27
1 Section title slide Umicore Blue Bernhard Fuchs, 11 March 2010 Umicore in Greater China
1
Section title slide
Umicore Blue
Bernhard Fuchs, 11 March 2010
Umicore in Greater China
2
Agenda •
Umicore’s history in China -
before 2000•
Umicore’s history in China -
after 2000•
Umicore’s business in China today•
Investments in Greater China•
Key issues for a materials technology company in China
•
Umicore’s China philosophy
3
Umicore’s Chinese name is “优美科”
优 (“U”) 代表 优质为本, means “excellence or best quality as the principle”
美 (“Mei”) 代表 美化生活, means “to beautify life”, as “materials for a better life”
科 (‘Ke”) 代表 科技创新, means “technological innovation”
Umicore in Greater China
4
•
First marketing office in Hong Kong 1982
•
Fact-finding tour of 7 Umicore specialists during one month in 1993
•
Decision to focus on cobalt as the first priority
•
First joint venture contract in 1995: creation of Shanghai Blue Lotus
•
Valuable learning experience and creation of initial expertise pool
•
First venture rapidly profitable
Umicore’s history in China (to 2000)
5
Umicore’s history in China (2000 to date)
Intensification of investments
•
JV for nickel containing rechargeable battery materials established in 2004
Rechargeable battery materials production plant
6
Umicore’s history in China (2000 to date)
Intensification of investments
•
JV for nickel containing rechargeable battery materials established in 2004
•
Inauguration of new automotive catalyst facility in 2005
Automotive catalysts production plant
7
Umicore’s history in China (2000 to date)
Intensification of investments
•
JV for nickel containing rechargeable battery materials established in 2004
•
Inauguration of new automotive catalyst facility in 2005
•
Establishment of regional HQ in Shanghai in 2005
Opening of Shanghai Headquarter in 2005
8
Umicore’s history in China (2000 to date)
Intensification of investments
•
JV for nickel containing rechargeable battery materials established in 2004
•
Inauguration of new automotive catalyst facility in 2005
•
Establishment of regional HQ in Shanghai in 2005
•
Technical Materials acquisitions in 2006
Umicore technical materials Suzhou
9
Umicore’s history in China (2000 to date)
Intensification of investments
•
JV for nickel containing rechargeable battery materials established in 2004
•
Inauguration of new automotive catalyst facility in 2005
•
Establishment of regional HQ in Shanghai in 2005
•
Technical Materials acquisitions in 2006
•
Expansion of Jewellery and Electroplating production and recycling capacity in 2009
Foshan
jewellery
scrap recycling
Jewellery and electroplating recycling and production plant
10
Umicore’s history in China (2000 to date)
Intensification of investments
•
JV for nickel containing rechargeable battery materials established in 2004
•
Inauguration of new automotive catalyst facility in 2005
•
Establishment of regional HQ in Shanghai in 2005
•
Technical Materials acquisitions in 2006
•
Expansion of Jewellery and Electroplating production and recycling capacity in 2009
•
Establishment of Li-ion rechargeable battery materials production facility in 2009
Li-ion rechargeable battery materials production plant
11
Umicore’s history in China (2000 to date)
Intensification of investments
•
JV for nickel containing rechargeable battery materials established in 2004
•
Inauguration of new automotive catalyst facility in 2005
•
Establishment of regional HQ in Shanghai in 2005
•
Technical Materials acquisitions in 2006
•
Expansion of Jewellery and Electroplating production and recycling capacity in 2009
•
Establishment of Li-ion rechargeable battery materials production facility in 2009
•
Further expansion of automotive catalyst operations planned for 2010
Automotive catalysts production plant
12
Business with an industrial presence in China
UmicoreUmicore
Advanced
Materials
Advanced
MaterialsPrecious Metals
Products & Catalysts
Precious Metals
Products & CatalystsPrecious Metals
Services
Precious Metals
ServicesZinc
Specialties
Zinc
Specialties
Cobalt & Specialty Materials
Cobalt & Specialty Materials
Electro-Optic
Materials
Electro-Optic
Materials
Thin Film
Products
Thin Film
Products
Element Six Abrasives (40%)
Element Six Abrasives (40%)
Automotive
Catalysts
Automotive
CatalystsJewellery &
Electroplating
Jewellery & Electroplating
Precious Metals Chemistry
Precious Metals Chemistry
Technical
Materials
Technical
Materials
Platinum Engineered Materials
Platinum Engineered Materials
Building
Products
Building
Products
Zinc
Chemicals
Zinc
Chemicals
Precious Metals
Refining
Precious Metals
Refining
Battery
RecyclingBattery
Recycling
Precious Metals
Management
Precious Metals
Management
13
Umicore in Greater China Footprint: 2,264 people (1,499 in associates)
Changsha
#124
Suzhou
# 483 (198)
•
Automotive Catalysts•
Technical Materials•
Element Six Abrasives
Guangzhou
# 7
•
UMS
•
UMS•
Element Six Abrasives
•
Zinc Chemicals
Wuxi
# 74 (74)
•
Element Six Abrasives
Beijing
# 32
•
Thin Film Products•
UMS
Shanghai
# 122
•
Cobalt Specialty •
Zinc Chemicals•
UMS•
Corporate
Foshan
# 34
•
Jewellery & Electroplating recycling
Ganzhou
# 870(870)
•
Cobalt Specialty Materials
Taipei
# 12 (4)
•
UMS•
Element Six Abrasives
Hsinchu
# 16 (4)
•
Thin Film Products•
Element Six Abrasives
Hong Kong
# 47(6)Jiangmen
# 443(343)
•
Cobalt Specialty Materials
14
Revenues distribution in China
AM4%
PMP&C64%
UMS27%
ZS5%
Headcount distribution in China
Corp.10
ZS167
PMP&C360
AM143
UMS85
Umicore in Greater China
Headcount as of 01/02/2010
Excluding 1499 people in associates
PMP&C = Precious Metal Products & Catalysts
AM = Advanced Materials
ZS = Zinc Specialties
Corp. = Corporate
UMS = Umicore Marketing Services
•
Chinese operations currently account for approximately 6% of Umicore’s revenues
•
UMS comprises sales of non Chinese operations
15
Investments in Greater China
16
Umicore’s investment strategy for Greater China
Market needs
•
Investments to serve the local Chinese market
•
Differentiation by know-how and services instead of costs
Flexibility
•
Follow Umicore’s Business Unit approach
•
Several legal entities instead of one large one
•
Experienced in handling Joint Ventures
Structuring
•
Regional Headquarter (RHQ) as hub for defined central services
•
Wholly owned foreign enterprises (WOFE) as well as Joint Ventures
•
Greenfield as well as acquisitions
Investment
•
Umicore has invested a total of €127m in China over the past decade
17
Current
investment:
Automotive
Catalysts
Car production in Greater China
0
4
8
12
16
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
(in million cars)
Site
•
Umicore Automotive Catalysts(China) Co. Ltd. In Suzhou
•
Wholly owned foreign enterprise (WOFE)
Production
•
Broad range of automotive catalyst products
Investment
•
First investment done in 2004/2005
•
Continuous investment since
•
Further investment planned for 2010
Investment aim
•
Further expansion of capability as well as capacity of automotive catalysts
Source: CSM
18
Site
•
Umicore Jewellery Materials Processing Co. Ltd. Foshan
•
Wholly owned foreign enterprise (WOFE)
Investment
•
Greenfield investment done in 2009
•
Based in the center of the Chinese jewellery
industry (Guangdong Province)
Production
•
Recycling of precious metals containing waste from the jewellery
industry
Investment aim
•
Supply the local Chinese Jewellery Industry with trustworthy recycling services and products
•
Transfer the successful business experience of other regions to China
Current
investment:
Jewellery and Electroplating
Precious metals demand in China
0
200
400
600
800
1,000
1,200
1,400
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
(Tonnes) Silver Gold Platinum
Source: GFMS / estimates for 2009
19
Current
investment:
Rechargeable
Battery
MaterialsLi-ion demand
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
(MWh/yr) Portable electronics Power tools (P)HEV / EVSite
•
Jiangmen
Umicore Chancsun
New Materials (JCU), Jiangmen
•
Joint Venture (Umicore 60 %)
Production
•
Production of intermediate products containing cobalt, nickel and manganese for Li-ion batteries
Investment
•
Greenfield investment 2009
•
Currently employs 100 people
Investment aim
•
Support the global growth of rechargeable battery materials
•
Materials produced for local Chinese market as well as for Umicore Korea
Source: Takeshita
20
Key issues for a materials technology company in China
21
Environmental, Health and Safety (EHS) protection
Umicore applies STRICT EHS standards globally
•
Due diligence: soil and groundwater analysis before any acquisition (company acquisition or additional land acquisition)
•
Strict adherence to all regulations
•
Focus on safety and occupational health of employees
•
Umicore approach is supported by authorities (e.g. Foshan
recycling)
Chinese regulation trend
•
Environmental protection more and more in the focus of local governments
•
Local governments force closure of local polluting enterprises
22
Labour
market
Competition for talent
•
Unemployment rate stable at 4.3% (even during worldwide crises)
•
Staff turnover rate continuously at more than 13 % (Umicore 2009: 8%)
•
Difficult to attract talent for remote locations
•
Umicore has set up retention and career development plans
Labor shortage (esp. workers) in some regions
•
“Second generation of migrant workers”
requests better living conditions
•
Umicore has been investing heavily in training and development
Significant salary increases
•
Salary increase rate over the years: 8.0% + per year (dip in 2009: 6,9 %)
•
2009: 15 % increase of “City lowest salary”
in Shanghai
23
Technology focus
Umicore’s focus in China is increasingly towards technology driven businesses:
• Automotive catalysts production
• Jewellery recycling
• Cathode precursor production
Umicore has a majority shareholding or full ownership in all high technology businesses
Intellectual property measures are in place
24
Section title slide
Umicore Green
Umicore’s China philosophy
25
Umicore’s China philosophy
Business Unit approach •
Every Business Unit has an intimate knowledge of the Chinese market and a dedicated strategy in place
•
Local Chinese production for local Chinese market
Timing •
Be early mover but not too early
•
Take measured steps
HR Management•
Develop and keep talent pool
•
Run business with Chinese management and Umicore Way
Risk Management•
Consider and tackle IP risks carefully, but respect and take advantage of Chinese ingenuity
Structure•
Local entities to be close and flexible to the market, supervised by Regional Headquarter
•
Preference for combination of fully-owned entities and successful joint ventures
26
Umicore’s China philosophy
By following these principles, Umicore has become a market leader for:
•
Automotive catalysts
•
Rechargeable battery materials
•
Cobalt powders
•
Cobalt refining
•
Zinc powders for primary batteries
•
Fine zinc powders
27
Section title slide
Umicore Blue
Thank
you
