A group of Chinese visito rs taking a tour at Emag facto ry in Stuttgart, Germany. Emag is a leading global vertical pick-up turning machine manufacturer. The company is a major supplier of Chinese steel giant Baosteel Group. Provided to China Daily

Deutsch manufacturers writing their success in Chinese industry

While the lingering economic downturn plagues the global industrial chain, a group of small and medium-sized manufacturing companies in Germany have managed to weather the storm.

Manufacturing only one set of products today needs a good argument. But positioned as the leading machine tools makers worldwide, these German producers are quietly writing their own success stories by making what many consider to be boring products.

Small in scale, they tend to have a stable business model, are usually family-run, act low-key, focus on one core competence and stay close to the market with it.

Known as "hidden champions", they make an important contribution - some for decades - to Germany's consistent position at or near the top of world industrial production.

And they are eyeing China for new growth areas despite temporary market saturation.

Chinese market

Despite the unfavorable global climate, Trumpf GmbH Co KG, the world's largest maker of laser cutting machines, saw its sales in China advance by 9.5 percent year-on-year .

Located northwest of Stuttgart, the company offers machines for laser processing, cutting and welding that are widely applied across, among many other industries, the steel, automotive and medical sectors.

Trumpf entered China in 2000 and started with just one job shop in Taicang in East China's Jiangsu province, where there was optimal infrastructure with many potential customers and suppliers well in place, said Nicola Leibinger-Kammller, president of the company.

It initially made typical sheet metal parts that normally its customers would produce. In 2005 it added a medical technology production base in the same location.

In a market where rudimentary machines tools call for constant technological upgrading, the company started to engineer change by exhibiting a faster, more precise and more economical production pattern.

For instance, it developed a welding-on-the-fly technology where the laser beam is generated far from the welding cell and can be directed into as many as six points.

The improved beam guidance helped this technology capture additional market share for car body construction . Vehicle giant Daimler AG was quick to adopt this laser welding process.

Trumpf has made unusually aggressive moves in the past year despite the descending economic indicators in China. By overhauling its factory to double annual capacity, the company vowed to raise sales by 500 million euros ($641 million) from less than 200 million euros in 2011.

"We do see market saturation in the short run but we also expect great opportunities as Chinese industry moves up the value chain," said vice-president Peter Leibinger, younger brother of Leibinger-Kammller.

"We want a steady growth that focuses on the premium market, where demand for quality in China is absolutely rising," he said.

While Germany has mostly been the cornerstone of the Europe an economy, in the eyes of many investors, Europe is not as important to Germany as it used to be.

According to a survey by the Association of German Chambers of Industry and Commerce, for the first time China has become German companies' top foreign investment destination, totaling $1.36 billion by the end of last year.

Like Trumpf, this change is also visible in Index-werke GmbH & Co, maker of production turning machines, which pins its hopes on China as the sole growth engine.

"We witness an overall gloomy picture in machinery production and even in Asian markets we fail to see exciting stimulus. But the only driver has to be China," said Reiner Hammerl, managing director of sales and marketing at Index.

Index specializes in multi-functional production centers in which different process technologies can be integrated in one machine. The complete machining means not only quality and precision are higher but, primarily, the production costs are reduced as a result of the shorter throughput times.

More than 40 percent of Index portfolios serve the automotive industry, with the remainder left for electrical engineering and fluid technology.

While its business growth rate was partly hampered by China's coo ling car market in 2011, Hammerl foresees good opportunities to regain the battlefield in the premium market in light of the stricter emission requirements the government has imposed.

"As Chinese cars need to meet higher environment al standards, they need more precise technology. Our expertise can make products more eco-friendly. We definitely see growing potential in this regard and this is where we edge others out," he said.

Those delivering a promising sales season in China also include Emag Holding GmbH, the largest vertical pick-up turning machines producer.

In the first half of 2012, the major supplier of Chinese steel giant Baosteel group saw a moderate profit surge, amid ubiquitous contracting demand in and out of China.

The company's products can cover the entire spectrum of machining processe s in the metal working industry, including chucked, shaft or cubic components.

Its hit product, the vertical pick-up turning machine, can save up to 85 percent of time in picking up spare parts and minimize manmade errors by achieving transmission automation.

Dieter Kollmar, Emag's managing director, sees the increasing allure of China after the Chinese government pledged to invest annually 10 billion yuan ($1.61 billion) in developing high-end machine tools, helping the industry to grow at a projected 12 percent year-on-year.

Upon the completion of a research and development center in Taicang, Emag is set to invest 4.9 billion yuan in a new plant in southern Jiangsu's Jintan city to mass-produce computer numerical control machine tools.

"I think the trend of industrial transition and moving up the value chain has put us in an advantageous position by improving work efficiency and freeing the labor force," said Kollmar.