tci 2015 global strategy of hyundai-kia & mutual growth
TRANSCRIPT
Global Strategy of Hyundai-Kia & Mutual Growth
Bo Sung Lee
Plenary Session 3: Global Cooperation and Cluster Internationalization
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Global Strategy of Hyundai-Kia & Mutual Growth- Together for the better future with Hyundai-Kia
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Contents at a glance
03.
Strategies and systems for Mutual growth
Vision for Mutual growth06.
01.
Importance of Mutual growth in automotive in-dustry
04.
Main programs
05.
Results
02.
Globalization and Mutual growth
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Importance of Mutual growth in automotive indus-try
01 Mutual growth with auto part suppliers is a source of competitiveness
for automakers- Quality of auto parts leads to quality of finished cars
Importance of Mutual growth
95% of total parts are purchased from part sup-pliers
Long-term relationshipsare needed
Competition para-digm is changing
Changes in cooperation
Past PresentClose
dManufactur-ingVertical
OpenedDesign/Develop-
mentHorizontal
TransactionRole of suppliers
Relationships
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CzechRepublic30>
Turkey10>
India63>
Russia23>Slovakia31>
DongfengYueda Kia55>
BeijingHyundai104> Geor-gia37>
Alabama40>
Brazil17>
Kia159>Hyundai185>
(in ten thousand units)
9countries 32Plants
Overseas:4.42M
55%Domestic:3.58
M
45%
Total Production Capacity : 8M units (2014)
Globalization and Mutual growth
02 32 plants in 9 countries –Overseas productions of 55%
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Location requirements
Able to customize manufacturing systems
Government support
Globalization of suppliers
Establishing wholly new plant
Acquiring plants owned by local firms
Green Field
Brown Field
ConsPros
Economy of scale– Able to start
production immediately
– Less cost of training
Take long period of time– Construction– Training
Limited options Cost of acquisition Unable to
customize manufacturing systems
HKMC
Renault-Nissan
Consideration of government support and infrastructure– (Russia) tariff, road,
electricity support– (USA) road, railroad support
Growth through M&A– Nissan(’99), Samsung(’00),
Avtovaz(’12)
Ford Resold after M&A– Aston Martin, Jaguar, Land
Rover, Volvo
Concept ExamplesCharacteristics
Globalization and Mutual growth
02 Rapid new plant construction Competitiveness of suppliers is a key
success factor
Globalization Strategies
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Strategies and systems for Mutual growth
Strategies for Mutual growth < Global competitive-
ness >Improve product quality ofsuppliers• Product quality• Productivity• Technology
< Mutual growth systems >
Support corporate culturepolicies• Cooperation network• Tier-2·3 suppliers support• Mutual growth culture
< Sustainable growth >
Management support• Infrastructure• Globalization
03 Improve competitiveness through Mutual growth with
suppliers
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Partners & systems
Tier-1 300 firms ▶ Supply parts to HKMC
Tier-2,3 5,000 firms ▶ Supply parts to tier-1 suppliers
Others 3,000 firms ▶ Facilities, etc.
Exclusive Organization
< Foundation of Korea Automo-tive Parts Industry Promotion >
•Founded in July 2002•Aims to improve auto partsquality
< R&D support group >
Technological Support
< Mutual growth team >
Procurement support
Strategies and systems for Mutual growth03
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04
(1) QualityMain programs
Founded “KAP” to support part suppliers (Jul 2002) : Subsidy of 5~8billion won per year
Foundation of Korea Automotive Parts Industry Promotion
• Technical support• Quality evaluation training
• Organize advisory group• R&D/manufacturing con-sulting (3~12months)
• Quality/Technology school• Financial aid
Quality/Tech-nology
Support Group
SupplierSupport Group
Others
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04
(1) Quality
5Stars pro-gram
※ Provide incentives by evaluating quality, technology, delivery of sup-pliers
Main programs
Improve global competitiveness and provide incentives by 5star program
Technology
• Fundamental• Implementation• Future technology• Performance
Quality • Quality management• Claim cost• Fraction defective
(1) Quality improvement(2) QM cost reduction(3) Export capacity
Effect
Delivery
• Delivery for aftersales parts• Delivery for CKD parts
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04
(2) Technology
R&D quality improvement• Quality mind• Claims prevention
R&D Capacityimprovement
• R&D capacityimprovement support
Customized Technology• R&D analysis• Technical support
Communication / Cooperation
• Cooperation committee
R&D Support group
Main programsSupport technology support through HKMC R&D support group
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04
(4) Infrastruc-
ture
Suppliers job fair
Venture plaza※ Joint development led by venture team
Venture
Joint development through Idea con-
test
Technologytransfer
Transferring technol-ogy
developed by venture team
• 348 firms participated2012 • 348 firms participated
2013Job
Fair
Suppli-ers
Main programs HR support : Suppliers job fair Joint development & Technology transfer
2014• 367 firms participated
Supplyparts
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20 ~ 30yrs 30 ~ 40yrs More than 4010 ~ 20yrsLess than 10
1%
21%
37%
31%
10%
28yrs>11.1
yrsHKMC average
(2014)Manufacturing
industry average(2013)
Relationship of more than 11.1years : 98%
=98%• More than 20 years : 78%• More than 40 years :10%
Relationship of more than 11.1years
Results05
(1) Long-term relationships
Average length of relationship : 28years (2.5 times longer than in-dustry average)
Long-term relationships
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’07 ’10 ’13’04‘01
3.2
times
Average sales per sup-plier
733억
2,337억
33.5%↑
(3.2 times larger than in 2001) CAGR of 10.2%
05
(2) Increased average sales
Average sales per supplier : 237.3 billion won(2013) (3.2times larger than in 2001)
Average sales per supplier
34.4%↑
32.8%↑
33.8%↑
Results
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05
(3) Increasing larger-sized sup-
pliersSMEs to Large-sized firms
Large-sizedFirms
(Mid-sized firms)
SMEs
23%39%
‘01 ’13
46(16%)(37(13%))
243(84%)
137(50%)(111
(38%))
137(50%)
46 firms in 2001 → 137 firms in 2013
Large-sized firms
times
37 firms in 2001 → 111 firms in 2013
3.0SMEs
3.0
Suppliers by size
times
Results
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05
(4) Globalization
Number of globalized suppliers
17 19 57 116 172 218 232 23917 22 65 171 247 310 344 360
1st-tier2nd-tier
‘97 ‘00 ‘02 ‘04 ‘05 년 ‘08 ‘10 ‘13
34 41 122287
419528 576 599
1st-tier : increased by 222 (17 in 1997 → 239 in 2013)2nd-tier : increased by 343 (17 in 1997 → 360 in 2014)
Increased by 565 in total
Support globalization of 599 suppliers : 239 1st-tier suppliers, 360 2nd-tier suppliers
Results
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05
(5) Global supplier network
Europe 33 firms1st-tier 192nd-tier 14
Russia11firms1st-tier 11
Turkey 11firms 1st-tier 82nd-tier 3
India 71firms1st-tier 422nd-tier 29
China 417firms1st-tier 1212nd-tier 296
Brazil 11firms 1st-tier 82nd-tier 3
USA 45firms1st-tier 302nd-tier 15
Results
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▶ Suppliers special-ization▶ Support Global-ization▶ New Technologies
▶ Quality ▶ Technology▶ Productivity
Mutual growthHKMC Suppliers
Vision for Mutual growth Together for the better future“ ”
Sales growth / increased part supply / profit growthIndependent growth of suppliers / Quality improvement
HKMC and suppliers share vision of being a “Global leader in automo-tive industry”
We understand that growth of suppliers leads to growth of HKMC.
HKMC will eager to create virtuous circle of Mutual growth with suppli-ers
06.
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Thank youTogether for the better fu-ture with Hyundai-Kia