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  Frank Petznick
Hella expects to maintain fast growth in China despite sluggish economy
Yang Jian | 2015/12/11

Hella KGaA Hueck & Co.'s lighting and electronics operations in China are thriving even as the nation's economy has slowed, the head of the German supplier's electronics business in China says.

Hella has five lighting plants and three electronics plants in China and employs more than 5,000 people in the country, including 700 engineers in six r&d centers.

Frank Petznick, executive vice president of Hella's electronics business in China and member of Hella's executive board for electronics business, spoke last month with Automotive News China Managing Editor Yang Jian about Hella's operations and market prospects in China.

How are Hella's lighting and electronics businesses doing in China?
Both businesses have been following a very strong growth path in the past several years. In the last fiscal year, our China sales reached 5.5 billion yuan, growing more than 23 percent year on year and accounting for 15 percent of Hella's global sales. The two businesses, lighting and electronics, each generated roughly half of the sales.

Which automakers are Hella's main customers in China?
Volkswagen and General Motors are our two largest customers. We have a significant market share with Japanese automakers, and BMW and Daimler are also important customers for us. Our market share with domestic Chinese automakers has grown significantly. Over 20 percent of our sales come from the locals.

What products does Hella export from China?
We only export electronic parts from China. Right now, we sell 74 percent of our electronic parts in China and the rest are for export. We mainly export to Asia, Europe and the United States. That's because we have some global customers -- General Motors, for example -- that we supply. Also, German carmakers let [our plants in Shanghai] produce the entire global volumes of some components.

In September, Hella disclosed that a Chinese injection molding supplier abruptly stopped shipping parts to Hella's lighting plants. What's the latest about this incident?
The incident is completely closed. That was a special incident indeed, which at that moment had an impact on us. But we have managed our supply chain to avoid any long-lasting effects from the incident. After the incident occurred, we supplied our customers by using backup resources from other suppliers, so no production line was stopped because of the incident.

This year, Philips sold its automotive lighting unit to Chinese investors. Does Hella plan to sell its lighting business?
No, we don't. HELLA started as a lighting company. Even today, most people still connect Hella to lighting. Over the years, our electronics business has grown significantly and globally it is as big as the lighting business in terms of revenue. Both businesses belong to Hella. We have no intention to sell either of them.

Actually, a combination of electronics and lighting businesses is a big advantage for Hella. Because the more LED and functions are adopted in headlamps and taillamps, the more the lighting business becomes electronic. So our electronic division is providing strong support for our lighting division.

Car sales in China have slowed this year. Will this affect Hella's growth in China?
The Chinese car market has indeed slowed, but we think the growth now is healthy and still significant. This market is becoming more competitive and automakers are trying to differentiate themselves by offering new technology. We recently brought our radar and electronic power-steering technologies here. I believe we can still grow a bit faster than the market by bringing in new products over the next couple of years.

What are some new features likely to appear in vehicles in the next few years?
The computing power of a car will allow us to offer features that we could not offer before. We can combine signals from radars, infrared cameras and ultrasonic sensors to create a picture that will help a driver to recognize the environment. Meanwhile, matrix beam headlights will allow drivers to project lines or patterns on the street with LED beams or selectively flash on obstacles or danger. I think we'll see some of these features in the next few years.

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