When the minds of the industry were almost shocked by the "turning point theory," Continental Group , the world's leading auto parts supplier, gave a diametrically opposed response.

At the 2015 (6th) Global Automotive Forum held in Chongqing, Continental Group officially announced the joint investment with Huayu Automotive Co., Ltd. (hereinafter referred to as “Hua Yu Automobile”) to build a new China Continental Automotive Brake System (Chongqing) Co., Ltd. The two sides hold equal shares. The total investment in the first phase is expected to exceed 600 million yuan. The company plans to occupy an area of ​​more than 80,000 square meters and will produce automobile brake parts mainly consisting of brake calipers, vacuum boosters and electronic parking brake systems. The new plant is scheduled to start production in the fall of 2016, when it is expected that there will be more than 600 employees.

"The investment in the new plant is an important milestone for the Continental Group's business in China. The annual automobile production in China is expected to exceed 30 million vehicles by 2020. At the same time, the automotive industry in Western China represented by the Sichuan-Chongqing region is rapidly developing." Value Chain The concept of “localization” prompted us to meet the needs of the market through local production, and the strategy of “rooting in China and serving China” guided us to follow the customer's steps and enter into the West. The establishment of the new plant in Chongqing will inject into the development of the Chinese automotive industry, especially in the western region. More energy and vitality.” Dr. Kang Ruifan, member of the Executive Board of the Continental Group and President and CEO of China, said.

Accelerating westward

The western region has long been an important part of the strategy of the "GROUP China" of the Continental Group.

According to industry experts' estimates, the total production and sales volume of light vehicles in China will reach approximately 30 million by 2020. For this reason, Continental Group’s established goal for the Chinese market is to reach sales of 10 billion euros by 2020, accounting for one-fifth of the 50 billion euros planned by the Continental Group for the 2020 plan.

Kang Ruifan said that according to the new characteristics of the Chinese market, the future of the Continental Group in China will be inclined to its own brand SUV, MPV and aftermarket, as well as the western market.

"China's automobile industry will increasingly move closer to the west. Our goal is to support the development of the automotive industry faster and better serve international and local OEMs through Chongqing's automotive brake system. The factory is indeed an important pawn in the development of our western region.” Kang Ruifan does not say anything about the importance of the West to the mainland. According to its disclosure, the Continental Group will continue to establish new facilities in Chongqing, Chengdu, Changsha, Wuhan and other regions, and will also seek suitable locations to build more aftermarkets in the west.

In fact, although the industry is not optimistic about the auto market, in the national territory of the auto market this year, the Midwest market still maintains a relatively rapid growth momentum, and the expansion of production capacity of car companies in western regions such as Chongqing has also attracted more zeroes. Parts supporting companies settled in. For Continental Group, setting up a factory in Chongqing is also actually developing new business growth points.

It is understood that Huayu Automotive is a leading automotive parts supplier in China. With advanced technology and reliable quality, Huayu Automotive provides OEM customers and aftermarket customers with quality products and services. Through strategic cooperation with the world's leading component suppliers, Huayu Automotive gathers engineering R&D, lean manufacturing and customer service resources. Prior to this cooperation, Huayu Automotive and the Continental Group had established a good cooperative relationship. This cooperation is a matter of course for both parties.

More importantly, in the current context, the significance of a localized cooperation strategy is extraordinary for multinational companies. According to Kang Ruifan, in the past 20 years, the Continental Group has been playing steadily and continuously increasing the proportion of localization. More than 80% of its products have already been locally assembled and will be more locally purchased in the Chinese market.

Optimistic promise

Obviously, Continental Group is still optimistic about the Chinese market. What does this confidence and judgment originate from and where does the driving force behind the continued growth of the Continental Group come from?

"A lot of vehicle manufacturers think that China's auto industry has cooled down a bit. Is this a bit disappointing or has caused us to lose momentum? I don't think so, because in the US, Europe and other countries It has been a normal stage since long ago. In addition, Continental Group has a history of 140 years, but we think we are still a very young company and we hope to continue to develop in the market for 140 years.” For the Chinese auto market and With the prospect of the mainland group, Kang Ruifan is quite confident.

Kang Ruifan stated that as early as 1994, the mainland entered China to carry out business, and now it has 25 production bases, 23,000 employees, and 15 R&D centers in China. In addition, the Continental Group has also established a number of joint ventures and has worked together with partners in China to achieve great success.

“We will be very interested in understanding what will happen in the next 20 years?” said Kang Ruifan. “China's GDP is slowly slowing down from double digits to single digits, but we think this is the normalization of the Chinese auto industry. Trends, in the automotive industry in the future is unlikely to see such high growth of 20%, 15%, we will see the normal growth of 7%, 8%, but for the Continental Group, this is not a problem."

In the view of Kang Ruifan, the development of the business of the Continental Group is not only in terms of quantity, but also not just how many new cars are sold. Qualitatively speaking, the mainland is very confident in its products and services.

"For the mainland, we still hope to maintain double-digit growth rates in the future, that is, we will exceed the growth rate of new cars in the Chinese market. In addition, we believe that in 2020, China will The production and sales of vehicles may exceed 30 million vehicles or even more. Therefore, we will invest heavily in China to demonstrate our firm determination. We will implement local production in the Chinese market to meet local demand.” Kang Ruifan believes that the Continental Group Increasing investment at this time is a decision under rational analysis.

Kang Ruifan admits that the auto industry has already faced a situation of overcapacity in China, but the key is to see who has surplus? "Everyone does not want to have excessive production capacity, but everyone does not want to miss the opportunity for development. The advantage of the Continental Group is that we are continuing. In terms of capacity investment, at least we do not see the risk of overcapacity.The products produced by our new plant in Chongqing not only serve the surrounding customers, but also serve a large number of customers outside the Chongqing area, so the risk of excess industry for us Not great.” Kang Ruifan further added that in terms of technology, there is now a shift from the original old car market to China’s localization. With the gradual increase in the degree of localization, we must also increase investment in the production capacity of the factory. This move of the Continental Group is precisely a matter of course.

Some people say that during this 20-year period in China, Continental Group has just caught up with the best golden age of Chinese cars.

For Kang Ruifan, the Chinese market is a vibrant but very diverse market. After so many years of rapid development in China, the Continental Group has also encountered many challenges. On the one hand, some domestic suppliers and international suppliers still have a certain gap in terms of technology; on the other hand, China's auto industry is developing from a weight to a quality, which inevitably leads to an increase in labor costs. Kang Ruifan stated that this is a challenge for all companies including the Continental Group, but this in turn also reinforces the belief of the mainland Group in increasing investment and accelerating its deployment.

He also revealed that Continental’s investment in China has reached 1 billion euros in the past five years and that mainland China’s total investment in China will also reach about 1 billion euros in the next five years, which is equal to the previous investment.

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