data source : global insight automotive, boston consulting, pwc goldman sachs & jci asia pacific...

Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team

Growth Through Effective Partnering

Garry Cardwell

Vice President and General Manager China, South East Asia, India, AustraliaJohnson Controls Inc.


ContentContent

Johnson Controls Corporate Overview

Why It Makes Sense to Partner in China

How Johnson Controls Approaches Making Successful Partnerships

Johnson Controls’ Experience in Partnering


Diverse & StrongDiverse & Strong Business SegmentsBusiness Segments

Founded in 1885Founded in 1885

123,000 employees worldwide123,000 employees worldwide

2004 sales of US$ 26.6 billion2004 sales of US$ 26.6 billion

AUTOMOTIVE GROUP (AG)

CONTROLS GROUP (CG)

The global leader,serving automakersaround the world.

Making customers' buildings more energy efficient, comfortable,safe and productive.


Automotive Automotive GroupGroup

BatteryInstrumentPanel

DoorPanel

OverheadSeating Complete Interior

Integration

Electronics/Storage


• Over 6,000 in Engineering, Design, R&DOver 6,000 in Engineering, Design, R&D• 7 Technology Centers (Asia-Pacific): 7 Technology Centers (Asia-Pacific):

– Pune, IndiaPune, India– Ayase, JapanAyase, Japan– Ansan, KoreaAnsan, Korea– Changchun, ChinaChangchun, China– Shanghai, ChinaShanghai, China– MalaysiaMalaysia– AustraliaAustralia

AG WorldwideAG Worldwide

Recent Acquisitions: Recent Acquisitions: • Ikeda Bussan, JapanIkeda Bussan, Japan• Sagem Automotive Electronics Sagem Automotive Electronics

Group, FranceGroup, France• Borg, GermanyBorg, Germany• Hoppecke, GermanyHoppecke, Germany• Varta’s Automotive Battery Varta’s Automotive Battery

Group, GermanyGroup, Germany• Grupo Imsa, MexicoGrupo Imsa, Mexico• Recent LOI for Delphi Battery Recent LOI for Delphi Battery

Shanghai, China


CHENNAICHENNAI

PUNEPUNE

MALAYSIAMALAYSIA

THAILANDTHAILAND

MELBOURNEMELBOURNE

INDIAINDIA

AUSTRALIAAUSTRALIA

CHINACHINA

TAIWANTAIWAN

KOREAKOREA

JAPANJAPAN

FUZHOUFUZHOUGUANGZHOUGUANGZHOU

CHANGCHUNCHANGCHUNSHENYANGSHENYANG

BEIJINGBEIJING

SHANGHAISHANGHAICHONGQINGCHONGQING

YANCHENGYANCHENG

YANTAIYANTAI

ADELAIDEADELAIDE

Asia-Pacific OperationsAsia-Pacific Operations

• Established first facility in 1997

• Operations in 9 Asia-Pacific countries: Australia, China, India, Japan, Korea, Malaysia, Taiwan and Thailand

• 10 joint ventures, 11,000 employees

• 37 manufacturing plants• 25 OEM customers


CHINACHINA

FUZHOUFUZHOUGUANGZHOUGUANGZHOU

CHANGCHUNCHANGCHUNSHENYANGSHENYANG

BEIJINGBEIJING

SHANGHAISHANGHAICHONGQINGCHONGQING

YANCHENGYANCHENG

YANTAIYANTAI

Johnson Controls in ChinaJohnson Controls in China

• Completed first JV agreement in 1996 – 6 primary, 4 subsidiary JVs today.

• One of the largest suppliers of seating systems and components in China.

• 18 auto seating and interior plants, 2 technical centers.

• Capabilities include product design, product evaluation, prototype build, production verification, production support, benchmarking, industrial design and local supplier development.


Why It Makes Sense to Partner in ChinaWhy It Makes Sense to Partner in China

云雀

China OEM

FAW

Dongfeng

DF - Nissan

DF -PSA/Citroen

SAIC

SVW

SGM

FAW-VW

Truck

Red Flag

TAIC

Daihatsu

ToyotaCharade

FAW-Hongta

FAW-Yangzi

Mazda

FAW-Jilin

SichuanToyota

Changan

Changan

Changan-Suzuki

Changan-Ford

Harbin

HafeiCNHTC

CHNTC

Xian

Chongqing

Geely

Haoqing

Merrie

ULion

FuQi

Xiamen Auto

Southeast

Qingling

Nanjing

NJ-Fiat

IvecoYuejin

Qinchuan

Zhengzhou Nissan

AeolusYueda-Kia

Diesel Engine

Nissan-Diesel

Hangzhou BusLiuzhou MPV

DF-HondaEngine

Guangzhou Honda

Canghe

Hefei Jianghuai

An Kai

JianghuaiChangfeng

(Pajero)

BAIC

Hyundai

FutianBJ Jeep

CBA

Jinbei GM

Jinke BMW

Dongfeng Renault

Songliao

Jiangling

Transit

Yizheng(SGM)Yantai SGM

Yantai Daiwoo

Yunque

CherySGM Wuling

Inner Circle:Core OEM

Middle Circle:Purchased OEMs

Outside Circle:OEMs which areoutside the "Big Three"

Int'l OEMs

Future Possibility

Share in Market

Other 44%

FAW 23%

Dongfeng 15% SAIC 18%

RENAULT

DF-Honda

A Color of Complexity: A Color of Complexity: Three layers of networks, Geo-political barriers…….Three layers of networks, Geo-political barriers…….


Keys To Partnering SuccessFind Strong JV Partners to Share Risk

Strong OEM Connections with Current Business

Solid Existing Partner Relationships with OEM

Top 7 China OEMsTop 7 China OEMs

GUANGZHOU

SAIC

FAW

DONG FENG

CHANGAN

BAIC

CBA



Existing Facilities and

Supply Base

Lower Initial InvestmentLocal Market Knowledge

Mitsubishi Plant

VW PlantRen/Nissan Plant

DCX Plant

Legend

Ford Plant GM Plant

Honda Plant

Toyota Plant

BMW Plant

Hyundai/KIA Plant

2005 Annual Volume, CSM Q1 2005 Forecast Country volumes consist of only the above 10 OEMs



ManagementTalent

Open to LearningReduced Expat Cost

Willing to Adopt Best Practice Systems Quickly

ManufacturingPurchasingLeadershipFinancial



Shenyang Joint Venture

Est in 1999

Products: Seat, Door Panel, Instrument Panel


Est in 1999


Beijing Joint Venture

Est in 1997

Products: Seat, Door Panel, OHS


Est in 1997


Changchun Joint Venture

Est in 2001

Products: Seat, Door Panel, Instrument Panel, Headliner, Cluster, Parcel Tray


Est in 2001


Shanghai Joint Venture

Est in 1998

Products: Seats, headliner, visor, OHS


Est in 1998


Chongqing Joint Venture

Est in 2003

Products: Seat, Parcel Shelf


Est in 2003


Guangzhou Joint Venture

To be est in 2004

Products: Seat


To be est in 2004

Products: Seat


How JCI Approaches Making How JCI Approaches Making Successful Partnership in ChinaSuccessful Partnership in China


Success Factors

Y = f ( Identifying, Assessing, Executing) = f (X1, X2, X3, X4, X5, X6)

Identify Assess Execute

X1 People

X2 Market Due Diligence

X3 Product Strategy

X4 Decision Making

X5 Implementation Method

X6 Soft Factors


JV Process (Science)

•12-18 months

• Handoff• Kickoff • Closing• Decision

•Identification•+ Relationships

•Due Diligence•Assessment •Integration •Operations

•100-180 days•-3 months•ongoing •-2 months

Key output:

Ranking: Regions Market

Opportunities Product Lines

Report: M&A Potentials JV potentials Product Strategy Footprint Business Plan

M&A or JV,Contracted,

CAR for Greenfield

Execution of Integration Plan

Validation ofBusiness Metrics


Art

Sci

ence

A Balance Between Art and ScienceA Balance Between Art and Science

It varies on:• Market Entry Timing• Global OEM vs. Local Political Leverages……………


Est in 1999



Est in 1999



Est in 1997



Est in 1997



Est in 2001



Est in 2001



Est in 1998



Est in 1998



Est in 2003



Est in 2003



To be est in 2004

Products: Seat


To be est in 2004

Products: Seat


JCI’s Experiences in PartneringJCI’s Experiences in Partnering


Reasons JVs Fail – Things to Avoid

• Strong daily execution• World-class quality• Maintain trust, partnerships• Innovative technology• Localization of materials• Willing to adopt best practice systems quickly• Good partners resolve any differences rapidly• Both partners able to achieve their objectives

How to Ensure Success

• Financial failure• Parties don’t trust each other, can’t work

together successfully• Involved parties have conflicting objectives• Partners can’t achieve their objectives

Partnering: Failure Modes and Success Factors


Summary / Conclusion

China represents nearly half of the automotive growth for the next ten years and the market is likely to become one of the Top 3 in the world.

We will be facing many challenges while the opportunities are tremendous for both growth and cost reductions.

Forging effective partnerships is critical for success as a supplier.

A successful partnership starts with relationship supported by transparent objectives, nourished by mutual trust and maintained through consistency in doing what we say we will.


Effective partnerships are based on trust

data source : global insight automotive, boston consulting, pwc goldman sachs & jci asia pacific...

Documents

global insight automotive

asiapacific countries

data source

boston consulting

china shanghai

global leader

south east asia

australia johnson controls