For India we anticipate continued growth over the next few years
When joining a new market a lot of opportunities are to be considered. There are many challenges to accept and chances to take. But especially for companies who just entered the market, there are a lot of questions. We turned to Mr. Siegfried Schabel, CEO of MEC Group (Messer Group) with some of our questions regarding entering and operating within the Indian market and kindly asked him to share his experiences and expertise.
GSC: With systems, products, and services that cover a wide variety of industries (from steel and metal working, to ship building, electronics, and medicine), Messer Cutting Systems' success lies in its ability to innovate. Before beginning R&D or production processes in a new country, what are the most important issues that Messer Cutting Systems takes into consideration?
Mr. Schabel: With our worldwide footprint we follow our target markets. We operate subsidiaries in those countries whose local markets require our products and services. Clearly the first question we ask ourselves is an assessment of local market size, customer demand and competitive situation. We engage in new markets only after a favorable assessment of the market potential. As a next step we need to understand our ability to do business, including such factors as the ease and cost of establishing a local presence, bureaucratic requirements, potential corruption or the assessment of the local legal system. All these criteria may still be KO criteria pushing us not to engage in that particular market.
Our market entry will generally be with a sales and a service organization. Following this, once we reach critical mass we will consider a local manufacturing scope. Regarding your question on R&D, this will generally not come at an early stage following a market entry. With the exception of application development for a local market, our global research and development for new products or technologies is centralized in our global R&D centers and will not be part of the initial scope of doing business in a new market.
GSC: Having established its own production and assembly facility in India in 2008, Messer Cutting Systems is still a relatively new player in the Indian market. In just five years, the original facility underwent a series of expansions and in 2013, a brand new production site was established to increase the space available for manufacturing machinery. Could you please tell us why Messer Cutting Systems chose India as an investment location in the first place? To what can you attribute this rapid growth in the country?
Mr. Schabel: India is a huge market. With 1.3 billion people today it is still growing. It is within the top 10 countries of the world ranked by GDP. We cannot ignore India! With our products we can help to build India's future. Our machines for cutting steel are instrumental to infrastructure development. We manufacture in India, with a high local content for the Indian market: Building India's future. Building India's infrastructure.
GSC: How do you see Messer Cutting Systems' business developing in India in the years to come?
Mr. Schabel: India today faces many critical challenges, many of which must be resolved successfully to develop the country further. Aware of the many risks that remain, we carefully watch the government's progress in navigating the many challenges. But our overall view on India is bullish, we have linked our own success to the success of building India's infrastructure. Our optimism is demonstrated in the fact that we have purchased land for an expansion of our facility in Coimbatore: For India we anticipate continued growth over the next few years.
GSC: Before the establishment of the Indian production and assembly facility, Messer Cutting Systems took a few steps into the market through various activities: first through distributors, then through sales and service support, and eventually by entering into a joint venture (via Messer Cutting & Welding and Eutectic Castolin, sold in 2011). With these experiences in mind, can you offer up any lessons learned by the company to other foreign firms that are just getting started in India?
Mr. Schabel: We operate some very successful Joint Ventures and Partnerships worldwide. Also in India we have transitioned through many models of partnership. The experience we have gained is not specific to India, but can be summarized in one key lesson we learned: If you find a partner who fits well in size, in ownership structure, in management philosophy and culture and in regards to the intended duration of the partnership, this partner will add value to your partnership. If you find just one deviation in a potential partners' belief or intention or if you are in doubt about these, then go independently. In that case a 100% controlled company will be more successful. Possibly slower and more difficult to establish, but the only way to avoiding conflicts later on.
GSC: Thank you very much for this interview, Mr. Schabel.
MEC Group is a global company in the areas of welding, brazing and coating technologies, metal cutting and fabrication, gas supply systems and medical instrumentation. Throughout our 118 year history we pioneered and led the development of technology in our areas. For the year 2015, MEC group generated sales of EUR 535 million. With almost 2,900 employees worldwide MEC Group provides leading technology solutions to customers. For more information visit the company website