By Yang Jian, Automotive News China
Shanghai, China -- Magna International Inc. is moving aggressively to expand its presence in China. The Canadian supplier's 20 Chinese factories and 5300 employees generate annual sales of $600 million. Yang Jian, managing editor of Automotive News China, interviewed Magna ceo Don Walker about his company's growth plans in China. This is a condensed, edited transcript.
Q: Which of Magna's divisions is biggest in China?
Walker: Our biggest business group is mirrors and closures [doors, windows, etc.]. The next two biggest are powertrains and Cosma [chassis components]. We have some presence in the other groups, but they are growing from a smaller base.
Q: Which products are generating the most sales growth?
Walker: Most of our sales come from [closures, powertrains and Cosma].
Q: How much do you expect your China operations to grow over the next five years?
Walker: Our expectation is to grow faster than the market is growing. We are looking at green-field operations, and we are looking at joint ventures with our customers and our competitors as well. We also are looking at acquisitions.
Q: Who are your main customers in China?
Walker: We have quite a few Chinese customers like SAIC and FAW. But we have more Western, Korean and Japanese customers than local Chinese customers.
Q: Magna Steyr, your coach-building operation, has three engineering offices in China. Do you hope to be a coachbuilder here? Would you replicate your operation in Austria, where one plant builds vehicles for several customers?
Walker: [Our] best opportunity is to go into regions where [each of] our customers may want to build 30 000 or 40 000 units. For us to get a critical mass, we need 100 000 to 150 000 units. If there is an opportunity to get four or five customers to share [an assembly plant], that's a win-win situation. [Our customers] can reduce their costs, and in the long run, they may want to build their own assembly plant here.
Q: The Chinese government is very keen to develop electric vehicles. Do you believe EVs will be the future of the global auto industry?
Walker: There is a lot of interest from the public and the government. [But] the public [will not] pay a lot more money for a product that is not as flexible in range and not very practical. So we need to look at [government incentives].
Electric vehicles will grow, but we won't have steep growth until we make some substantial improvements in the power and energy density of batteries. [But] hybrid vehicles for sure will be a very big part of the market.
Q: What other technologies will Magna invest in?
Walker: There will be tremendous improvements in the efficiency of internal combustion engines. Magna also is heavily involved in weight reduction. So you can reduce vehicle weight, and you can reduce friction and [energy] losses in powertrains. We'll see big advances in all those areas.