Enhanced role in China for thyssenkrupp

An employee uses a winch to maneuver an electronic automotive steering system ahead of packaging on the final assembly line at thyssenkrupp AG's Presta SteerTec factory in Mulheim, Germany. BLOOMBERG

China is likely to play a bigger role in thyssenkrupp AG's proposed new industrial solutions entity, as the German industrial conglomerate experiences its biggest reorganization in decades to pursue more focused and efficient growth, its chief executive officer has said.

The elevator business, including elevators, escalators, access and airport solutions, will remain its largest segment in China after the details of the reorganization are decided in 12 to 18 months, whereas automobile-related technologies are set to enjoy the fastest growth, according to Guido Kerkhoff, who chairs the executive board leading the reorganization.

"China is much stronger in the industrial side," Kerkhoff told reporters in a group interview in Shanghai. "You see more and more technologies which first emerged in China and are then deployed everywhere. That's a trend that will definitely continue."

Kerkhoff was speaking months after he was appointed CEO to steer the reorganization of the company into two independent and listed units to counter profit pressure and sustain growth. One will manage its elevator, auto parts and plant construction businesses, the other its steel and metals operations.

Sales in China reached 3 billion euros ($3.42 billion) in the fiscal year ended Sept 2017, representing 7.2 percent of the group's overall revenue. But Kerkhoff saw bigger potential in the Chinese market, where growing population and urbanization sees more pressing and premium mobility demand.

He said the greatest number of thyssenkrupp's contracts in the auto sector now come from Chinese companies, and it is looking to further enter the realm of autonomous driving and intelligent vehicles.

"If you look at the auto sector, we follow the trends with our clients where more and more innovation comes out of China and then spreads to the rest of the world," he said.

One recent tie-up with Chinese companies included a memorandum of understanding signed with rail car manufacturer CRRC Corp, with the parties pledging research cooperation in the fields of smart mobility, magnetic technology, environmental protection and renewable energy.

Kerkhoff added that the company is open to all opportunities to work with Chinese partners in areas like big data analysis, such as in the newly unveiled HoloLinc solution to speed up sales for stairlifts thanks to a tie-up with Microsoft Corp.

Being part of the China International Import Expo scheduled for Nov 5, thyssenkrupp is highly optimistic about the nation's pledges to continue to open up the economy and create a level playing field for all businesses.

"The expo is a very important and positive signal to all participants in the market that China wants to have an open international trade environment, open trade policies, and create a fair competition market," said Gao Yan, CEO of thyssenkrupp China.

"Today we are a very localized company, manufacturing products in China and exporting to other countries. We will continue this process. "