The automotive sector represents a small part of GE Advanced Materials' plastics business in China, but it is growing so fast that in March, GEAM created a special division devoted to the plastics automotive sector in China, led by Gu Huaming. He spoke about the potential and the problems of the plastics business in China.
Q: Sales in China's automotive market have slowed to single-digit growth in the past few months after rising by 70 percent in 2003 compared with the previous year. How has that impacted GEAM's plastics strategy in China?
Gu: In China, the automotive market is growing like crazy. Though it has slowed down the last four months, this year the passenger car is still where we focus. Last year 2 million passenger cars were sold; this year with the slowdown, the market will still be 2.4 million to 2.6 million cars, with at least 20 percent growth. It's not 80 percent like a couple of years ago, but it is still nice growth.
The slowdown is not going to impact us that much for a couple of reasons. We started slow, like most companies in the industry, so the impact is not that much. Also, even though local production has slowed down, the export business for global [original equipment manufacturers] has taken off very strongly.
Q: What percentage of GEAM's total plastic automotive sales are represented by China?
Gu: Total China sales as a percentage at this point is very small, but it is growing very fast. Automotive [in China] is a new organization, but we did this because we really see the future.
Q: What kinds of plastics are you making for the auto market?
Gu: Automotive is the only market that we serve where all our products can go to this segment. The biggest product is polycarbonate.
Q: J.M. Noh, the president of Beijing Hyundai, said last year that he had to import high-quality plastics. Can those be made in China?
Gu: There are two reasons some OEMs are importing plastics. First, a lot of the companies don't have local capacity in China. We have the biggest local manufacturing capability, but it's not enough. Second, a lot of companies are still moving production to China and developing their supplier base. During this process they rely on existing suppliers.
Q: Who are your customers?
Gu: Both Tier 1 suppliers and OEMs, and also smaller [firms that serve] Tier 1 suppliers. We see the whole customer spectrum.
Q: How big is your team?
Gu: I started with four people, and now have 14. I do a lot of hiring.