Interview with Helmut Schneider (May 2008)
“ With eleven years of experience in China, we are optimistic about the future. We want to double our turnover in the next five years. It has already increased fivefold since 1996.” Helmut Schneider
In 2007, Messer had eleven operating companies with 15 locations in the gas sector in China. Six of these firms are joint ventures, and the rest are wholly owned. Since the beginning of its activities in China, Messer has not only concentrated on the coastal regions but has also been a pioneer in terms of investing in the Chinese inland provinces.
Helmut Schneider, Managing Director of Messer in China, names the following factors for success: knowing the market and your partner, conducting contract negotiations meticulously and remaining flexible, without abandoning the basic ethical and professional principles of the management. “At the same time, it is important not only to want to avoid making mistakes but also to learn from them”, says Helmut Schneider, explaining one of his basic principles. The industrial gases clientele in the Middle Kingdom is dominated by the big customers from the steel industry. But this is set to change.
Mr. Schneider, the industrial gases business is very capital-intensive and its structure is completely different in China from that in Europe. How is Messer faring in China?
Since the takeover of the Messer Group by the Messer family in 2004, we have focused on expansion and have primarily grown with our key clients. In 2005 we invested 24 million euros, and in 2006 this fi gure rose to 40 million euros. In the past year, 35 million euros flowed into our Chinese business, with 60 million euros planned for 2008. Thanks to the worldwide boom in the steel sector, our customers need to produce more and therefore have a greater requirement for gases, especially oxygen, in their processes. As a result, existing locations are being expanded or new ones developed. An example of this is a new development by one of our customers in Yuxi in Yunnan Province. We won the supply contract after an invitation to tender – the customer also took part in the tender process and examined the possibility of in-house gas production. Xiangtan Steel, our partner and biggest customer worldwide, also decided last year to build a new steel plant in Yangjiang in the southern Chinese province of Guangdong. Our joint venture, Xianggang Messer Gas (XMG), will operate a production plant with an initial output of 15,000 standard cubic meters of air gases per hour, in addition to which it will build a condenser for 150 tons per day. We won the contract thanks to our strong and successful partnership.
What is your strategy for maintaining this strong position if demand from steel producers should drop again?
In April 2007, Zhangjiagang Messer, the youngest of our companies in China, celebrated the official opening of its air separator in the Zhangjiagang Chemical Park. Zhangjiagang Messer also produces hydrogen in the industrial park, which is located 150 kilometers north-west of Shanghai. We built the air separation plant in Zhangjiagang independently of an important pipeline customer. From the outset, our gases are produced for customers with a broader industrial spectrum. We had previously used a similar concept in Ningbo and Foshan. We want to build more production sites like this in China in order to diversify further in the future. To increase sales of cylinder and liquid gases, we will also need to expand our sales organisation. But we are going one step further into the future: in Wujiang and Chengdu we have built plants for the production and filling of specialty gases, while in Foshan a specialty gases plant is already under construction. This is a completely new development for us in China and will represent a challenge in the coming years.
Are you worried about the competition – is a company’s corporate structure a factor in China?
The major international competitors, in particular, continue to be very active in China, and we encounter the big names in practically every project. But local competitors – some of whom have been formed with European investor‘s capital – have also become much more aggressive in recent years and are increasingly enticing employees away from our sector. When it comes to awarding contracts, the size of a company is often an important factor, especially for Chinese state companies; this sometimes reduces our chances, because, as a medium-sized company, we do not correspond to the ideas of the big state companies. Nevertheless, we are very successful because we conclude and carry out long-term contracts, building up successful and sometimes harmonious partnerships in the process. The fact that we are a family company is irrelevant here, however – if anything, it is greeted with surprise, because China does not have a medium-sized business sector on the same scale as Germany. German companies are definitely held up as an example in China: “Made in Germany”, reliability, thoroughness and straightforwardness – these terms might seem like clichés to us but here they are still very much regarded as German virtues.
How do you ensure a good working environment in this huge country with its complex structure?
We are pleased about having a relatively low staff turnover. Our people are not that quick to leave us. There are many reasons for this loyalty, the main one being the success of the company and how our employees are integrated into this success. It is fun to work in a successful organisation. We achieve our good working environment by expecting and promoting responsibility and individual initiative; this is an invaluable motivational factor. We have a decentralised set-up, with our head office located in Shanghai, where we don’t actually do any business. Our employees like our decentralised structure of responsibilities. In the area of employee communication, we are following unusual paths for China: we have a staff newspaper which appears regularly. And although we had to learn to deal with factual information carefully in this newspaper in order to prevent it falling into the hands of our competitors, it has proved to be a success, especially in terms of promoting identification with the values and objectives of the entire Messer Group. Both our staff newspaper and our intranet are available in English and Chinese.
