Bosch goes local in China

By Dominique Patton

- Last updated on GMT

Related tags: Bosch, Manufacturing, Machine, Candy

A new Bosch plant in China is slated to become the German packaging
group's Asian headquarters, offering local confectionery makers
better prices over imported machines.

Bosch's packaging technology division has already started production at the facility in Huangzhou on the east coast, and expects to employ 200 people there by the year-end.

"We want to make it our Asian headquarters,"​ said Henri Beelen, confectionery business unit manager at the firm.

Speaking at the Packaging 2006 exhibition in Beijing on Tuesday, Beelen told that the group is now producing confectionery machines entirely in China.

"Everything from the sales, marketing, design and manufacturing will take place in the new building, which also has a workshop,"​ added Beelen.

Bosch supplies highly automated machines that dose and dissolve raw candy materials, form and fill shells and cook hard candies. It has a variety of innovative pulling, extruding, filling and forming equipment geared towards a range of different confectionery products.

But the machinery is pricy, particularly when compared against local suppliers. With a manufacturing base in China, Bosch hopes to reduce this price gap.

"It is quite unusual for a foreign firm and gives us advantages over our worldwide competitors. We can compete on price with a 20-30 per cent difference,"​ he said.

And although the prices will still be significantly higher than local manufacturers, Beelen claims that Bosch confectionery machinery tends to be twice or three times faster than those of Chinese suppliers.

Bosch is also seeing rising interest in its machinery as a knock-on effect of the high sugar prices. With higher raw material costs, Chinese confectionery makers are forced to make higher quality candies in a bid to raise their margins.

"To make quality candy you need a high quality machine,"​ claims Beelen.

With the Chinese confectionery market growing by around 8-10 per cent each year, Bosch is keen to be well positioned in the world's most populous country. It already supplies the sector's leaders but at up to €100,000 apiece, its machines will not reach every candy business in the country.

"We know that around 200 of China's 20,000 confectionery makers can afford to buy Bosch machines,"​ added Beelen.

Bosch will also look to neighbouring markets however, exporting to the rest of Asia as early as the end of 2007.

"In a few years we want to have 500 people working in Huangzhou,"​ said Beelen.

The firm benefited from the long-standing presence of its sister company, Bosch Power Tools, in the same area where it set up its processing machinery facility.

But bringing manufacturing know-how to China will heighten fears of copying by local suppliers.

"We've seen brochures where they use the same pictures of our machines,"​ said Beelen, adding that suppliers of the critical parts will have access to their drawings.

"On the other hand, these companies are unlikely to know how to use the machine, so even if they can easily copy it, they won't be able to fix problems."

Related topics: Emerging Markets, Ingredients

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