David Liang, managing director of market-leading tool steel service provider ASSAB in northern and central China, talks to Dermot Healy about challenges and opportunities presented by the rapid pace of change in the Chinese automotive sector.
AMS: Your company ASSAB has been involved with the Chinese automotive sector for many years. Tell us about how your company currently serves this rapidly expanding market.
David Liang: This is an interesting story since this is due to the hard work of many ASSAB colleagues. ASSAB has really grown with the expansion of the automotive sector in this country. ASSAB’s presence in China dates back more than 60 years. In the mid 1950s, ASSAB tool steels were distributed in southern China. In the early 1990s, we established our first ASSAB-owned outlet in the special economic development zone of Shenzhen City. Our Swedish parent group Uddeholm is the supplier of special steel products for ASSAB in China. The ASSAB name in Chinese is Yi Sheng Bai, which means “one beats one hundred” and is of great symbolic value in China. In fact, our name ASSAB is so strong in China that it serves as an industry reference.
Our vast experience in the China industry allows us to offer a more sophisticated level of service, which includes a specialist knowledge that has come to be appreciated by our customers. We have an extensive product portfolio and can support customers with the full range of cutting, machining, CNC contour machining, PVD coating and heat treatment processes. We do our very best to be a ‘one-stop’ supplier.
As you know, growth has been rapid in recent years as foreign automotive OEMs have established new plants in China. The approach has been to go beyond mere assembly operations to localise the manufacture of the component parts of their vehicles and this trend continues. At the same time our domestic manufacturers strive to adopt the latest technologies to be found in the United States and European models in their own products. They have turned to us to help in their ambitions, as ASSAB has the necessary experience to support them. These factors help us grow and become even more sophisticated in our services to the automotive industry.
AMS: I have read your company has set some impressive targets for revenue growth in coming years. How do you see the market developing?
AMS: Perhaps you could tell us about this service infrastructure. How is it organised, and how does it serve your customers?
DL: We have a strong, established network of service centres strategically located across the country. Actually, our network cannot be matched by any other tool steel supplier in China. This allows us to be well placed to serve our customers as they grow, develop and change. We have made the necessary investments with qualified, experienced people, as well as ensuring they have the hardware and software systems all in place to support them.
Each service centre of course carries stock of special steel, but they will also have a range of laboratory services and technical staff who can respond quickly to particular requirements for products and services. They form close working relationships with customers in their region, to ensure that needs are met and quality of service is maintained. They are the first port of call for advice on material selection or to help with customers’ quality issues or production problems. Of course, considering the automotive manufacturing focus in East and Central China we have chosen to make additional investments in Shanghai where ASSAB has additional facilities for material analysis, impact testing and microscopic scanning which can be called on to assist with any of our customers’ problems. Similar sophisticated ASSAB services you can surely find around the country, also in our other service hubs from Beijing in the North to Dongguan in the South.
AMS: So this level of service has helped your company grow and secure its current place in the market?
DL: Yes, of course. We offer a unique level of service to our customers wherever they are located in the country. We aim to offer the same or even better level of service to customers here in China, as customers would experience in the US or Europe. We have made the necessary investments, and have made the commitment, and it is this that has perhaps helped us to become market leaders in our field. The ASSAB level of integration of additional services is even more sophisticated than what you will find in US or Europe. Unfortunately, being a market leader in China also brings negative consequences such as trademark infringements. We come across individuals in China who try to impersonate ASSAB but we are spending a lot of time and resources to remove such criminal activity. Our advice is for our customers to always use the official ASSAB channels.
"To succeed in China with automotive customers requires enterprises with agile and responsive instincts"
AMS: Are there particular developments for the future that you see as offering you special opportunities?
DL: Yes, we have seen very rapid growth, for example, in demand for large die casting of aluminium for powertrain and vehicle structural components and this poses special challenges. Hot forming is also an area that is growing rapidly, and generates the need for the kind of specialised high quality tool steels that we are best placed to provide. Being a market leader and belonging to a multinational steel group, we always need to stay one step ahead. To ensure that we already have in place the facilities, products and development capacities to respond once customers finalise their plans and start to specify their requirements. ASSAB is fortunate as we have had the resources to make the necessary investments in good time. New developments always generate special customer requirements. For example demanding customers may require larger furnaces for heat treatment, new kinds of coatings, or other specialist treatments. These new developments present challenges for toolmakers and therefore opportunities for innovation in our portfolio of products.
AMS: So you can offer the automotive sector a wide range of surface treatments and other services alongside the steel supply?
DL: Yes, it is becoming an ever more important part of our work. Surface treatments, such as PVD coating, are widely used in advanced tooling technology. With appropriate tailored coatings, the hardness, corrosion resistance, high temperature resistance and tribological properties of the material can be modified. ASSAB is able to offer PVD coating as part of our service portfolio here in Shanghai and in neighbouring regions. We provide customers a wide range of PVD coatings for different types of applications as part of a complete metallurgical service. So also with machining, ASSAB can pre-machine tool steels, provide both heat and surface treatments, stress relieving, nitriding, and similar processes to best realise the quality of the steel and enhance the performance of the tool. We work with toolmakers to identify the most appropriate materials and treatments for their particular applications. These high value added services are important for our company, and appreciated by our customers.
Of course, the product development cycle is always becoming shorter and shorter, with OEMs intent on reducing the time to bring innovation to market. To succeed in China with automotive customers requires enterprises with agile and responsive instincts. Working with automotive partners has helped us develop this way of thinking, and this way of working.
AMS: Are your colleagues in Sweden involved in your work? Do you have close links with the steel foundries?
DL: Being able to co-operate with our colleagues in Europe helps us a lot. Our account managers in Europe, working with all the major OEMs, can keep track of their new developments and new technologies. This allows us already to be familiar with the latest processes in advance of their application here in China. ASSAB can draw upon our colleagues’ expertise in Sweden in developing appropriate steel grades, and we are able to work closely with them in their new developments. This is an essential part of seeking to offer a global standard of service to our customers. It is what ASSAB customers have grown to expect, and it is an absolutely integral part of our service commitment.
