching low-key

Dominiek Plancke, President, Philips Automotive Lighting Worldwide

Gasgoo.com: How do you define the role and position of Philips Automotive Lighting in the Chinese automotive market and the role and location of this new plant in the global production system?

Philips: Philips Automotive Lighting has been working in the Chinese market for 15 years. It is the market leader in the mainframe and aftermarket. Our share in these two markets is first, but the specific figures are not convenient to disclose. . We expect the Chinese market will continue to maintain double-digit growth. By 2015 China's auto production will be comparable to that of Europe as a whole. We hope to at least synchronize with China's auto market.

It is precisely because of the promising growth potential of the Chinese market that we resolutely decided to expand our investment in the Chinese market during the global economic crisis of 2008. Ma Luxin plant will be dedicated to the production of high-performance halogen automotive light bulbs. At present, there are two production lines under intense debugging. We have also set aside production capacity during the construction of the factory to meet the future market growth. The factory's products will be mainly used in the Chinese market, but also consider exporting to parts of the Asia Pacific region.

Gasgoo.com: As a second-tier supplier, is there any plan for Philips Automotive Lighting to purchase the new factory's production locally, and what localization strategy will you adopt in China?

Philips: To ensure a very high level of quality, all production equipment and components used to assemble lamplight at the new Malu plant are imported from Germany and other parts of Europe.

Automotive lighting is a part of the entire automotive industry chain. We have moved the assembly and final packaging business to China, which is an important step toward localization. We have recruited local production and management talents and conducted rigorous and systematic training on them so as to ensure the quality of our products. We can do 10 PPMs, or even 0 PPMs.

All of our investment and localization strategies in China are based on the starting point: to be closer to our customers and to respond to customer requests more quickly. We will also consider further localization of procurement and R&D, but we believe that full localization is not achievable in the short term.

Gasgoo.com: There is a saying in the industry that the Chinese regard the headlights as the eyes of the car, while European consumers think that the windshield is the eyes of the car. Does it mean that Chinese consumers pay more attention to the appearance and function of car lights? ? Does Philips plan to carry out some R&D work in this area to meet such needs?

Philips: In fact, we can't make absolutely absolute divisions of the needs of different markets. Each market will have different segments. According to our understanding, European companies such as Audi and BMW also attach great importance to the design of the headlights and pursue a sense of fashion. The Chinese market is developing very fast, and customers have also shown multiple segmentation trends.

Of course, customers in China and Europe are indeed different, so we established an application center as early as March 2008 to better understand the needs of local OEMs and equipment manufacturers in order to provide products that are closer to the market. .

Gasgoo.com: Please talk about the product launch and capacity planning of Philips Automotive Lighting Malu New Plant and Hubei. What is the current sales and market share of Philips headlights in China and what are the future goals?

Philips: The Philips Automotive Lighting Hubei plant is primarily responsible for the production of signal bulbs, while the Malu plant will focus on the production of headlamps. The Hubei plant has been operating for 15 years, and parts of the signal lamps have begun to be imported from Asia or localized in Asia. At the same time, we need to spend a lot of effort to verify the qualification of our suppliers.

Sorry for the capacity of the Malu new plant, but I can't disclose it because I do not want our competitors to know our capacity soon. We will also keep confidential our current sales and market share and goals. However, I can say that we are the first in the pre-installation and post-installation markets. You can see Philips' headlights on VW, GM, SAIC, Geely, Chery, FAW, Changan, and Wuling. This year China has produced 16.4 million cars, most of which are Philips'.

Gasgoo.com: The first Philips factory in China was built in Songzi, Hubei in 1995. It took another 15 years to build a second factory. Did Philips auto lighting miss the best development opportunity brought by the rapid development of the Chinese auto market?

Philips: On the contrary, it was precisely because we saw the huge potential of the Chinese market that we decided to invest and build factories again in China. In the long-term, localized production is the trend and direction of our future development. It should be said that the establishment of a second factory It shows that we are constantly adapting to this changing market. On the other hand, investing in factories is a complex and huge project. We need to do a lot of research and investigations from inside to outside. So from the official launch of the entire project to the opening of today, we have experienced a lot. Long process.

Gasgoo.com: At present, there are many counterfeit Philips automotive lighting products on the Chinese market. What are your strategies or plans to reduce the negative impact of this phenomenon?

Philips: This is arguably our biggest competitor and it is indeed an existing problem. The first thing I want to say is that this phenomenon illustrates the market's recognition of Philips brand products from the other side. In fact, this phenomenon is more concentrated in the aftermarket. Because it is unlikely that this situation will occur in the front-loading or mainframe market, because the automakers pay great attention to the quality of their products and will not allow counterfeit products to be installed in their own vehicles, especially when it comes to driving. Safety products, in the event of a quality accident, can have extremely adverse effects on themselves.

In the aftermarket service market, this phenomenon does have a bad effect on our sales. In fact, Philips has always had the act of counterfeiting, but this requires a long process, and it is not one side's power that can be changed. We also hope that the government will have more measures for market supervision.

Gasgoo.com: The rapid development of China's automobile market can be said to have become a place for foreign manufacturers to make a splash. Does Philips have plans to purchase and integrate downstream companies, such as lighting factories, to seek greater profits?

Philips: No. We will adhere to the development strategy of being a secondary supplier, acquiring downstream companies, and our original customers becoming competitors are not within our contemplation.

Gasgoo.com: It is reported that by the end of November, China will cancel preferential policies for foreign investment. Will this affect Philips' future investment plans?

Philips: Regarding the special treatment of foreign capital, this is not the main reason for our investment, nor is it the main driving force. We believe that the Chinese auto market will continue to develop. Therefore, we decided to participate in such a market development process. This is the main reason for our investment.

[Interview] Philips lights in the Chinese market, including the supporting and aftermarket markets have all achieved a leading position, but they are still growing steadily from the Chinese investment development strategy disclosed by their management, with regard to sales, market share targets and new The factory's production capacity, Philips is also in silence, can be described as a full low-key. Perhaps it is precisely this rigorous business spirit and sound strategy that has created the achievements of Philips headlights in the Chinese market today.