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Harman Considers Third Factory in China Amid Europe Auto Slump

Harman International Industries Inc. (HAR), a maker of car infotainment systems, is considering building a third factory in China as it seeks to more than double the proportion of revenue from the country.

The factory, if built, will house departments for design, manufacturing, assembly and shipping of products worldwide, Harman Chief Executive Officer Dinesh Paliwal. A decision will be made in six to 12 months, he said.

“If we do it here, we have to do it with scale,” Paliwal said in an interview in Chengdu, China, where he was attending the Fortune Global Forum. “Proper big scale. Nothing small.”

Harman, which counts Toyota Motor Corp. and Hyundai Motor Co. among its customers, is seeking growth in countries like China to reduce its reliance on Europe, where the auto market is contracting for a sixth consecutive year to a two-decade low.

The Stamford, Connecticut-based company is targeting to get 25 percent of its worldwide revenue from China by 2018, up from 10 percent currently, Paliwal said.

“I’m extremely bullish on China,” he said. “Next five years for China, we’ll more than double, triple our business here.”

Harman’s sales in China rose to $400 million last year from less than $20 million four years ago, Paliwal said. The company has announced $200 million in total investments in the country so far, he said.

The company is also shifting from serving mostly luxury vehicles to mid-end models to focus on expanding sectors, Paliwal said.

To contact Bloomberg News staff for this story: Alexandra Ho in Shanghai at aho113@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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