ZF commits to nation, building new factories

German auto parts supplier ZF will continue investing in China, its largest market worldwide, as part of a localization strategy, said CEO Wolf-Henning Scheider.

In an interview last week, Scheider said ZF plans to make investments and build new plants in China within 18 months.

He said the company is now building a second plant in Shenyang, capital of Northeast China's Liaoning province. ZF's facilities in the city offer a variety of products to carmakers including BMW.

"A decade ago, we imported many of the parts from Europe or other regions, but now they have been produced locally," said Scheider.

Since entering the Chinese market in 1981, ZF has established around 50 production facilities across more than 20 cities in China along with four research and development centers.

Scheider said the company is increasing its production capacities in China to serve both local carmakers and to ship products abroad including the Americas.

Scheider will be succeeded in 2023 by Holger Klein, a member of ZF's board of management. But the management reshuffle will not affect ZF's strategy in China, said Scheider.

"I don't think we will have any change in our strategy. China is our biggest single market and we will continue our investment in China," he said.

Klein expressed his confidence in the Chinese market in early July when ZF inked a deal with local authorities in Shandong province to build a plant in Rizhao city.

"China is the world's largest automotive market and a dynamic, resilient and attractive market. We remain confident in the Chinese market," said Klein.

He said ZF is an integral part of China's social and economic fabric. "We are doubling down on China, which is becoming our home to global products and functionalities," he said.

In an earlier interview, Klein said ZF expects its sales in the Asia Pacific region－with China as the core－to account for 30 percent of its global total by 2030, up from around 20 percent in 2021.

Investment in the Rizhao plant, which is expected to be operational by the end of 2022, will reach 60 million euros ($60.92 million).

Covering 14,000 square meters, the plant will produce and sell air bag cushions and other passive safety products. It will also conduct relevant research and development.

ZF said the products will mainly meet domestic market demand with potential export markets including Thailand, South Korea, the United States, Japan and Vietnam.

In three years, the plant's annual sales are expected to exceed 1 billion yuan ($147.8 million), said ZF.

"We will continue to cultivate the Chinese market, enhance innovation and development capability, promote digital manufacturing, stay close to and lead the market and technology trends, while firmly assuming social responsibility and making contributions to China's sustainable development," said Renee Wang, president of ZF China and senior vice-president of ZF Operations Asia Pacific.