Johnson Controls International expects double digit growth rates for its China operations within the next one to three years despite concerns over a slowdown in the world’s second-largest economy.
Alex Molinaroli, chairman and CEO of the automotive parts maker, told CNBC at the sidelines of the World Economic Forum’s annual June meeting in Dalian, that he is bullish about China’s prospects.
“The ups and downs of China mean nothing compared to the rest of the world when you think about the growth rates, you think about the emerging middle class and you think about the clustering of the cities,” Molinaroli said. “It’s a perfect opportunity for Johnson Controls.”
He added, “I’d be really disappointed if we didn’t see strong double digit growth.”
China’s economy grew 6.9 percent annually in the first quarter, beating expectations, amid a government infrastructure spending spree and rising housing prices. Last year, the economy grew at 6.7 percent, which was the slowest pace of expansion in 26 years, but remained above the growth rates of most other countries.
Johnson Controls produces automotive parts such as batteries, and heating, ventilation, and air conditioning equipment for buildings. It has a substantial presence in China, including manufacturing plants, research and development facilities, branches and thousands of employees and channel partners.
Molinaroli explained that while there’s going to be fluctuations in growth rates, there will still be cars that are going to need batteries, air conditioning that will be required and security systems that are going to be more important to the emerging middle class in China.
“Migration from the east to the west and large cities — all these things fit to our strength. So when I look at the cycle that we’re in, I feel very confident about our position,” he said.
He added that technology adoption and adaptation in China is happening quicker than almost anywhere else in the world. “What I like to tell our people is that we’ve spent the first 100 years of our history moving technology from West to East. I believe that next 100 years, at least the next 20-30 years, it’s going to be technology that’s born here, innovated here, that’s going to move East to West,” he said.
To bolster that position, the company recently opened its Asia Pacific headquarters in Shanghai. Molinaroli called the opening of the headquarter a “vote for all of Asia” and said the company is also looking to conquer the India market, which remains one of the fastest growing major economies in the world.
“If I thought about India just a couple of years ago, I would be much less bullish than I am today,” he said. He explained that while Johnson Controls, like many other companies, has outsourced work to India, when it came to serving the market, there was more to be done.
“Serving the India market is one that we have not been as successful at. But I think that’s going to change. When I look at what’s going to happen over the next decade and the following decade, I’m really bullish on India,” he said.
Source: cnbc china
Johnson Controls CEO expects double digit growth in China business despite slowdown worries