Plastic News China recently interviewed Gerhard Neidinger, Executive Vice President of Automotive Plastics Asia, at the Kunshan production base of Rchling Automotive, Germany.

How important is China to Rchling?

Nandinger: China is one of the most important countries for us to start production. Especially in the automotive industry, even if growth slows down slightly, China will maintain sustained growth for at least the next 10 years. There's no doubt about that. I think we have truly innovative products to help the Chinese market save gasoline and energy, which is very important for this market.

We first entered China with Volkswagen, and now many OEMs in China have become our customers. There are 52 OEMs in China, so there are 20 of them as customers, which accounts for a large proportion. Rolls-Collar has 65 production bases in the world and 21 production bases in Rolls-Collar's automobile business.

What is your company's future expansion plan after Kunshan Base is put into operation?

Nandinger: We already have a factory in Changchun and Chengdu. The Shenyang factory is now being prepared and will open in the middle of next year. The construction of the new plant has begun, and we are still discussing some final details. We may expand further in South China within 3-4 years. Usually, we will follow the footsteps of OEM customers. We have received the first order from OEM in Guangzhou, which will be produced in Kunshan at present, although the distance is 3500-4000 kilometers.

What are the next plans in China?

Nandinger: Production in Kunshan has been normalized. Two years later, the production space will not be enough. At that time, we should consider reorganizing the business of Kunshan Factory. We must concentrate on the Shenyang factory. As long as we can push our products to the market and bring innovative products to the Chinese market and local OEM, we are sure to succeed here.

In the automotive industry, it takes two to three years to develop new cars at first. At the end of the development phase, prototype moulds and parts need to be manufactured, and then the first step is to assemble and test the car. Maybe some changes will be made, and then these parts will continue to be manufactured in 5-6 years. So the number of orders can remain stable.

What are the unique challenges brought about by the Chinese market and how will your company cope with them?

Nandinger: First of all, the challenge is to set up factories locally, and secondly, to find suitable local talents in China, to provide training for them and to select elites. This is very different from Europe. We must select talents from universities. We have a high demand for technical personnel. It is not enough to recruit only from the labor market. In 2008, we established cooperation with local universities to provide training for college students. We send experts to provide technical training for students, such as process tooling and maintenance and equipment. After training and graduation, graduates usually have a one-year internship, they will enter our company for internship. In this year, we will provide more training for students, not only theoretical knowledge, but also practical training. In this way, we have accumulated a strong reserve of technical talents for our factories. So far, we have cooperated three times. The scope of cooperation covers our entire group. We are looking for qualified engineers who will be sent from China to Europe and the United States. Consider sending about 40 engineers a year.

If you set up this kind of training and find people who are interested in it, you're half as successful. Now our training has entered its fourth year. Every year we train at least 20 students. Last year we had 30. This year we have 20 trainees, and specially hired trainers to train them in the company. It's a big investment, and then we can find the right people here. It's satisfying to see that the people we recruit keep growing in the company. I am satisfied with their progress so far.

How will rising labor costs affect you?

Nandinger: The only change is that China's wages are rising at an annual rate of 8-10%. So we have to adjust production and improve automation for almost all our products. We reduced the number of workers, but hired more engineers. In order to install automation equipment, engineers are needed to develop it.

The shift from workers to engineers is because what we need now in China is high-performance equipment. OEM customers believe that if we can reduce product prices, we will be able to play a greater production potential. In the past, wages were low in China, but they have been rising in the past 10 years. Three to four years ago, we started automation in all our business plants in China. Another advantage of this is that the quality has been significantly improved.

Is competition in the local market challenging?

Nandinger: Competition is a big challenge. There are many competitors producing similar products, but in the final analysis, few competitors can really develop and produce the products we provide in China. I see that our Chinese counterparts are constantly learning, but we are still in the lead right now.

Of course, there are difficulties. At present, what I see is that the products only supply the local market, only one or two OEMs export to the outside world. But I think China's exports will increase in the future, because in terms of quality, the products produced in China can already be comparable to those produced in Europe and the United States. For new development, in the short run, it may take 4-5 years for China's OEM to start exporting to the outside world.

What do you think of the future trend of China's automobile manufacturing industry?

Nandinger: Certainly not. China's market is huge, and it has full development potential in the future. It still has the world's largest car market, even if growth slows slightly.

China's automobile production in 2014 exceeded 22 million vehicles, accounting for one fourth of the world's total output (nearly 90 million vehicles).

Please introduce Roxwell's business development in other parts of Asia.

Nandinger: We have cooperative projects in Japan and Korea. To cooperate with Japan's OEM, business must be carried out locally. That is to say, development work must also be carried out locally. The situation in Korea is quite special, because OEM is mainly Korean enterprises, and foreigners are not allowed to interfere in their products.

India's market is not as flexible as China's. Our other departments have set up some factories locally. I think it will take another 10-15 years for India to grow slightly. The rest of Asia is not comparable to the Chinese market. Vehicles supplied to Vietnam are made in Thailand, and some parts are exported from China.

You have worked in China and other places. Can you make a comparison?

Nandinger: I have worked and lived in China for 30 years, but I can't speak Chinese.

Chinese people have been developing rapidly with each passing day. We have built similar factories in different countries of the world. Looking at factories in China, we are always one step ahead. Our Engineering Center in China is an example. We started to develop our own products in China in a short time. By contrast, the situation in other areas is quite different. We are satisfied with the performance of the Chinese team, whether it is their working style, learning style, how to put it into practice, or what they have learned. Of course, we also provide a lot of training here, and every year there will be significant progress. We have only one foreign employee here, and the rest are Chinese. I think this is one of the reasons for our success in the Chinese market.