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Production in Wuhan (China) starts on schedule
The goal: 10% market share in five years

Horstmar, September 2014 – In October Schmitz Cargobull will commence production at its new trailer plant in Wuhan, China, nearly at the same time as the IAA Show in Hanover. "We are exactly on schedule", reports the Board Member Andreas Schmitz at the preliminary press conference for the IAA Show. He has been in China since the middle of 2013, coordinating setting up the production line, selecting the suppliers and the personnel management. "We will have approximately 250 employees in Wuhan by the end of the year." Production target 2014: 500 vehicles.

Work is progressing well. The new hall was completed at the end of June. "We expect to commence series production in September," states Andreas Schmitz with a view toward the next step. The detailed preparation of the € 100 million investment is obviously paying off. There have been no delays and the collaboration with the Dongfeng Motor Group is proving fruitful. "We are using Chinese suppliers and, in some cases, suppliers whom we also work with in Germany," reports Schmitz. The supplier qualification process is in full swing.

An automotive zone is developing in Wuhan
Wuhan has eight million inhabitants, making it one of China's ten largest cities and an attractive location for highly-trained employees. More and more automotive companies are establishing sites in Wuhan as a result of its favourable location between Shanghai, Beijing and Hong Kong. At the end of 2013 Schmitz Cargobull had 40 local employees. This will have increased to approximately 250 by the end of 2014. Approximately 20 employees from Germany supported the project on location. Four employees from Germany are now permanent members of the management team in Wuhan. In addition, Chinese managers are also being trained for the management team.

The employees in China will receive similar training to their colleagues in Europe to prepare them for their new roles. Before the SOP (start of production), in particular, there will be intensive training covering the entire value chain from sales to development and order processing to production. In the process, Chinese employees have received several weeks of training in Germany. In addition, the core German team underwent several phases of intercultural training.

Market volume in China: 175,000 to 200,000 trailers per year
The Chinese market is only just beginning to develop. Schmitz: "Approximately 90% of the transport companies are still owner-drivers. There is almost no specialisation for specific types of transport." That is why the production and sales will initially commence with robust trailers designed to take on many different tasks. Economic developments will give rise to middle-sized and large-scale transport companies over the middle term. Similar to European firms, these transport companies will in turn specialise and require specific types of trailers. With its expertise gained in Europe, Schmitz Cargobull possesses the flexibility to serve this demand. In addition, the durable vehicles will enable sales to be expanded into Mongolia, Russia and neighbouring Asian countries.

Government closing plants without a licence

In the Chinese market there are approximately 400 manufacturers with a production licence and 2,000 small manufacturers without a licence. In part due to safety concerns, the government is now taking action and closing a large number of those plants without a licence. The largest competitor among the major manufacturers covers approximately 15% of the market relevant for Schmitz Cargobull. All of the other competitors are far smaller, with a market share of 2 to 3%. Currently, 175,000 to 200,000 trailers are registered every year in China. Schmitz Cargobull and its joint-venture partner, Dongfeng, aim to achieve a 10% market share within five years. When working at full capacity, up to 40,000 units per year can be manufactured at the plant in Wuhan.

Several-year head start

A number of competitors from Europe and America have announced plans to expand into China. However, primarily only American manufacturers are currently entering the market. "From our own experience we know that entering the market requires a long period of preparation," explains Schmitz. The management intends to use the several-year head start to expand the market share.