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The Austria-German steel company Siemens VAI attaches importance to the Chinese market and plans further expansion.
The promising Chinese steel market is attracting the steel giants from all over the world.
“In the 2009 financial year, 54% of our new orders were from Asia and China was the biggest supplier,” said Werner Auer, CEO of Siemens VAI in May 2010 when he was present in the Fourth Global Summit of Siemens VAI on Metallurgy and Mining in Germany.
Siemens VAI’s predecessor was the VAI Technology Co., Ltd in Austria. It was the leading company in the steel and aluminum products design and metallurgy technology in the world. It had complete steel- and aluminum-making technologies, including agglomeration, iron making, steel making, automatic metallurgy and environment-friendly technology. 70% of the steel makers in the world has adopted the steel-making technology provided by this company. It took 25% of the global metallurgy technology market.
The company was acquired by Siemens in 2005 based on which the Siemens VAI Metallurgy Department was founded. This department belongs to the Industrial Solutions Department of Siemens.
Rise of China’s Steel Market
According to the World Steel & Iron Association, the global demand for steel and iron decreased by 7% in 2009. But China, though influenced by the financial crisis, still saw its demand for steel increase by 25% in 2009. In 2010 the global demand is expected to have a 10% increase and the demand in China will further increase by 10%. The demand of China, Russia, India and Brazil for steel will take 60% of the global market in 2010. In the past two years the proportion was respectively 58% and 50%.
The British steel consulting company MEPS forecasts that the steel output in the world will increase by 11% to the historical high 1.35 billion tons. China’s steel output will increase by 7.3% to 609 million tons. In addition, nearly half of the demand for steel in the world came from China.
Auer said that the financial crisis accelerated the construction of the new steel manufacturing bases, of which the ones in China and India are the most important. The customers in the USA, Europe and Japan with advanced technologies will attach more importance to the flexible, high-quality, safe and environment-friendly products. They have higher requirements for the technology. For China and India where the infrastructure projects are booming, the simple steel products with good cost performance are more popular. However, it is undoubted that the markets in China and India have the higher growth rate. According to the data from Siemens VAI, the market value in these two countries is 11.2 billion euros while the demand of the high-end market in the developed countries is only worth 3.7 billion euros.
“If we want to succeed in the next five years, we must win the markets of China, India, Brazil and Middle East,” said Tim Dawidowsky who is in charge of Siemens VAI’s foundry and rolling business.
Siemens VAI’s
China Strategy
The increase in China and India has given Tim Dawidowsky, a precise German, more confidence. According to the data from Siemens VAI, the market volumes of China and India took 12% and 3% of the global market in 2009. The proportions will reach 25% and 8% in 2015. The appealing market cheers up many people, including Dawidowsky. However, the German seems very calm in front of this big market. In his opinion, four things must be done to dig up the market potential: to share the growth potential, to have the says as the participator in local market, to develop the products which can meet the demand of special market and to keep the competitive advantages.
Presently, Siemens VAI has three manufacturing bases in Shanghai and Taicang, Jiangsu and employs 1,380 workers. It also has a manufacturing base in Bombay, India and employs 760 workers. Obviously, Siemens VAI has already laid solid foundation for its future development. In the next two or three years, Siemens VAI will invest 35 million euros in expanding the product category through China and India.
However, the heated market also caused fierce competition.
Recently, Siemens VAI’s parent company – Siemens Industrial Solutions CEO Jens Michael Wegmann said: “The steel-making facility market is completely different after the financial crisis. Everybody is competing for a few big projects. We have to focus on our service and modernization with which we can take the market.”
“We can not buy market and customers. So we have to win them with our products and service,” said Tim Dawidowsky.
Confronted with the competition from the local competitors and the international rivals, Siemens VAI can not treat the situation casually. SMS Group and Danieli Group, which together take nearly 50% of the market, have already stepped into China’s market. The Chinese domestic company China Metallurgical Group Corporation, which has good and stable relation with China-based steel companies and is gradually expanding the business into Russia, India and Brazil, is also a strong opponent for Siemens VAI.
The promising Chinese steel market is attracting the steel giants from all over the world.
“In the 2009 financial year, 54% of our new orders were from Asia and China was the biggest supplier,” said Werner Auer, CEO of Siemens VAI in May 2010 when he was present in the Fourth Global Summit of Siemens VAI on Metallurgy and Mining in Germany.
Siemens VAI’s predecessor was the VAI Technology Co., Ltd in Austria. It was the leading company in the steel and aluminum products design and metallurgy technology in the world. It had complete steel- and aluminum-making technologies, including agglomeration, iron making, steel making, automatic metallurgy and environment-friendly technology. 70% of the steel makers in the world has adopted the steel-making technology provided by this company. It took 25% of the global metallurgy technology market.
The company was acquired by Siemens in 2005 based on which the Siemens VAI Metallurgy Department was founded. This department belongs to the Industrial Solutions Department of Siemens.
Rise of China’s Steel Market
According to the World Steel & Iron Association, the global demand for steel and iron decreased by 7% in 2009. But China, though influenced by the financial crisis, still saw its demand for steel increase by 25% in 2009. In 2010 the global demand is expected to have a 10% increase and the demand in China will further increase by 10%. The demand of China, Russia, India and Brazil for steel will take 60% of the global market in 2010. In the past two years the proportion was respectively 58% and 50%.
The British steel consulting company MEPS forecasts that the steel output in the world will increase by 11% to the historical high 1.35 billion tons. China’s steel output will increase by 7.3% to 609 million tons. In addition, nearly half of the demand for steel in the world came from China.
Auer said that the financial crisis accelerated the construction of the new steel manufacturing bases, of which the ones in China and India are the most important. The customers in the USA, Europe and Japan with advanced technologies will attach more importance to the flexible, high-quality, safe and environment-friendly products. They have higher requirements for the technology. For China and India where the infrastructure projects are booming, the simple steel products with good cost performance are more popular. However, it is undoubted that the markets in China and India have the higher growth rate. According to the data from Siemens VAI, the market value in these two countries is 11.2 billion euros while the demand of the high-end market in the developed countries is only worth 3.7 billion euros.
“If we want to succeed in the next five years, we must win the markets of China, India, Brazil and Middle East,” said Tim Dawidowsky who is in charge of Siemens VAI’s foundry and rolling business.
Siemens VAI’s
China Strategy
The increase in China and India has given Tim Dawidowsky, a precise German, more confidence. According to the data from Siemens VAI, the market volumes of China and India took 12% and 3% of the global market in 2009. The proportions will reach 25% and 8% in 2015. The appealing market cheers up many people, including Dawidowsky. However, the German seems very calm in front of this big market. In his opinion, four things must be done to dig up the market potential: to share the growth potential, to have the says as the participator in local market, to develop the products which can meet the demand of special market and to keep the competitive advantages.
Presently, Siemens VAI has three manufacturing bases in Shanghai and Taicang, Jiangsu and employs 1,380 workers. It also has a manufacturing base in Bombay, India and employs 760 workers. Obviously, Siemens VAI has already laid solid foundation for its future development. In the next two or three years, Siemens VAI will invest 35 million euros in expanding the product category through China and India.
However, the heated market also caused fierce competition.
Recently, Siemens VAI’s parent company – Siemens Industrial Solutions CEO Jens Michael Wegmann said: “The steel-making facility market is completely different after the financial crisis. Everybody is competing for a few big projects. We have to focus on our service and modernization with which we can take the market.”
“We can not buy market and customers. So we have to win them with our products and service,” said Tim Dawidowsky.
Confronted with the competition from the local competitors and the international rivals, Siemens VAI can not treat the situation casually. SMS Group and Danieli Group, which together take nearly 50% of the market, have already stepped into China’s market. The Chinese domestic company China Metallurgical Group Corporation, which has good and stable relation with China-based steel companies and is gradually expanding the business into Russia, India and Brazil, is also a strong opponent for Siemens VAI.