Freudenberg CEO: Opening-up has benefited both China and world

German family-owned technology group Freudenberg saw its sales rise in China in 2017 as a result of continuous investments in existing and new projects.

"The Chinese market plays a key role in our existing and future operations, and our diversified and innovative portfolio caters to the demands of China's industry," said Mohsen Sohi, CEO of Freudenberg Group.

With more than 70 sites, Freudenberg generated sales of 8.3 billion yuan in 2017 in the Greater China region, up 15 percent over the previous year.

This year marks the 40th anniversary of China's reform and opening-up. In an exclusive interview with China Daily Website, Sohi shared his views on the country's socioeconomic development.

Q: Please use three words to describe changes in China in the past 40 years.

A: Amazing progress, openness, dynamic.

Q: What are the biggest achievements you think China has made in these 40 years?

A: As a result of this opening-up of China, the standard of living for most of Chinese has improved. And I would say that's really the biggest achievement. And China has also carved a bigger role in the world economy and in the global politics.

Q: How has your company benefited from the reform and opening-up policy?

A: I would say not only us but a lot of companies have benefited from it. And the benefit has been mutual. I would say because China has been an attractive market for a lot of western companies, they came here. They brought the products. They brought the technology. They benefited from the growth. But at the same time, they also contributed to the progress of China, and in raising the living standard in China.

Q: How has been the performance of your company in China and in the world last year?

A: In the world we had an excellent year. In 2017, we grew rapidly at over 18 percent globally and 15 percent in China, which is a very good number.

Q: What role does the Chinese market play for Freudenberg now and in the future?

A: We have been here for a long time and our strategic plan is to stay in China. We have grown very fast in China. China already constitutes 10 percent of our global revenue – that's very remarkable, and we believe that in the future we will grow even more than the rest of Freudenberg. The growth of Chinese market in the coming years will be nice, not as high as it was perhaps five or 10 years ago, because the economy is much larger but still very attractive. So, we are very optimistic about China. If you average in the last 10 years, probably our rate of growth in China has been the highest.

Q: What new opportunities has China brought to Freudenberg, especially after the implementation of the Belt and Road Initiative?

A: Our China strategy - very similar to the rest of the world – was that we want to produce in China for the China market and for the Chinese consumers. With Belt and Road, as this issue of activity - the enhancement to create and commerce of this picture - obviously, it helps all the economies, including the economy of China, and with that all the companies, including us, will benefit.

Q: China is focusing on innovation. Could you please share what your company has done in this field, especially in R&D?

A: Our key driver for the growth of the company and strategic direction of the company is research development and innovation. If you compare 2013 to 2017, we have doubled what we invest in research development and innovation. For example, last year we spent about 4.6 percent of our revenue in research and development. That's much higher than our peers in similar companies. So that's the direction we will continue. Also, China will benefit from that as China strengthens the intellectual property protection laws, I would say more and more companies are willing to bring technologies to China.

We already have a R&D center in China and many of our businesses who have R&D activities within their own businesses they also do R&D in China.

Q: What are the challenges your company face in China today? And how will the company overcome it?

A: We want to make sure that the playing field is fair for companies such as Freudenberg and its Chinese competitors. So that's one of the things where I think government policies will really help. But in terms of other challenges like many other companies, talent, well-trained people, well-trained people that can keep in the company that's a huge issue for us. I would say worldwide, that's an issue, but particularly in China.

Q: Do you have any plan to invest more here and where will the investment go to?

A: Absolutely. You know China will experience continuous strong growth and we want to participate in that growth. And without investment, you cannot do that. So, we have to invest not only in plants and property, but also in terms of new technologies. An example is that China most likely will be one of the leaders in new mobility and electric vehicles, and there we have strong plans to establish or footprint to support Chinese market in new mobility.

Q: How do you view China's role in the world today and in the future?

A: China has assumed a stronger role economically and politically in the world and I see it positively. On the economic side, it will be positive. Because in general there is more trade and commerce, I think it will help and it can be win-win situation for China as well as for its trading partners. And also, politically as China gets more and more integrated in the world, it continues to push dialogue and peaceful solution to the world issue.

Q: What's your most unforgettable experience in China?

A: I have two experiences. One was the very first time when I landed in Shanghai in 1996, I was amazed by the number of bicycles I saw, especially now when you go to Shanghai. And the rapid progress that has been made in this country in this particular case. And the second one was I have seen the Great Wall in China last year.