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Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Growth Through Effective Partnering Garry.

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Presentation on theme: "Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Growth Through Effective Partnering Garry."— Presentation transcript:

1 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Growth Through Effective Partnering Garry Cardwell Vice President and General Manager China, South East Asia, India, Australia Johnson Controls Inc.

2 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Content  Johnson Controls Corporate Overview  Why It Makes Sense to Partner in China  How Johnson Controls Approaches Making Successful Partnerships  Johnson Controls’ Experience in Partnering

3 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Diverse & Strong Business Segments Business Segments  Founded in 1885  123,000 employees worldwide  2004 sales of US$ 26.6 billion A UTOMOTIVE G ROUP (AG) C ONTROLS G ROUP (CG) The global leader, serving automakers around the world. Making customers' buildings more energy efficient, comfortable, safe and productive.

4 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Automotive Group BatteryInstrument Panel Door Panel OverheadSeating Complete Interior Integration Electronics/ Storage

5 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Over 6,000 in Engineering, Design, R&DOver 6,000 in Engineering, Design, R&D 7 Technology Centers (Asia-Pacific):7 Technology Centers (Asia-Pacific): –Pune, India –Ayase, Japan –Ansan, Korea –Changchun, China –Shanghai, China –Malaysia –Australia AG Worldwide Recent Acquisitions: Ikeda Bussan, JapanIkeda Bussan, Japan Sagem Automotive Electronics Group, FranceSagem Automotive Electronics Group, France Borg, GermanyBorg, Germany Hoppecke, GermanyHoppecke, Germany Varta’s Automotive Battery Group, GermanyVarta’s Automotive Battery Group, Germany Grupo Imsa, MexicoGrupo Imsa, Mexico Recent LOI for Delphi BatteryRecent LOI for Delphi Battery Shanghai, China

6 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team CHENNAI PUNE MALAYSIA THAILAND MELBOURNE INDIA AUSTRALIA CHINA TAIWAN KOREA JAPAN FUZHOU GUANGZHOU CHANGCHUN SHENYANG BEIJING SHANGHAI CHONGQING YANCHENG YANTAI ADELAIDE Asia-Pacific Operations Established first facility in 1997 Operations in 9 Asia-Pacific countries: Australia, China, India, Japan, Korea, Malaysia, Taiwan and Thailand 10 joint ventures, 11,000 employees 37 manufacturing plants 25 OEM customers

7 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team CHIN A FUZHOU GUANGZHOU CHANGCHUN SHENYANG BEIJING SHANGHAI CHONGQING YANCHENG YANTAI Johnson Controls in China Completed first JV agreement in 1996 – 6 primary, 4 subsidiary JVs today. One of the largest suppliers of seating systems and components in China. 18 auto seating and interior plants, 2 technical centers. Capabilities include product design, product evaluation, prototype build, production verification, production support, benchmarking, industrial design and local supplier development.

8 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Why It Makes Sense to Partner in China

9 A Color of Complexity: Three layers of networks, Geo-political barriers…….

10 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Keys To Partnering Success Find Strong JV Partners to Share Risk Strong OEM Connections with Current Business Solid Existing Partner Relationships with OEM Top 7 China OEMs GUANGZHOU SAIC FAW DONG FENG CHANGAN BAIC CBA

11 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Keys To Partnering Success Find Strong JV Partners to Share Risk Existing Facilities and Supply Base Lower Initial Investment Local Market Knowledge Mitsubishi Plant VW Plant Ren/Nissan Plant DCX Plant Legend Ford Plant GM Plant Honda Plant Toyota Plant BMW Plant Hyundai/KIA Plant 2005 Annual Volume, CSM Q Forecast Country volumes consist of only the above 10 OEMs

12 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Keys To Partnering Success Find Strong JV Partners to Share Risk Management Talent Open to Learning Reduced Expat Cost Willing to Adopt Best Practice Systems Quickly Manufacturing Purchasing Leadership Financial

13 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Keys To Partnering Success Find Strong JV Partners to Share Risk Shenyang Joint Venture Est in 1999 Products: Seat, Door Panel, Instrument Panel Shenyang Joint Venture Est in 1999 Products: Seat, Door Panel, Instrument Panel Beijing Joint Venture Est in 1997 Products: Seat, Door Panel, OHS Beijing Joint Venture Est in 1997 Products: Seat, Door Panel, OHS Changchun Joint Venture Est in 2001 Products: Seat, Door Panel, Instrument Panel, Headliner, Cluster, Parcel Tray Changchun Joint Venture Est in 2001 Products: Seat, Door Panel, Instrument Panel, Headliner, Cluster, Parcel Tray Shanghai Joint Venture Est in 1998 Products: Seats, headliner, visor, OHS Shanghai Joint Venture Est in 1998 Products: Seats, headliner, visor, OHS Chongqing Joint Venture Est in 2003 Products: Seat, Parcel Shelf Chongqing Joint Venture Est in 2003 Products: Seat, Parcel Shelf Guangzhou Joint Venture To be est in 2004 Products: Seat Guangzhou Joint Venture To be est in 2004 Products: Seat

14 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team How JCI Approaches Making Successful Partnership in China

15 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Success Factors Y = f ( Identifying, Assessing, Executing) = f (X 1, X 2, X 3, X 4, X5, X6) IdentifyAssessExecute X1X1 People X2X2 Market Due Diligence X3X3 Product Strategy X4X4 Decision Making X5X5 Implementation Method X6X6 Soft Factors

16 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team JV Process (Science) months HandoffKickoffClosingDecision Identification + Relationships Due DiligenceAssessmentIntegrationOperations days-3 monthsongoing-2 months Key output: Ranking:  Regions  Market Opportunities  Product Lines Report:  M&A Potentials  JV potentials  Product Strategy  Footprint  Business Plan  M&A or JV, Contracted,  CAR for Greenfield  Execution of Integration Plan  Validation of Business Metrics

17 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Art Science A Balance Between Art and Science It varies on: Market Entry Timing Global OEM vs. Local Political Leverages …………… Shenyang Joint Venture Est in 1999 Products: Seat, Door Panel, Instrument Panel Shenyang Joint Venture Est in 1999 Products: Seat, Door Panel, Instrument Panel Beijing Joint Venture Est in 1997 Products: Seat, Door Panel, OHS Beijing Joint Venture Est in 1997 Products: Seat, Door Panel, OHS Changchun Joint Venture Est in 2001 Products: Seat, Door Panel, Instrument Panel, Headliner, Cluster, Parcel Tray Changchun Joint Venture Est in 2001 Products: Seat, Door Panel, Instrument Panel, Headliner, Cluster, Parcel Tray Shanghai Joint Venture Est in 1998 Products: Seats, headliner, visor, OHS Shanghai Joint Venture Est in 1998 Products: Seats, headliner, visor, OHS Chongqing Joint Venture Est in 2003 Products: Seat, Parcel Shelf Chongqing Joint Venture Est in 2003 Products: Seat, Parcel Shelf Guangzhou Joint Venture To be est in 2004 Products: Seat Guangzhou Joint Venture To be est in 2004 Products: Seat

18 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team JCI’s Experiences in Partnering

19 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Reasons JVs Fail – Things to Avoid Strong daily execution World-class quality Maintain trust, partnerships Innovative technology Localization of materials Willing to adopt best practice systems quickly Good partners resolve any differences rapidly Both partners able to achieve their objectives How to Ensure Success Financial failure Parties don’t trust each other, can’t work together successfully Involved parties have conflicting objectives Partners can’t achieve their objectives Partnering: Failure Modes and Success Factors

20 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Summary / Conclusion  China represents nearly half of the automotive growth for the next ten years and the market is likely to become one of the Top 3 in the world.  We will be facing many challenges while the opportunities are tremendous for both growth and cost reductions.  Forging effective partnerships is critical for success as a supplier.  A successful partnership starts with relationship supported by transparent objectives, nourished by mutual trust and maintained through consistency in doing what we say we will.

21 Data source : Global Insight Automotive, Boston Consulting, PWC Goldman Sachs & JCI Asia Pacific Marketing Team Effective partnerships are based on trust


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