Finland's elevator giant expands rapidly in China, driven by urban renewal

Finland-based elevator giant KONE has consistently seized opportunities for growth in the Chinese market, building up its local production capacity to better serve the country's rapid urban development.

KONE entered the Chinese market in 1996, establishing a production base in Kunshan City, situated in eastern China's Jiangsu Province. To date, KONE's cumulative investment in Kunshan has reached 1.38 billion yuan (about 200 million U.S. dollars), making China KONE's largest single market worldwide.

Three months ago, Antti Paavola was transferred from Finland to China to take on the role of head of KONE Kunshan Industrial Park. He immediately recognized that the location of the production base was key to meeting the company's growth goals in China.

"Almost 99 percent of our suppliers are close to us and that helps us to keep our promises and deliver on time to our customers," said Paavola, Senior Vice President of Greater China Supply Chain at KONE.

Surprisingly, he adapted quickly to the new environment thanks to the well-established local industrial facilities and excellent government services.

"Government collaboration and how government can support us. The last ten years, we have been able to double our output and deliveries from Kunshan. And Kunshan has become the biggest manufacturing center for KONE," Paavola said.

In 2016, Italian engineer Andrea joined the KONE Kunshan Research and Development Center, initially planning for a two-year work cycle. Now, in his eighth year, Andrea has not only settled in China but has also led his team in continuous innovation, developing new products and solutions for the Chinese market while sharing China's expertise with the world.

"If you are successful in China, you can be successful also elsewhere. Nowadays in China we really have a competent center, and this is the global competence center, [which] means that all the designs we use globally and we export globally are made here. So it's really here where we have the competence that we then use to create and deliver solutions for the rest of the world," Andrea said.

As the elevator market in China shifts from an incremental model to a bulk commodity market, the installation of elevators in older communities and the maintenance of existing elevators are emerging as key growth areas for the industry. This year, the Chinese government has implemented a series of policies and measures to encourage and support equipment renewal. In response, KONE has for the first time established a renewal and transformation business department, positioning itself to capitalize on this new wave of development opportunities.

"China is a very important market for KONE actually the number one market in the world. This is a big opportunity to help China drive urban renewal. We see an opportunity to use digital technology to drive better safety, better customer experience for customers, while actually helping ourselves be more efficient. It's just a changing market. And what's important for us is to adapt to changing conditions," said Philippe Delorme, President and CEO of KONE.

Finland's elevator giant expands rapidly in China, driven by urban renewal

Yamaha, one of the world's largest piano manufacturers, has established a significant presence in Hangzhou City of east China's Zhejiang Province for more than two decades, witnessing remarkable growth of the market in the country while envisioning long-term development on this dynamic land.

The Japanese company's factory in Hangzhou produces approximately one in every five pianos in China. At its peak, nearly 70 percent of Yamaha's pianos and one-third of its woodwind instruments and guitars are manufactured in this facility. The products not only cater to the Chinese market but are also exported worldwide, earning the brand a prestigious reputation.

The friendly relations between Zhejiang and Shizuoka Prefecture, the center of musical instrument production in Japan, began in 1982, fostering deeper exchanges and cooperation. As trade between the two sides flourished, Yamaha Corporation focused its attention on Zhejiang, seeking to capitalize on its potential.

"Yamaha has high expectations for the Chinese market. The increasingly open Chinese market provides our company with stable support from material procurement to product sales,” said Seiichi Suzuki, general manager of Xiaoshan Yamaha Musical Instruments Co., Ltd.

Yamaha established its factory in Hangzhou's Xiaoshan District in 1997. Initially, the factory relied on assistance from its Japanese headquarters for worker training and production equipment. However, over the years, advancements in China's industrial technology have transformed this dependency. Chinese suppliers have now developed the capability to design and manufacture processing equipment for complex piano parts, even exporting some of the equipment to Japan.

The factory has grown from a modest workforce of fewer than 100 to nearly 3,000 employees. Its production processes have evolved from simple assembly to full-fledged instrument manufacturing, with an increasing focus on localizing component production, thereby enhancing the entire supply chain.

"There is a big difference between 2007 and now," said Taku Okamoto, head of the production department.

Okamoto was sent from Yamaha's Japan headquarters in Shizuoka Prefecture to China seven years ago to oversee product quality. He witnessed rapid development of the country, saying that nowadays tasks that might take a long time in Japan can often be completed in about a third of that time in China.

Today, Yamaha, like many foreign-funded enterprises, is capitalizing on the opportunities presented by China's robust growth. Suzuki, as well as many workers like Okamoto, say they believe that building on the foundation of the past two decades, Yamaha can seek an even more robust development in this land for the next 30, 50, or even 100 years.

Yamaha's journey in Hangzhou inspires vision for more robust development in China