Maschke Discusses Freudenberg-NOK's Global Investment Strategy and China Risks
and Rewards at CAR Management Briefing Seminars
Companies without strong, local presence will be at a strategic disadvantage
in this key growth market
TRAVERSE CITY, Mich., Aug. 6, 2014
TRAVERSE CITY, Mich., Aug. 6, 2014 /PRNewswire/ --Companies hoping to
capitalize on automotive opportunities in China must be willing to establish a
manufacturing presence in that country and integrate into the local business
community to succeed, Freudenberg Sealing Technologies President Torsten
Maschke told an audience at the 2014 Center for Automotive Research Management
Briefing Seminars (CAR MBS) in Traverse City, Mich. today.
Maschke spoke as part of an international panel of industry leaders that
explored investment opportunities and risks associated in developing
automotive markets. The discussion centered on opportunities in the world's
largest automotive market, China.
During his presentation, Maschke shared Freudenberg Sealing Technologies'
strategy for China, built on more than two decades of experience producing
seals and components in that country. He emphasized the critical importance of
maintaining strong company values in new regions and also reviewed the
company's risk/reward investment process for evaluating new opportunities.
"As we expand into new regions, there is universal understanding across our
business units that our investment decisions must align with our original
Guiding Principles," Maschke said. "Our globalization strategy is, in fact,
founded on these principles and can be succinctly summarized: Freudenberg
Sealing Technologies does not enter new regions as a marketing entity.
"The company does not establish regional operations on the basis of low cost
labor opportunities," he continued. "We pursue investments where our company
can become a local supplier focused on local customer needs. We strive to
become part of a country's manufacturing fabric."
Freudenberg's Guiding Principles – its corporate DNA – were written 165 years
ago and have established a culture built around innovation, customer value,
responsibility, leadership, community and a long-term orientation. These
business tenants – along with a thorough risk-opportunity assessment – have
become an essential part of the company's approach to international growth.
Despite the fact that important technological and legislative issues in China
remain unresolved, the sheer size of the market offers international auto
companies and industry suppliers significant financial opportunities, Maschke
But those opportunities will best be realized by companies which are prepared
to establish a local industrial presence in China that allows them to meet
content requirements for international customers while expanding their
relationships with domestic Chinese vehicle makers. Significantly, the auto
industry's growing use of global vehicle platforms makes suppliers with
engineering and production expertise in China even more valuable to their
"They will not only need to rely upon collaboration and advanced technologies
from their suppliers to make these models successful in their home markets,
they will also need to rely upon suppliers who can make these models
successful for them in China," Maschke said. "They are going to need, to coin
an American expression, boots on the ground in that vast new market to help
them understand and navigate technical and cultural issues that make global
platforms challenging and tricky."
Freudenberg formed joint venture partnerships with NOK Corporation in both
India and China. Both operations are growing and in China, the company's
strategic plan is now nearing maturity with more than 70 locations, 6,300
employees and 23 manufacturing facilities.
According to Maschke, "The real challenges in China, of course, are not the
existence of megatrends or emerging technology initiatives. The challenges are
how the country will respond to them and how we, as a supplier doing business
there, will respond to the needs of our customers and continue to grow. One of
the most vexing questions suppliers ask themselves when looking at new markets
like China is how they will compete against well-established local players."
Freudenberg's answer is two-fold, Maschke concluded. Companies must offer
higher quality, better processes, newer innovations, superior customer service
and broader market value than all of their competitors, while also integrating
into the market to such an extent that they become a local player. And they
must embrace flexibility.
Flexibility will help companies address key challenges such as resource
availability, legislative mandates, and technological uncertainty. China may
even take the lead in introducing new technologies in the not too distant
future, Maschke added.
While industry challenges in China are still numerous, the opportunities are
"It is not enough to appear globally aligned while all of your innovations,
business practices and technology ideas still originate in other regions. You
must be able to analyze and respond to the needs and ideas that countries and
cultures bring to the automotive industry," Maschke concluded. "You must also
become an essential part of your customers' globalization strategies. This is
the only way you can help solve global challenges while remaining true to your
business principles. We are experts at doing both."
About Freudenberg-NOK Sealing Technologies
Freudenberg-NOK Sealing Technologies is the Americas joint venture between
Freudenberg and Co. in Germany and NOK Corp. in Japan. Freudenberg-NOK is a
leading producer of advanced sealing technologies for a variety of markets
including: aerospace; agriculture;appliance; automotive; construction; diesel
engine; energy; food and beverage; heavy industry; and pharmaceutical. Founded
in 1989 under the legal name Freudenberg-NOK General Partnership,
Freudenberg-NOK is headquartered in Plymouth, Mich. and operates more than 20
facilities across the Americas. For additional information, please visit
SOURCE Freudenberg-NOK Sealing Technologies
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