Be optimistic about the Chinese market Sandvik accelerates its investment in China

After setting up the world's largest assembly plant in Shanghai, international industrial giant Sandvik continued its drastic investment in China.

On August 24th, LarsJosefsson, president of the company's mine construction machinery, announced the establishment of a new R&D center in China. This is Sandvik’s latest layout of the East Asian market and another step in accelerating its localized production in China.

However, it declined to disclose the total investment in the entire R&D center.

Ake Roos, Sandvik's vice president of global R&D engineering and quality, told reporters: “This is our tenth R&D center in the world. However, unlike other places that focus on a certain type of product research, R&D centers in China will focus on different product lines. To meet the multi-layered needs of this huge market in China and Asia."

The R&D center will account for 10%-15% of Sandvik's global R&D forces. By combining the advantages of Chinese universities, personnel and other local technologies, we will develop products that meet the Chinese market; and through Sandvik's own engineering and technical capabilities, it will serve as a support and service center for its local production base and assembly plant in China.

Last year, Sandvik built a new factory in Jiading, Shanghai, seven times the size of the first-phase plant built in Shanghai in 2005. All of the equipment has the best technology, quality and safety performance of the company, and the production includes drilling rigs and crushing. Most of the products, such as aircraft and shovels, are expected to double their production capacity in 2010 compared to the same period last year.

Behind repeated investments, the opportunity cost of Sandvik’s desire to occupy the Chinese market as soon as possible is tested.

Antonin Beurrier, president of the mine engineering machinery company's East Asia Region, said: "During the financial crisis, China's mining machinery industry was not affected. This year's market is still expected to rise by 15%. Our development rate is basically twice the growth rate of the industry. ."

In 2009 Sandvik Mine Construction Machinery's overall sales in China were 2 billion yuan, accounting for half of the Group's total business in China. Of these, 25% came from construction projects such as crushers and tunnel excavators; 75% came from mining.

In addition, the establishment of an R&D center is also an initiative of Sandvik to solve the challenges of the localization process.

LarsJosefsson once told reporters that before 2006, all of its products sold to China came from imports, but in order to achieve localization, 75%-80% of products must be manufactured in China. For example, the Jiading factory, with an annual output of more than 3,000 sets/sets of equipment, will not only target China but also supply the global market.

“In order to realize localization quickly and effectively, Sandvik will also establish a service center in China to be closer to customers, and at the same time increase its technology transfer efforts from overseas factories in Canada, Europe, and Australia to Chinese factories to achieve a reduction for Chinese buyers. Energy consumption and the purpose of improving automation of the market." He said.