Freudenberg invests, expands in Chinese market

Global technical solutions company Freudenberg Group is upbeat about the Chinese market, where it will continue to invest and develop a diverse and innovative portfolio that meets the needs of the country's industry, said the company's senior executive.

The German technical solutions provider said that it will officially open a new factory in Changchun, Jilin province, in October. The new factory, which spans 32,558 square meters, will introduce new product lines to provide high-quality seals for the domestic automotive industry and meet the growing need of local customers.

Freudenberg's localization footprint in China is more than that. Recently, it has established a technology innovation department in Shanghai, which aims to promote research and development cooperation between the company and local research institutions and innovative enterprises. Furthermore, it will serve as an intermediate to coordinate communication and resource allocation between the company's headquarters in Weinheim and the local innovation network in China, and to promote its technological breakthroughs in e-mobility, new energy, sustainability and smart manufacturing.

Bettina Schoen-Behanzin, Freudenberg Group regional representative for Asia, said: "The innovation department will create a corresponding innovation network through scouting activities and establish collaboration with startups, companies, universities and institutes in China. It will closely follow the strategic direction of China's technological innovation development, and develop in-depth knowledge of governmental initiatives, R&D public funding opportunities and industrial demonstration projects."

Speaking of China's technology innovation market, she said that China's technological capabilities have been given incredible momentum.

"Chinese industries are not only getting closer to the technological frontier in conventional areas such as electronics, machinery, automobiles, high-speed railways and aviation, but also driving technological innovations in emerging areas such as new and renewable energy, next-generation telecommunication technologies, big data and supercomputers, artificial intelligence, robotics, space technology and e-commerce," she said.

She also noted that China's huge number of consumers and the market size are a blessing for innovation, which promises sufficient returns to cover the costs of either acquiring foreign technology or undertaking a cumulative learning process to catch up with foreign frontier technologies.

The market size is also key to unlocking the "learning curve "effect, as in the cases of the Chinese solar and electric vehicle industries, she said.

Last October, Freudenberg commissioned a new state-of-the-art consumer filter manufacturing facility in Shunde, Guangdong province. In Wuxi, Jiangsu province, the newly expanded tech center of Vibracoustic, a sub-brand of Freudenberg, provides advanced testing and development services since February. Vibracoustic will open another factory in Chongqing in early 2023. SurTec, a unit of Freudenberg Chemical Specialties, will also inaugurate its new technical center in Hangzhou, Zhejiang province at the end of this year.

Chen Jia, an independent researcher of international strategy, said: "After the COVID-19 pandemic broke out, China demonstrated excellent economic resilience and supply chain assurance capability. This has strengthened foreign companies' confidence in building factories in the country.

"Multinational corporations establishing factories in China are also a result of the Belt and Road Initiative. When numerous domestic companies are exporting their products and services overseas, the spillover effect promotes the relevant international industry-leading enterprises to accelerate vertical industrialization and make additional investments in the Chinese market. This will greatly help them lower operational costs and take advantage of China's relatively mature industrial R&D capabilities.

"With lowered costs and raised localization level, it is expected that more and more European technical enterprises will establish factories in China," Chen added.

Currently, Freudenberg employs over 7,000 people in China and operates over 70 branches, including more than 20 manufacturing facilities and numerous sales and service offices. Now, the Freudenberg Regional Corporate Center Asia, located in Shanghai, can provide operational support to Freudenberg companies in the Asia-Pacific region.

"Now, China is Freudenberg's third-largest market and crucial to the group's strategy. Continued investment in high-tech manufacturing infrastructure and local R&D facilities are integral to the group's long-term approach and innovation strategy here," Schoen-Behanzin said.

"The rapid development of the Chinese market is visible to the entire world. The rapidly expanding economy opens up a wide variety of market opportunities. Only by establishing a local production network, nurturing local talent and strengthening local R&D capabilities will we be able to meet the needs of local customers more efficiently," she said.