HANNOVER, Germany - Despite an anticipated slowdown in global revenue growth, Siemens AG, Europe's largest engineering company by sales revenue, is adopting a new expansion strategy.

The new global approach also aims to be in sync with China's 12th Five-Year Plan (2011-2015), as the company looks to ride the rapid growth of the industrial sector.

"Our industry sector will witness its fastest growth in China over the next five years. That's as the growth of the industry market in the country will surpass 5 percent, on the back of the vast business opportunities brought by the country's 12th Five Year Plan (2011-2015)," Siegfried Russwurm, CEO of Siemens' industry division, told China Daily during the Hannover Industrial Fair, which ended on Friday.

"We will increase our investment and deepen our presence in second- and third-tier cities and in western China, whose development will drive the county's economic growth over the next five years," Russwurm added.

According to Siemens, the global market for the manufacturing and processing industries is expected to grow to more than 200 billion euros ($288 billion) by 2016, as it rises 5 percent on average annually during this period.

"China is now the third-largest industry market in the world, and Siemens Industry Sector's (one of four divisions of the group) business growth in the market will absolutely be higher than its global average," Russwurm said.

Last week, the Munich-based company said its net profit for the three months to March 31 this year will be between 1.4 billion and 1.9 billion euros. However, its business will expand at a slower pace in the second half of this year.

"I assume that growth will cool down in the second half of the year," The Financial Times quoted Joe Kaeser, Siemens' chief financial officer, as saying.

Siemens announced at the end of March that it will revamp its Industry Sector unit in a move to strengthen the company's services business in automotive manufacturing, mechanical engineering and the chemical industry.

According to Siemens, it has added a fourth sector to its business, focusing on infrastructure and city development, and which includes a bundle of select operations from its industry and energy businesses.

"With the planned reorganization of Siemens AG, our industry sector unit intends to strengthen its vertical market and services business and further expand in industrial software. The reorientation will not only help to increase our customer's productivity, but will also drive the growth of our own business," Russwurm said.

Marc Wucherer, President of Siemens Industry Sector Northeast Asia Cluster, said that thanks to China's new five-year plan focusing on industrialization and urbanization, "Siemens Industry Sector, which concentrates exclusively on industry customers and the industry services business, will have more opportunities to cooperate with our business partners in China".

Siemens said that it plans to increase the innovative abilities of Chinese companies engaged in key fields of the country's urbanization process, including transportation and shipping, railways and the logistics industry over the next five years.

Wucherer said that China's industrial upgrade and its focus on business related to environmental protection coincide exactly with Siemens' new strategy. "We expect buoyant business growth in the Chinese market over the next five years", he said.

China's GDP is expected to increase to 55 trillion yuan ($8.4 trillion) by 2015 from 39.8 trillion yuan in 2010.

China Daily

(China Daily 04/13/2011 page15)