Siemens AG plans to expand its market share in emerging markets. “The emerging markets are still the growth engines of the global economy. With its strong local presence and the right products, Siemens is excellently positioned to capture an above-average share of the growth taking place in these markets,” said Mr Roland Busch, Member of Managing Board.
Siemens plans to drive growth primarily not only in Brazil, Russia, India and China (BRIC) and West Asia but also in countries such as Chile, Indonesia, Mexico, Colombia, Poland, South Africa, Thailand, Turkey and Vietnam.
He said the Chinese government's twelfth five-year plan calls for, among other things, massive investments in renewable energies, smart grids, electric mobility and improvements in the healthcare system. By 2020, India wants to be feeding an additional 200 gigawatts into its power grid to meet its energy needs. To expand its rail network alone, Russia has announced investments of about Euro 300 billion by 2030.
Over the last few years, Siemens has already achieved above-average growth in the emerging markets. Revenue from continuing operations more than doubled between fiscal 2005 and fiscal 2010 to some Euro 22 billion — an average annual growth rate of 17 per cent.
FOR LOCALISATION
Local value creation — encompassing not only sales and production but also research and development (R&D) activities and engineering — is a key success factor for business in emerging markets. In 2005, Siemens had about 46,000 employees in the emerging markets. By 2010 it had risen to 85,000.
The market for products in the entry-level segment is an additional growth lever for Siemens in the emerging markets. Also called SMART products, they are simple, maintenance-friendly, affordable, reliable and timely-to-market. The market for entry-level products is growing worldwide at an annual rate of 7 per cent. In China and India, the rate is 10 per cent.
The volume that Siemens generates in the entry-level segment has increased by about 20 per cent year-on-year to a current annual volume of about Euro 10 billion. Today, Siemens is marketing over 160 such products. Another 90 products are being developed or close to market launch, he said.
Products launched include the SST-600 steam turbine, which is produced in India. Increasing the turbine's local value-add from 30 per cent to 100 per cent within three years cut costs by around 40 per cent. Similarly, over five lakh units of CerberusECO fire alarm system, which was developed and produced entirely in China, has been sold since its launch in 2009.