Karl Mayer - Dual product line strategy for China

25 June 2008, Obertshausen - Textile machinery manufacturers around the world have been targeting China both as a market and production base for some time now and many have set up production facilities and sales and servicing operations in the country. Leading German warp knitting machinery manufacturer Karl Mayer is no different and here we take a look at the company’s operations in China.

According to Germany’s VDMA Textile Machinery Association, textile machines to the value of 3,900 million Euros were exported from Germany last year, and more than 25 % of those went to Chinese manufacturers. In terms of turnover, knitting and hosiery machines headed the list of machines exported. In 2007, sales of warp and weft knitting machines manufactured in Germany and sold in China amounted to 521 million Euros, which represented roughly 42 % of the total export volume recorded for this subsector of the textile machinery sector.

According to Karl Mayer, the high demand for textile machines for producing knitted textiles has not only increased the level of imports into China, it has also made the competition even fiercer. New Chinese machine building companies are emerging all the time, and are looking to increase their share of the market in every sector.

Dual product line strategy

The Karl Mayer Group has reacted to this trend by implementing a dual product line strategy, which it has been following for the last two years. The key element of this strategy is to build basic machines with a solid, dependable performance profile for customers who are more price-oriented, as well as high-tech machines having a high price/ performance ratio for users operating at the high end of the market.

Just as important as this dual product strategy has been the need to reorganise the Karl Mayer Group’s production capacity. As well as modernising and improving the company’s headquarters in Germany, the company has stepped up its operations in China and has had new premises built for its Chinese subsidiary.

Development of Karl Mayer China

Since 1995, Karl Mayer has had its own subsidiary in China. The first factory, which covered a production area of 10,000 square meters was set up in Wujin in Jiangsu Province and operated as a production and service centre. In 2003, the factory was extended to cover an area of roughly 25,000 square meters and within three years it became obvious that even this was not adequate. In the spring of 2006, the company’s management decided to have a new building erected and moved to the new Wujin facility in the Hi-Tech Industrial Zone (WIZ), which was about 15 km away.

Planning for the move began in June 2006, and the first sod of earth was lifted in the following January to mark the beginning of the building process, with the new building being ready for occupation in March 2008. This was only just in time, since the opening of the new production plant was scheduled for 26 July.

The office accommodation is already being used for holding agency meetings between Karl Mayer’s staff and the sales partners, but the modern factory will not officially be opened until the day before the opening of the ITMA ASIA + CITME trade fair.

Karl Mayer has invited its clients from all over Asia to attend the opening ceremony. The programme will include a traditional Chinese "lion dance", speeches, a firework display and a celebration meal. Those attending the event will also have the opportunity to tour the new factory and view the machinery and equipment in the showroom.

New factory details

Karl Mayer (China) Ltd covers an area of 55,000 square metres and consists of production, assembly, service, spare parts sales, and administration departments. The factory produces complete machines on a fully integrated basis for the various strategic units, is responsible for all the operations of the entire Karl Mayer Group in China, and will increasingly manufacture components for other production centres.

The new factory will also supply customers in China with spare parts, manage the servicing operations across the entire product range for manufacturers in China, and accommodate the Karl Mayer Academy, China. The new premises will also house a permanent in-house exhibition, so that anyone who is interested can find out about the latest developments on offer from this market and technology leader.

Strict quality control

Karl Mayer’s strict quality standards were followed to the letter, right from the planning stage, and especially when realising the plans, and every important stage was supervised by a management team from the company’s headquarters in Obertshausen. In addition to building the new factory, the commercial practices had to be modified, a modern production planning and control system had to be introduced, and the organisational structure had to be adapted to suit the requirements of the highly efficient, high-quality production operations. By working with the Chinese management team, it was thus possible to implement the sequences and processes typical of a European production location, whilst taking into account the actual situation prevailing in China.

As the new building took shape, considerable investment was made in new machine tools and production machines for the production department, thus ensuring that Karl Mayer China now has the latest production and processing machinery at its disposal. The end result is a state-of-the-art plant for producing Karl Mayer machinery.

By setting up this new factory in the Wujin Hi-Tech Industrial Zone, the Karl Mayer Group believes that it has built up a strong base in its main market, which is becoming more and more competitive. The modern factory produces high-quality machines at competitive prices, which should impress users and enable Karl Mayer to take advantage of the low local labour costs to manufacture its entire production range.