Aspiring global players must consider China

Dr Jianguo Hong manages FAM’s successful Chinese operations

China may be far away, but the country is playing an increasingly important role for companies from Saxony-Anhalt.

Magdeburg conveyor system specialist FAM is one of the companies from Saxony-Anhalt which already has a foothold in China. FAM sells around 85 percent of its products abroad. Clients of the major exporter include coal power plants and port facilities. FAM has 12 subsidiaries around the world, since 2009 including one in China. Dr Jianguo Hong, managing director of the Chinese subsidiary, talks of a rapid growth in Chinese business which is set to continue.

Dr Jianguo Hong has given a new meaning to ‘FAM’ (Förderanlagen Magdeburg). He created a slogan which is going down well in China: ‘FAM - Flexibility And More’. In Asia, people value German virtues – punctuality, reliability and discipline. But those seeking success in the ‘Middle Kingdom’ must also be flexible, respond rapidly and be able to adapt to specific customer requirements, says Dr Hong. ‘We don’t put the cart before the horse’, he explains. A decision on whether FAM sets up a subsidiary, opens a representative office or enters into a partnership is not taken until success on the market is clear and a project has been acquired. This was the approach in Canada, Chile and Russia, and is exactly how today’s managing director of FAM China developed the company’s Chinese operations. ‘The risk must be calculable; gradual, steady growth is important.’

Six years ago, the conveyor system specialist opened an office in China. Three years later, ‘FAM Material Handling Technology Co. Ltd.’ was established in Beijing. ‘A start-up phase demands one hundred percent commitment and effort on all markets’, says Dr Hong. ‘Back then, China was a completely unknown quantity for FAM.’ The breakthrough onto the Chinese market was a double success with two FAM products at once, the compact ball mill and the hammer mill. These products gave the company from Saxony-Anhalt a good reputation with coal power plants. ‘A great deal of energy and effort’ was invested in the two projects, according to Dr Hong. And paid off: FAM has since sold major handling and conveyor systems for open-cast mines and bulk materials storage sites. The country is, however, not just a sales market. ‘We also buy equipment in China’, explains the managing director, who travels between the two countries up to ten times a year. For conveyor systems which are exported to China, the German company supplies the central machines and devices; the steel structures are manufactured locally. Dr Hong believes this offers two benefits: it avoids the complicated and costly transport of the huge steel structures, and also involves Chinese companies in the process. ‘This collaboration secures us a high level of market acceptance’, explains the managing director.

German products have a reputation of reliability in China, says Dr Hong. ‘We sell plants and equipment in China which are destined for end customers in other countries.’ This has created a business momentum allowing the Chinese FAM to become firmly and successfully established. It now employs a staff of eleven, and orders frequently come straight to the Chinese office rather than through the headquarters in Magdeburg. Business in China has grown sharply over the past three years in particular according to Dr Jianguo Hong. The 49-year-old qualified power plant engineer, whose first name literally means ‘build the country’, used to dream of working in a company in search of pioneers. ‘I wanted to experience the development and start-up process at first hand’, he explains. For Dr Hong, who studied in both China and Germany, the two countries are closely connected. ‘China is my home country and Germany is my home’, he says. And this will remain so. ‘China will play an even greater role as a major market over the coming years.’ Dr Hong has also observed that ‘many Chinese companies want to invest in Germany. Any aspiring global business players should bear that in mind.’