PERSPECTIVE: China Transforming Into Fastener End-Market

Jason Sandefur

China is rapidly becoming an end-market for fasteners. Two companies are setting up new operations in China to serve a budding consumer market.\
W�rth Group is investing $30 million to serve the burgeoning auto market in China. The company said it was looking to “secure long-term sales markets in China” instead of cheaper labor for its U.S. and European products.
And Grainger opened a $6 million master branch in Shanghai”s Minhang District for its entry into the consumer market. To support its efforts, Grainger developed a new website and catalog both in Chinese.
W�rth Group to Build Industrial Park in China
Germany-based W�rth Group signed an agreement to build an industrial park with its own power plant in China.
CEO Reinhold W�rth signed the cooperation contract at the German Chancellery in Berlin with Chancellor Angela Merkel and members of the German cabinet and Chinese prime minister Wen Jiabao present.
K�nzelsau, Germany-based W�rth will build W�rth Industrial Park in the northern China city of Shenyang, where the automotive industry is developing.
W�rth will begin with a Euro 23.5 (US$30m) 30 hectares site. The park will open with 400 employees and eventually expand to 3,000 employees.
“The trading firm W�rth has taken another important step towards its own production. Certainly production is more capital intensive than mere trade but W�rth will only be able to secure long-term sales markets in China for itself if it also produces in the country,” W�rth explained.
W�rth chairman Robert Friedmann emphasized that the investment in China “is not meant as a means to transfer jobs. Creating the W�rth Industrial Park rather helps to open up new markets in China and Southern/Eastern Asia in general. The planned growth of the corporate group in Germany and Europe will not be affected by it.”
Shenyang deputy mayor Qi Song said “W�rth is very welcome in Shenyang especially since this will act as a signal to other German and European companies. We are sure that both parties will profit by W�rth”s investment. Together with W�rth we are looking into a bright future.”
The Chinese market also offers W�rth expansion from its core business of assembly and fixing products. For example W�rth Solar will open a new Euro 55 million (US$71.1m) solar cell production plant in North W�rtlernbergian, Germany, in October.
The Shenyang business will begin with producing screws and fixing elements in 2008. Alois Wimmer, the W�rth board member in charge of screw manufacturing, declared, “Shenyang, we are coming!”
Founded in 1945, W�rth Group supplies fasteners and tools and had 2005 sales of Euro 8.4 billion (US$10.7b). Web: Wurth.com
Grainger Opens First Master Branch in China
Looking to break into China”s $4 billion MRO market, WW Grainger Inc. opened its first master branch in China. Located in Shanghai”s Minhang District, the US$6 million facility will initially stock 20,000 products, with 95% of them locally sourced.
Grainger caught the fastener industry”s attention in early 2006 when it greatly expanded its fastener offerings to 30,000 SKUs.
For its latest venture, Grainger has launched a new website, grainger.com.cn, in Chinese, as well as a Chinese language catalogue.
“We are delighted to bring our expertise to the marketplace in China,” commented Bonnie McIntyre, general manager of Grainger China LLC. “We look forward to growing our presence to serve more customers in this country.”
The Shanghai Daily reports that the facility is only the beginning of Grainger”s expansion plans for China. Other locations will be added in the future, Grainger International president John Schweig was quoted as saying.
Grainger officials reportedly said the market response to the Minhang facility”s trial operation over past two months was positive, netting several large orders.
The Lake Forest, IL-based company claimed that the new 39,000 sq ft facility “reflects Grainger”s strengths in North America.”
Stock includes products for electrical, lighting, tools, pneumatics, plumbing, material handling, metal working and HVAC.
Grainger also operates a customer service center in central Shanghai that offers sales consultation.
The Chinese MRO market is valued at US$4 billion annually.
Grainger reportedly has been purchasing US$200 million worth of products from China annually, mainly for its customers in the U.S. �2006 FastenerNews.com