The AmCham Shanghai Suzhou Center held a Suzhou General Managers’ Forum to discuss strategies on how manufacturers reposition their China manufacturing strategies in a dynamic business environment on the morning of Thursday, September 22 at the Hyatt Regency Suzhou. The event featured keynote speakers, Denise Rutherford, Vice President Greater China & Managing Director of 3M China and Ligang Liu, Managing Director and Chief Economist, Citigroup, as well as three panels featuring speakers from Mettler-Toledo, General Electric, Caterpillar, IDEX, Flex, Xi’an Jiaotong Liverpool University, and Microbenefits. Moderators for the event included Aiying Wang, VP & GM, Eaton (China) and AmCham Shanghai Suzhou Center Advisory Council Vice Chair, Christopher Corkery, Principal and Head of Fit for Growth Platform, PwC Strategy, T.T. Chen, Operating Partner, Shanghai Taplow Longittude Management Consulting, and AmCham Shanghai Manufacturers’ Business Council Chair and Pilar Dieter, Chief Representative and Partner, Solidiance.
Denise Rutherford kicked off the conference by discussing 3M’s initiatives in China, including its lean six sigma implementation results, environmental sustainability program, as well as its overall manufacturing and technical strategy to serve the Chinese market. Rutherford started with an overview of China’s current megatrends, including the digital economy, urbanization, middle class expansion, and sustainability, as well as the Chinese government’s 13th 5 Year Plan initiatives on environment protection, Made in China 2025 initiative, and regional integration of city clusters. Rutherford mentioned that 3M recently launched a brand station on Alibaba.com as many of its customers are looking online first when making sourcing inquiries. In terms of lean six sigma, 3M has saved $1.4 billion from initiatives in 2016, and targets savings of $1.8 to $2.0 billion by 2020 from initiatives, and currently has black and green belt armies for efficiency improvements. 3M targets leveraging lean six sigma to drive value realization from 2016 into the future. For sustainability initiatives, 3M China used a 3P (pollution prevention pays) initiative to reduce VOC emissions by 3,100 tons, water usage by 16,100 tons, waste by 76,900 tons, and greenhouse gas by 40,000 tons from 2011-2015. Rutherford mentioned 3M’s continued large investments in research & development, currently at 6% of global sales, as well as its direction to boost local sourcing where possible and design products for manufacturability by having 3M employees spend time on customers’ factory floors for deep involvement in the design process.
Citigroup Chief China Economist, Ligang Liu provided an update on China’s economic situation. Liu forecasted that China’s economy would grow by 6.4% in 2016, and stated that a China growth rate between 6%-7% was considered healthy. Liu also discussed the property market, and his expectation that tier 1 property prices will continue to rise, as there is continued evidence of young professional migration from tier 3 and 4 cities to tier 1. Liu mentioned that investors need to take a medium or long term view of housing prices, as currently there are too many critical resources built up in tier 1 cities. Liu also mentioned that China’s percentage of trade to gross domestic product (GDP) was a lot higher than that of the U.S. at 35%, so global demand trends would affect China a lot more than the U.S. Liu also discussed the relative health of China’s central government finances, and China’s low household debt of 40% debt to GDP ratio, compared to similar per capita economy’s such as Malaysia and Thailand, which are double that. Liu also indicated that the RMB is somewhat overvalued, a consensus amongst economists. Liu suggested that manufacturers should pay attention to the fluctuations of the dollar in order to understand the movements of RMB. Liu reiterated through the forum that he saw no reason for American companies to leave the Chinese market.