Embed Size (px)
Citation preview
Embraco’s Embraco’s Embraco’s progress in progress in progress in
CHINACHINACHINACHINACHINACHINA
World leader in World leader in hermetic compressor hermetic compressor
+ 300 million+ 300 millionproducts products 22%22% global global
Embraco Today
Plants in Plants in 3 3 continents continents
Bra z il
4 ,8 10
China
1,085
Italy
1 ,657
Slovakia
1,334
Singapore
2
Bra z il
4 ,8 10
China
1,085
Italy
1 ,657
Slovakia
1,334
Singapore
2
Bra z il
4 ,8 10
China
1,085
Italy
1 ,657
Slovakia
1,334
Singapore
2
Bra z il
4 ,8 10
China
1,085
Italy
1 ,657
Slovakia
1,334
Singapore
2
Technology Technology Leadership Leadership
hermetic compressor hermetic compressor market market
products products manufactured manufactured
+ 27 million+ 27 millioncompressors/yearcompressors/year
Global distribution Global distribution and sales networkand sales network
22%22% global global market sharemarket share in operation in operation
Plants and People
USA6868
Italy521521
Slovakia2.5402.540 China
1.2041.204Mexico 6868 1.2041.204
Brazil5.4055.405
Mexico11
TotalTotalEmployeesEmployees
9,7399,739
• Exporting to China since 1986
• Embraco brand already known in Asia
• Perception of economic growth, domestic potential of the cooling market
• Future export base for the continent
Why go to China?
Determining Factors for the Investment
• Good infrastructure, low production costs
First Brazilian company to form a joint venture with First Brazilian company to form a joint venture with
the Chinese government in 1995 the Chinese government in 1995
Investment to know peculiarities of the market
• How business is done in China• Financial market – capital inflow and
outflow• Legal and taxation systems
CHINESE MARKET
Embraco’s First Steps
• Legal and taxation systems• Regional differences
Market demand, then estimated at 7 to 8 million compressors/year
Cultural differences between the two countries
1993 – Initial negotiations for a possible partnership
1995 – Joint venture established with Snowflake group, controlled by the municipality of Beijing
Embraco’s First Steps
Documents that structured the association:• Joint venture contract
• Articles of Association – Limited partnership
• Installation’s rental contract (factory already existed)
• Licensing contract to use brand on product
• Technology transfer contract – EC compressor
Cultural understandingCultural understandingBusiness strategiesBusiness strategies
Characteristics and Challenges
Understanding social protocolsUnderstanding social protocols
Intellectual propertyIntellectual property
Consolidation of judicial systemConsolidation of judicial system
Complex negotiationsComplex negotiations
Start of Operations - 1995
• Beijing Embraco Snowflake Compressor Company - BESCO
• Old factory located in urban area: Fungtai District, south of Beijing
• Production volume: 1 million compressors/year
• Number of employees: approximately 1150 people
• Focus on domestic market
Main Challenges:
• Uncertainties regarding Chinese legislation
• Marked cultural differences
• Trust between the parties – relationship building
EMBRACO
SNOWFLAKE69.18%
Current Capital Stock Structure
SNOWFLAKE
30.82%
BOARD OF DIRECTORS
PresidentPresident
ViceVice--PresidentPresident
MembersMembers
Management Structure
ManagementManagement
General ManagerGeneral Manager
ViceVice-- General ManagerGeneral Manager
ManagersManagers
MembersMembers
• New factory located in planned area – near
the Beijing International Airport
• Joint investment of US$ 65 million
• Strategic platform to supply the Asian market
with cooling systems
Embraco Today in China
with cooling systems
• Focus on the domestic market
• Full production capacity of 4.5 million
products
• ISO 9001 Certification
• More than 1,100 employees
• Research and development center
• New product EM - global
• State-of-the-art technology
• Full production capacity of 4.5 million
products
New Factory Differentials New Factory Differentials New Factory Differentials New Factory Differentials
products
• Environmental concerns:
- Reduction in water consumption
- Reduction in electric energy
consumption
- Reduction in CO2 emission
1879
2278 2200
2700
3500
Sales Volume Evolution in China
92208
580
1136
14381335 1329
1503
1879
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007*
* Forecasted
3.2
5.15.3
6.67
7.1 7.4 7.76.8
6.76.0
6.36.4
1.82.3
2.2
2.63.3
7.10.1 0.2
0.61.1
1.4 1.3 1.3 1.5
13.3
16.3 15.7
18.220.0
21.7 22.3 22.7 22.9 23.625.0
22.9
27.326.7
Global Sales Volume
BRAZIL EUROPE CHINA
*Profit Plan – millions of units
9.4 10.1 11.1 10.2 11 11.9 13.2 13.6 13.7 14.3 15.0 16.0 14.7
18.4 17.0
3.2
06 07*05040302010099989796959493
• Chinese partnership management is
more focused on results
• Management, quality and productivity
concepts are internalized
• People already understand that the
Current Situation
• People already understand that the
company should generate jobs and
profit
• China has been a member of World
Trade Organization since 2004
• Steady growth supports investments
for future development
New Plant Inauguration – May 2006
New Plant Inauguration – May 2006
New Plant Inauguration – May 2006
New Plant Inauguration – May 2006
New Plant Inauguration – May 2006
Conclusion
“A Chinese bargain” does not exist.
Ernesto HeinzelmannErnesto HeinzelmannErnesto HeinzelmannErnesto Heinzelmann
[email protected]@[email protected]@embraco.com
