Harman targets Chinese market

BEIJING - The premium audio and infotainment group Harman International Industries Inc expects annual sales in China to surge to $1 billion by 2015 as it pours heavy investment into local production and technology research and development (R&D).

"Our sales goal is to achieve $1 billion a year by 2015 in the Chinese market, which means we have to grow our business here by 35 percent every year," said Dinesh Paliwal, chairman, president and chief executive officer of the US company.

"We also plan to triple our head count by 2015 and aim to grab 30 percent of the market share in China," he added.

According to Paliwal, China is a key market for Harman, which designs and manufactures audio and infotainment products for vehicles, home, theaters and venues, as well as electronics for audio professionals.

The company's sales revenue in the country increased from $35 million in 2009, the year it entered the market, to $200 million in 2010.

"Our new $100 million second-round investment, which brought our total investments here to $175 million, will greatly help us reinforce our production facilities, as well R&D capabilities, to achieve our target," said Paliwal, who visited China to celebrate the opening of Harman's new plant in Dandong, Liaoning province, last Wednesday.

The new $50 million plant is expected to contribute $300 million to the company's revenue every year.

"Our strategy is to be in China with No 1 technology. Harman will always bring the latest products and technologies to the Chinese market and its consumers," said Paliwal. "Technology and innovation are our keys to gain market share in China."

He said Harman invests 10 percent of its turnover into R&D every year.

The audio company has established R&D facilities in Shanghai and Shenzhen, making China one of its four R&D hubs around the globe.

"Harman is positioning itself to capture a growing share of China's continued expansion in automotive, professional and consumer audio products and services," said Paliwal.

As a premium audio provider in the automobile industry, 80 percent of the world's luxury cars contain Harman audio systems, including Audi AG and Ferrari SpA. Harman's business is greatly driven by its automotive division, which currently contributes 70 percent to its total sales.

Harman expects that by 2015, China, the largest vehicle market in the world by size, will also become the biggest automotive audio market.

"We're winning new contracts with current auto customers and pursuing partnerships with Chinese homegrown auto makers," Paliwal said.

In addition to long-term cooperation with foreign auto brands, Harman has signed a contract with Chinese car maker Geely Automobile Holdings Ltd to provide professional audio systems to the automaker's Emgrand EC8 car.