Voith geared up for the long haul in China

By Shi Jing in Shanghai (China Daily) Updated: 2014-12-12 07:55

However, Lienhard admits that there will be some obstacles in the longer term.

"Industries like steel, cement, paper and even power plants are all suffering from overcapacity in China. The industry will take some time to absorb the excess capacity," Lienhard said.

Currently Asia accounts for 25 percent of Voith's overall sales, and China for 80 percent of the Asian pie.

"But for the slowdown, China would have become the single largest market for us globally. It will be another two or three years before it actually happens," he said.

"What has really happened is that most of the industrial activity has remained stagnant, barring exceptions like the Internet and auto industries.

"As far as we are concerned, the automotive sector business has been good for us, while the paper sector remains weak. It is not that big a concern and we are confident that all our businesses will post strong growth in the next few years."

Voith's presence in China can be traced back to 1906 when it bagged a water turbine order for a hydroelectric power station in Yunnan province.

The turbine, commissioned in 1910, is still operational and in good condition, said Lienhard.

For Voith, 2014 is rather special as it commemorates the two decades of its joint venture with Shanghai Electric Group Company Ltd for supplying equipment to major hydroelectric projects such as the Three Gorges Dam, Xiluodu Hydroelectric Power Station and Longtan Hydro Power Station.

According to the China Electricity Council, hydroelectric power accounted for 22 percent of China's total power generation in 2013. Though it is the second-largest mode of power generation in China, doubts still remain about the prospects for hydroelectric equipment suppliers.

Lienhard reiterates that such concerns are unwarranted. "Statistics show that China has the potential to generate 600,000 megawatts of hydropower every year. Even if China were to double the present capacity, which is about 250,000 megawatts, it would provide us sustained growth opportunities for the next two decades," he said.

Voith is one of the major power equipment suppliers to the two Chinese rail makers - China Northern Locomotive and Rolling Stock Industry Group Corp and CSR Corp Ltd. It is betting big on this segment of its business to provide steady growth as lot of Chinese cities are developing their own metro lines.

"We also manufacture automatic transmissions for buses. Chinese bus makers export buses to several places in Africa and South America. In this sense, we want to be a local company, which supplies to the local industry and then helps them go abroad. We also want to be a key supplier to local companies that are going into markets like the United States," said Lienhard.