Grow in emerging markets
The so-called BRIC countries (Brazil, Russia, India and China) and the up-and-coming nations of Asia, South America and the Middle East are achieving high levels of economic growth, in which we intend to participate. Our strategic aim is to increase the share of revenue we generate in the world’s emerging countries, thus strengthening our position in high-growth markets.
Over the past few years, we’ve achieved above-average growth in the emerging countries. In fiscal 2011, our revenue in these countries rose 11%, outpacing our overall revenue growth and accounting for one-third of our total revenue.
As the following examples show, robust economic growth in the emerging markets is creating strong demand for solutions along the entire energy chain as well as for patient-centric, affordable healthcare and integrated infrastructures for industrial and urban applications:
The Chinese government’s twelfth Five-Year Plan, adopted in 2011, foresees substantial investments of over $430 billion in renewable energies, smart grids and electric mobility. The government also plans to invest heavily in the country’s healthcare system.
By 2020, India wants to be generating an additional 200 gigawatts of electricity in order to meet its growing demand for energy.
By 2030, Russia intends to invest nearly €300 billion in the expansion of its rail system alone.
In other words, new business opportunities await us worldwide. And we’re leveraging our extensive portfolio to exploit them more fully than ever before.
The demand for economical products and solutions specifically tailored to local customer requirements is particularly strong in the emerging countries. To meet this challenge, we’ve launched the SMART (simple, maintenance-friendly, affordable, reliable and timely-to-market) initiative.
Our SIMATIC Smart HMI system is a prime example of the initiative’s success in the area of industrial automation. HMI, which stands for human-machine interface, is a key tool for controlling and monitoring industrial automation processes. In China, we’re already the undisputed market leader in the medium and higher-end market segments. To move ahead in the entry-level market, we’ve created a SMART version as well. In line with the SMART philosophy, our local developers, collaborating closely with their colleagues in Germany, have designed a user-friendly product that meets the needs of Chinese customers and is available at a substantially lower price.
Our MAGNETOM ESSENZA magnetic resonance imaging (MRI) system is another prime example. Developed in close cooperation with Chinese colleagues, the system is manufactured in both Germany and China. The advantages of this high-efficiency 1.5-tesla MRI scanner include comparatively low installation costs and power requirements.
For the emerging countries, increasing power consumption poses a long-term challenge. In India, for example, medium-voltage switchgear is in very short supply. Competition on this market, which is characterized by regionally specific technical requirements, is fierce. Proceeding on the basis of our globally standardized product platform, our employees in India have developed switchgear that’s winning new orders. In fiscal 2012, our new plant in India will begin producing medium-voltage switchgear that meets our worldwide quality standards.
Our portfolio currently boasts more than 160 SMART products and product families for emerging markets – ranging from X-ray devices to steam turbines to railway signaling systems – with dozens more now poised for market launch. But SMART products don’t only increase our revenue and strengthen our market positions; they also demonstrate what we’re doing to strengthen our local presence and expand local value creation. To maintain our leading positions in emerging countries over the long term, we’re not just localizing production; we’re also giving our regional organizations more decision-making authority and greater entrepreneurial responsibility. Likewise, we’re establishing entire value chains in those markets, since the procurement of raw materials, finished products and services in one and the same currency zone enables us to achieve competitive cost positions while reducing the currency-related risks to which a global company like ours is necessarily exposed.
We’re also setting up additional R&D centers in regions with above-average growth in order to be a more attractive employer for local managerial talent and highly qualified university graduates – thus strengthening our position in growth markets over the long term.