Growth Driver of the World Economy China is booming! ZF is already there

The People’s Republic is currently one of the most powerful engines driving the global economy. ZF has had a successful presence in the country for more than 20 years.

Highways weave in and out like the colored threads of a cat’s cradle, often running in parallel before crossing over or under one another. At first glance, the sheer complexity of Shanghai’s road network looks chaotic – almost senseless. But Dr. Rolf Gall deftly slides his BMW 5 Series into the unending stream of traffic with well-founded confidence: he knows exactly where he’s going. The German engineer first visited the People’s Republic back in 1996. In those days, Shanghai’s Pudong district – which extends along one bank of the Huangpu River – was still marshy farmland, where farmers in straw hats grew vegetables for the city dwellers on the other side of the river.

Now the district’s vast skyscrapers rise majestically into the night sky in a spectacular light show that is repeated every evening. Shanghai has become the showcase city of a newly ascendant China – a potent symbol of the country’s status as a major global player, the sec- ond largest economy and largest trading nation on Earth.

As traffic volumes continue to expand, Shanghai is shifting the flow of vehicles onto elevated expressways.

ZF in Shanghai

In Shanghai, Gall heads the local ZF Engineering Center. He gestures through the windscreen. “In all of these premium European sedans, mid-size U.S. cars and thousands of green taxis, you’ll find our transmissions, chassis and shock absorbers,” muses the 59-year-old engineer. “Chinese road-users are driving their small cars using a steering system we customized for China. Trucks made by local market leader Dongfeng are fitted with our suspension – and you’ll find them working on every construction site in the country; there are millions of them.” In Shanghai, ZF is even working underground on one of the world’s most modern subway systems, which carries 2.3 billion passengers a year riding on dampers supplied by ZF. In another rail-related development, ZF Services technicians have just been tasked with maintaining the trains that travel on China’s high-speed rail network, already 6,000 miles long and still rapidly growing.

Dr. Rolf Gall heads the local ZF Engineering Center Shanghai. Here the focus lies on localization of product and application engineering.

Video: The Chinese Market

China, with over 1.3 billion people, is not only the most populated country on earth, but also the most important foreign location in the German automotive industry.

On location with the carmakers

Dr. Guohong Ye, now President of ZF China, returned to the country in 1994 as the company’s first employee. “Back then, we were following the major auto manufacturers, supplying them with steering systems, dampers and fully assembled axles delivered direct to their production lines on a ‘just-in-time’ basis,” he remembers.This early collaboration with VW and Audi was soon followed by joint ventures with other manufacturers, including General Motors, BMW and Daimler. Even now, by far the largest proportion of ZF’s sales comes from car chassis and dampers. In parallel with the local successes of the international automakers ZF sales were rising, in 2014 by 30 percent to EUR 2,6 billion.

China’s automotive market is developing rapidly, as reflected by the ZF transmission plant in Shanghai, which moved into new premises in 2013. 6HP automatic transmissions are produced here. “Previously, we were building 5-speed automatic transmissions for the earlier model of the VW Passat. Now our customers are called Great Wall and SAIC, and they’re all Chinese manufacturers,” explains Plant Manager Chen Guoping. Business is changing: Chinese manufacturers’ growing demand for ZF’s modern automatic transmissions is just one sign of how the market is evolving. As Director of the ZF Engineering Center, Gall is keeping a close eye on these developments. “Chinese manufacturers are fully intending to catch up with the world’s leading automakers. What’s more, their end customers have become much more discerning following the first wave of mobilization.”

Dr. Guohong Ye studied in Germany and now heads ZF Holding in China.

Chronicle ZF in China

1994
Entering a new market: ZF starts building relationships in China in the early 1980s. In 1994, ZF sets up the company’s first subsidiaries in Shanghai and Liuzhou.

2003
Axle systems are delivered direct to BMW’s production lines by the new ZF plant in Shenyang. The premium European carmaker’s huge success in China also helps boost ZF sales. Car chassis sales still account for the bulk of ZF revenues in China. Since 2013, a new ZF plant in Beijing has been producing axles for Mercedes.

2004
ZF’s first car transmissions are manufactured in Shanghai. Between 2006 and 2013, when production is discontinued, the plant builds nearly 250,000 5HP automatic transmissions for VW’s best-selling Santana. The plant is now being retooled for 6HP auto transmissions destined for new SUVs and vans built by Chinese manufacturers.

2010
In the ZF Engineering Center in Shanghai, ZF engineers develop, test and adapt more and more products for the Chinese market. Now ZF is planning to build a major expansion, to meet the growing demand for customized development work. Currently, the Center employs 70 developers.

today
More than 5900 employees in ZF’s Chinese operations generate around 14 percent of the company’s global sales – and the figure is rising. In the future, ZF plans to tailor and develop product variants that meet local market needs even more precisely, following the “design-to-market” principle.

Emission standards drive innovation

China has big plans – not least for environmental protection. The government in Beijing is putting enormous pressure on the auto industry by imposing stringent emission thresholds. Which is why more andmore Chinese manufacturers are relying on high-quality technology from ZF to make their vehicles more attractive, fuel-efficient, comfortable and eco-friendly. In addition to efficient transmissions, they are also buying electric steering systems and new chassis with better dampers.In order to integrate modern technology with local manufacturers’ applications, ZF must provide local full-service support – a challenge for Gall and his team in Shanghai. “Our existing workforce isn’t big enough; we’re looking to recruit several hundred engineers in the medium term.” For this, they also need more space. So ZF is currently constructing a new building, around four times larger than the existing one, with room for more offices, eight new test stands for cars and trucks, and sufficient parking for 700 vehicles. Why 700? Among other things, to accommodate the numerous test vehicles provided by Chinese manufacturers. Many of them will act as platforms for ZF technology developed especially for China, in accordance with the “design-to-market” principle.

Pictures: Urban Zintel