Schindler Will Overtake Otis and Kone in China Market, CEO Says
(Bloomberg) — Schindler Holding AG will overtake competitors in China, such as Kone OYJ and United Technologies Corp.’s Otis, to become the world’s biggest supplier of elevators and escalators, Chief Executive Officer Silvio Napoli said.
“It’s clearly in the next years not months, but it’s our resolve to get there,” Napoli said in an interview. “If you want to be number one worldwide, you have to be number one in China.”
Schindler finished building the largest escalator plant in the world in China this year and an elevator plant is under construction. It may acquire local competitors to accelerate growth and get to the top, Napoli said. A merger involving the remaining three large elevator companies is unlikely because of antitrust hurdles.
The Italian-born diplomats’ son was hired as head of corporate planning by owner Alfred Schindler 20 years ago, before being promoted to CEO at the beginning of this year. Napoli cut his teeth building up businesses in emerging markets for the family-controlled company, overseeing the establishment of a unit in India that was later the subject of a Harvard Business School case study.
China accounts for 67 percent of new installations for the 54 billion euro ($66.3 billion) global market for elevator and escalators, Credit Suisse analysts said in August.
New Factories
While Schindler’s sales were $9.5 billion, making it the second-largest provider, it has been overtaken by Kone in new installations, according to Credit Suisse. Otis is the world’s largest supplier overall.
“Fast fish eat slow fish in Asia. We are understanding that to be successful in the new reality we need to go faster,” Napoli said. Having realized Schindler had started to lag behind rivals a couple of years ago, the company is poised to bring new factories on-stream in Asia to recoup lost ground in China and India.
The market in China is slowing yet remains robust, Napoli said. He sees it growing 6 percent next year, compared with 7 percent in the last quarter yet still a “fantastic opportunity”.
Adding Managers
Currently in the top five in the Chinese market, Napoli will add Asian managers to the executive committee. He’s also simplifying the way Schindler elevators are installed in China to make them cheaper, as well as rolling out the 3600 range that targets residential markets which it previously hadn’t focused on. Napoli said he will expand into a host of Chinese cities with populations of about 1 million.
Smaller Chinese suppliers, which include Canny Elevator Co. Ltd., Sjec Corp. and Shenyang Brilliant Elevator Co Ltd., are struggling to gain market share and may be consolidation targets as the market slows, Napoli said.
“When opportunities arise, whether they have been floated or are still privately held, we will be very open,” he said.
Once Napoli has accomplished his goal in China, he’ll target Mongolia, Kazakhstan, Baltic countries bordering Russia, and Africa, the executive said.
To contact the reporters on this story: Patrick Winters in Zurich at pwinters3@bloomberg.net; Jan Schwalbe in Zurich at jschwalbe6@bloomberg.net To contact the editors responsible for this story: Simon Thiel at sthiel1@bloomberg.net Andrew Noel, Robert Valpuesta
