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Fitting China into your global footprint

(chinadaily.com.cn)
Updated: 2008-05-23 15:20

Case study

Dr?ger Medical, headquartered in Germany, is one of the world's leading manufacturers of medical equipment. As a global company employing about 6,000 people in 190 countries, China comes as a natural place to Dr?ger Medical.

"We are early movers into China and have been successfully manufacturing and selling low-end anaesthesia machines in China for more than 13 years. Now deciding what is next is now our next challenge and the traditional product based view is simply not always right," says Wolfgang Syhr, General Manager of Shanghai Dr?ger Medical Instruments. "For example, you might easily conclude we should be exporting large structure plastic carts to Europe for our other products because our China-built anaesthesia machines also contain these parts. However, if you check the capabilities required for these parts, such as foam moulding, you will find that China does not have any advantage in these competences, even if we don't consider the large transportation costs. The product based view made us also oversee opportunities in other areas, especially related to electronics."

The Chinese medical device market –still dominated by global players– grows fast, and attracts more and more players setting up local manufacturing and development. Furthermore, local Chinese manufacturers are getting more advanced and will increasingly become active outside of China. Facing this increased global and local competition, Dr?ger Medical decided it needed to get more out of China and replace the ad hoc decision making by a valuable long term China strategy. "Our past investment decisions were based on individual projects, with limited check of their alignment with the global R&D and manufacturing strategy" according to Syhr.

"We needed to grab the China opportunities due to e.g., the emerging R&D skills and the improved supply chain quality," Syhr continues and Dr?ger Medical decided to follow the competency based approach. They came to some surprising conclusions. Products that previously were quickly ruled out of China now give a huge advantage. "On top of this, the China fit tool gives us a quick and easy-to-use tool to prioritize and focus our resources on top opportunities with long term benefits." Syhr ends.

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