Geely Signs Up Johnson Controls as Supplier

Johnson Controls Co., one of the world's top 500 enterprises, signed a global strategic cooperation agreement with Geely Holding Group in Beijing on December 16, 2009. According to the agreement, Johnson Controls will provide more and better auto parts across the globe. Both sides will carry out a comprehensive, in-depth cooperation in the fields of auto parts, new energy sources and etc.

Last week Geely signed contracts with a Korean supplier and Zhejiang Limin Group. The agreement with Johnson Controls is another major initiative in terms of the construction of supply chain system. Geely, a booming automaker, has attracted world-class suppliers.

　　Geely's strategic transformation is attractive.

In May 2007, Geely first conducted the strategic transformation in the industry. Geely was the first automaker to announce it would not rely on price competition any more. Geely made it clear that its core competitiveness would shift from cost competition to quality competition and overall competition. Under the guidance of that core idea, Geely conducted a top-down comprehensive reform in the supply chain system. The supply system embraced a change. Based on the experience of Europe, the United States and other advanced countries, Geely carried out a bold innovation and initiative. An integrated supply system emerged in which all the parties were connected with each other and shared a same fate. At present Geely has introduced a Quick Access method for suppliers. It would usually take one week for the world's nine major suppliers to complete the agreement with Geely. In addition, Geely implemented a series of measures ranging from power engineering to supply system. Supply chain system has enjoyed a successful transformation.

Geely has already eliminated 385 unqualified suppliers in recent three years and another 10% will be phased out in 2009.Geely will establish a supply chain platform consisting of 40 core suppliers in three years. A large number of excellent domestic suppliers and multinational giants will collaborate with each other on Geely's platform. Geely's first C-class car-Imperial EC8 25 made its debut recently. It is an integration of the efforts and innovations of several suppliers in 12 countries and regions.

Geely's successful transformation in supply chain system brought benefits to itself and attracted several suppliers.

The sales in 2009 are expected to grow 40% year on year, a comprehensive breakthrough compared with the earlier sales target-25% growth. The profitability of Geely Automobile is also soaring and the mid-2009 statistics showed that Geely's profits surged with more than 100% increase. Meanwhile, Geely's open and qualified supplier system has attracted a number of world-class suppliers.

Recently Geely held a global meeting for its suppliers in Ningbo and more than 30 world-class giants took part in the meeting. Those top enterprises expressed their willingness to establish a long-term cooperative relationship with Geely and provide products and technical support and cooperate with Geely in their leading fields.

Liu Xiangyang, the Vice President of Geely Group, said that the transformation of the supply chain system has entered a new phase. The construction of Geely's supply chain has met several challenges and opportunities including the establishment of platform, differentiation and globalization. Geely has carried out its strategy for products which includes five major technology platforms, 15 major product platforms and 42 models. Therefore the suppliers are required to upgrade their products and provide a complete platform-solution. For example, Johnson Controls completed the platform-based design work for the seats of Imperial EC8 25 in 22 days. Under normal circumstances, the work would take a year or even longer.

With the continuous development of China's auto market, customer demands are becoming more and more differentiated. As a local automaker, Geely is able to understand the market demands better. Only by combining the better notions about demands with multinational technologies and R&D can Geely meet market demands and enhance the competitiveness of products. Recently Geely learned from the market that many customers have indicated a desire to have a cervical gear to relieve the fatigue in neck. Johnson Controls got feedbacks from Geely and completed the research and development of cervical gear within seven days. The market offered a warm applause for the facility.

Geely has set its annual sales target for 2015-two million units. Geely needs some local support from multinational companies to finish the strategic layout. By 2015 Geely will establish several bases across the world. For instance, Johnson Controls will provide parts for the global bases, which will greatly speed up Geely's pace of globalization and enhance product's local competitiveness.

Steve Roell, the Chairman and CEO of Johnson Controls, said that the company attached great importance to Geely. During the past two years Geely proved that it was on the right path through practical actions. Johnson Controls was eager to witness and participate in a historic moment. It was a very important task for Johnson Controls to sign with Geely and the supplier would meet Geely's diverse demands with good service. (Translator: Qinghua/ Hanxin)

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