Bosch’s tools to do the job

13:51 | 15/10/2012
Robert Bosch reported double and triple-digit growth of its business lines in Vietnam last year and is now aggressively expanding its investment in the country. VIR’s Hanh Huyen talks with Bosch South East Asia president Martin Hayes about the driving forces behind the company’s business confidence.
Martin Hayes

What are the reasons behind your company’s impressive growth last year?

Vietnam is the fastest growing market for Bosch in South East Asia. Today, it is one of our manufacturing and R&D hubs in the region. Since Robert Bosch Vietnam was established as a wholly-owned subsidiary in Ho Chi Minh City in 2008, the company has undergone exponential growth in Vietnam over the last few years where we went on to open a branch office in Hanoi, a factory for hi-tech automotive pushbelt manufacturing and a software engineering centre.

We also recently celebrated the opening of a third branch office in Danang, and we are still growing. The number of associates currently employed in Vietnam is close to 1,000. By 2015, we plan to increase our workforce to 1,600 associates.     

What makes Vietnam such a highly dynamic growth market for us is the social and political stability, skilled workforce and favourable economic conditions. These have been key factors that have supported Bosch in furthering  our investments. This is clearly evident in our sales revenue of 2011, with Bosch Vietnam generating EUR157.5 million,  a 75 per cent increase in total net sales  compared to 2010.  

Bosch will continue to diversify across Vietnam in the coming years. Our fundamental business strategy of focusing on beneficial products that help increase energy efficiency, conserve resources and protect the environment will help us to achieve sustainable economic success and a leading market position in our activities across the business fields of automotive aftermarket, drive and control technology, power tools, security systems, solar energy, thermotechnology, gasoline systems and software engineering.

Robert Bosch stated that it would double investment in its pushbelt plant from EUR55 million to EUR100 million by 2015. Please update your company’s disbursement into this plant and other business lines. Has the current global and domestic economic downturn impacted on Robert Bosch?

Bosch has fulfilled all investment commitments under the its investment registration. By the end of 2011, investment phases one, two and three (partly) were completed. The total disbursed investment was EUR80 million and the factory employed around 400 associates including engineers, technicians and skilled workers. To meet high quality production requirements, Bosch arranged for further qualification training in the Netherlands for nearly 150 associates from the plant. Total export turnover reached EUR125 million in 2011.

We are now planning to conduct a new phase of investment to boost factory capacity to produce all components of the pushbelts, meaning 100 per cent localisation for end-to-end manufacturing of pushbelts for continuous variable transmission (CVT) in automobiles. Total investment until 2015 will be increased to a total of EUR230 million. The factory will be expanded and new production lines will be set up to raise the output capacity to 4.6 million CVT pushbelts per year.   

The global and domestic downturn has not affected our investment into the plant. In fact, we are still receiving a very healthy volume of orders from our customers in Asia and the planned expansion will support us in meeting the buoyant demand of our customers.        

Robert Bosch is one among the  few global corporations having set up an R&D centre in Vietnam, the first software and engineering R&D centre in the region. Why did Bosch choose Vietnam to set up such a centre?

The decision to set up Robert Bosch Engineering & Business Solutions Vietnam Company Limited (RBVH) in Vietnam was based on the availability of good infrastructure facilities and a good engineering talent pool graduating from the excellent engineering universities in the country.  By locating the software engineering centre here, we are also able to leverage on the opportunities from a cost-effective development location in Southeast Asia and geographical proximity to car manufactures in Japan, Korea, China and Southeast Asia.

Robert Bosch is seeking incentives from the government for its expanded investment. But under the Investment Law, only a newly-established project can receive such incentives like 10 per cent corporate income tax instead of the common 25 per cent. Is the government buying into your argument?

As mentioned earlier, we have   the intention to increase investment to enhance production depth to build our own components for 100 per cent domestically-produced components at the factory.

This will raise out total investment capital from EUR80 million to EUR230 million by 2015. By 2015, the rate of domestically manufactured products will be about 80 per cent, export turnover will reach EUR290 million and we will have 1,500 employees. After the visit of Minister of Planning and Investment Bui Quang Vinh to our plant in July this year, the plant has been affirmed as a high-tech industry development project by the minister.

According to the Ministry of Planning and Investment (MPI) report that the MPI submitted to the prime minister for his consideration and decision, the MPI is of the opinion that for major projects conducted by well-known corporations like Bosch, Vietnam should provide suitable incentives to encourage long-term business development of foreign investors in Vietnam.

The MPI suggested the prime minister to assign it to lead and coordinate with the relevant authorities to form a team to research, investigate and report on the resolution of the request by Bosch for corporate income tax incentives and import duty application for our investment projects in Dong Nai. Based on our experience to date with the Vietnamese authorities, we remain positive on the outcome of their decision, and trust in the continued support that the government has extended to Bosch thus far.

German’s Minister of Economics & Technology Philipp Roesler visited Robert Bosch’s R&D centre in Ho Chi Minh City

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