Investment

Strong China push helps 3M ride the profit wave

By Wang Ying (China Daily)
Updated: 2010-08-17 15:28

SHANGHAI - Diversified US manufacturer 3M Co on Monday said there will be no change in its investment plans for

George Buckley says the local leadership should manage local business. Provided to China Daily

China as its unit here performed strongly and contributed nearly 4 percentage points to the overall 43 percent growth in the second quarter.

3M reported a growth of 53 percent in sales during the first half of 2010. A strong performance in China helped lift the company's global net profit to $1.12 billion in the second quarter, said George Buckley, president and chief executive officer, 3M.

"China has been performing well for some time now, and for many years we had a growth of 20 to 25 percent," said Buckley. Sales of the company are expected to reach $2.9 billion in 2010 in China and 3M plans to grow this to $5 billion by 2015.

The US company has so far invested $750 million in China, and expects to continue increasing the investment.

"(3M) has just approved another manufacturing plant last week for components that help people with asthma and breathing problems," said Buckley.

Located in 3M's Pujiang medical manufacturing site in Shanghai, the plant will manufacture metered dose inhaler (MDI) devices. Set up with an initial investment of $20 to 22 million, the plant is likely to be completed by the end of next year.

Many foreign-funded companies are facing cost pressures while their Chinese counterparts are doing better in cost savings.

But 3M has set a good example on how to cut operating cost through an efficient localization strategy.

According to Buckley, 3M has a China-for-China strategy, which means they don't directly export things from China, but manufacture products in China, and employ mostly Chinese people. "3M is technically a Chinese company," said Buckley.

The company's 16-member leadership team here has only one non-Chinese, according to Buckley.

"One of the philosophies in our company is that we believe the local leadership should manage local business," he

said.

Since Buckley took charge, 3M has significantly increased its localization rate, especially in the management side. Currently, over 60 percent of the management personnel in 3M are local people.

"We still have a long way to go," said Buckley. "Although we have made a success in China, 3M's market share is still very small."

Since 1984 when it set up its China headquarters in Shanghai, 3M now has eight manufacturing sites and 26 business locations (including the one to be open by the end of August) in the nation.

In late July, the company said its profit rose after strong revenue growth in Asia.

The company plans to boost market share in Asia and China with a wide variety of products, ranging from Post-it stickers to flat-screen TV film.

China Daily