Land of opportunities

Updated: 2012-11-08 07:51

(China Daily)

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Jan Kreibaum

president and CEO, Knauf Asia-Pacific

1. China has grown at a tremendous rate during the past two decades, an impressive achievement never seen before. Combined with the huge population and strong linkage with the global economy, it is clear that China will continue to be a key global driver. At the same time, as China grows in affluence it is unlikely that these high growth rates can be maintained in the long term. With a strengthening share of domestic consumption and continuing urbanization, I believe, however, that during the next decade China will continue to show growth rates in the range of 5 to 8 percent - indeed, I would consider this a very healthy growth rate. It is also important to realize that the needs of the Chinese population are increasingly focused on safety and health, as well as environmental concerns, not just on increasing wealth. Certainly Knauf is in a good position in China - with a wide product-solution offering, based on our proven German technology and innovation - to contribute and participate in this continuing growth.

Land of opportunities 

2. As a family-owned company with a very successful history, we always take a long-term view in our planning. It is a fact that all economies go through cycles but the longer-term outlook is the one that is critical to our planning. Even with current concerns, China will inevitably continue to grow and the increasingly sophisticated needs of its population convince us that China is a key market for our future planning. We are now completing the investment in our new Taicang site (in Jiangsu province), which will be one of the most advanced plasterboard-system production sites in Asia. Furthermore, we will be introducing capacities for new and innovative plaster solutions over the next few years, which will offer increased safety, health and economic benefits to our customers.

3. As we are currently investing in new capacities and, importantly, also in a wider product offering, we expect to grow our sales substantially over the next five years. It is important that in a market such as China we are in a position where we can continually improve and adapt our product and service offerings to be accepted as a preferred supplier by our customers. As the needs of the population are shifting more strongly towards safety and health as well as concerns about the environment, it is important that we continue to develop solutions that address these evolving needs. In our industry, Knauf - as the world's leading manufacturer of building materials - is unique in bringing German technology and innovation to China to support our customers. With this approach we plan to ensure realistic profitability for our business in China.

4. Rising energy, raw material and labor costs are a concern for all manufacturers in China. We are continually improving our production efficiencies to counter some of these increases. For example, we have converted our production sites from coal and heavy oil to natural gas, allowing for not only better efficiencies but, more importantly, also respecting our environmental responsibilities. However, the increasing concerns about energy costs and availability also offer a company such as Knauf, with its advanced building materials, new opportunities. Our customers face the same problems and, for example, our new plaster-solution offerings will provide not only safer and healthier solutions but also economically advantageous options.

5. As China is rapidly becoming a developed economy, it is establishing an economic environment with clear and fair rules for all participants, whether domestic or foreign-owned. We expect the new leadership to continue in this endeavor. Furthermore, we expect that the new leadership will further focus on the well-being and quality of life of its citizens, to which Knauf is fully committed to employing its technology and innovation prowess to contribute, with its new product solutions focusing on safety, health, comfort and sustainability.

Edward K. C. Cheung

CEO, North Asia, DTZ

Land of opportunities 

1. As a reflection of the central government's efforts to cool down the economy and prevent it from overheating, GDP growth of 7.4 percent is considered a healthy and positive sign. The government is looking for sustained growth, with the emphasis on quality of life rather than quantity of GDP growth.

We expect China to continue to be the most important growth engine for the global economy in the coming decade. Given that other parts of the world, including major developing countries such as India, are not seeing GDP growth increase significantly, China will continue to be the most important growth engine. (China has an rising middle class whose greater purchasing power fuels high demand for retail and residential property. As such, property development investment in China continues to witness robust growth. The urbanization rate continues to be high and Chinese cities are much, much bigger than those in the West. We also need to mention the growing importance and expansion of China's tertiary sector. Our company has been working in the Chinese market for a very long time and any positive developments in the country will certainly benefit our business.)

2. There will no delay or cancellation of our expansion plans in China. We will see cost factors as well as other macro changes as part of the development characteristics of the country. Since we believe in China being the growth engine of the global economy, we will continue to develop strongly in this market.

3. We are in the real estate business and consider real estate to be a major part of the country's GDP growth. Therefore, this year, as well during the next five years, we foresee stable and healthy development of the real estate market. This will benefit our company's performance.

4. Being in a fast-growing market, there are areas in terms of rules and regulations as well as technical issues that the Chinese market is still perfecting. We hope that given time, aspects such as the legal and regulatory systems and market transparency will continue to improve. This will not only benefit our business but all other industries as well.

5. The new government's priority will be to ensure sustained and healthy economic growth. Chinese exports have witnessed a decline recently and domestic consumption growth has been flat. As it will take some time for the external economic environment to improve, the focus from the new leadership will be on boosting domestic consumption. Domestic demand and consumption will be the main drivers of economic growth. We expect these GDP-boosting measures from the new leadership to have a positive impact on commercial properties. They have always been the focus of our company's business. Therefore, we see positive growth for our business in the coming year.

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