Major automotive supplier also focuses on invention of new products, cost cutting innovations


Major auto parts supplier Bosch is seeking to diversify its products and increase investments in Korea.

“The need in Korea from the customer side is engine management systems,” Robert Bosch Korea president and CEO Hermann Kaess told The Korea Herald.

“What we do with every innovation is to produce parts that consume less fuel, less emissions, that is the game.”

Bosch’s Korean operation is driven by its automotive sector which accounts for 85 percent of their local business.

“We are a supplier but known worldwide as innovators. Korean companies appreciate that and that’s why we conduct some innovative activities with them as well as being a reliable supplier,” Kaess said.

In the consumer goods sector, Bosch is strong in the sale of power tools into the Korean market as well as household appliances.

Recently, Bosch released a fully automated coffee machine that digitally reads a capsule’s barcode in order to brew the desired beverage.

“Besides the consumer goods, we have an industrial building business which is quite important for us,” he noted.

Bosch is not resting on the business. A few weeks ago, the company broke ground in Busan on a new factory that will handle the growth experienced in their hydraulics operations for the construction, excavation and shipbuilding sectors. The factory is expected to be completed by early next year.

“We think of further investments, but first we need to hammer out agreements,” such as with labor unions, for example.

With their centers in Korea, Bosch’s operations concentrate on the adaption of systems into Korean production.

“What is important is to be close to our customers so that you can react and show the flexibility you need,” he said.

The German giant is taking a reserved outlook for this year’s economic forecast.

After the Korean economy recovered in 2010, Bosch sold 2.2 trillion won in goods. Last year, it grew about 15 percent in Korea.

“But now we are careful, we just don’t know what will happen due to the European debt crisis, the U.S. economy not being clear, and concerning China we hear different things, so we plan more or less to stagnate this year just to take a careful approach and hopefully we will have a positive surprise.”

Kaess noted not to expect the same growth as last year, “there are too many factors, it’s too volatile, it is more driven by hope.”

Bosch started business in Korea 1972 and opened a Seoul office in 1985. Bosch in Korea, including its joint ventures, employs about 3,600 executives and workers.

In the engineering world, the Germany-base multinational company boasts of quality goods and high market shares.

But the challenge that they, and other engineering companies, will have in the future may be a lack of qualified expert engineers to innovate the industries.

“In the engineering area, there needs to be a high degree of specialists to create the innovations we need to tackle all of today’s problems like climate change,” he said

“We already see this in Germany where we are in difficulties in this industry,” he added. “It’s running well now, full employment, but in the future there will be a problem getting the skilled engineers hired.”

The areas that will need a strong focus in the future he noted were in the electronic areas and mechanical engineers, but that is just the tip of the iceberg.

In England, for example, where a plethora of engineers moved innovation forward last century, the climate is changing with young British students opting to study in the commerce and business fields.

To tackle this problem at its core, Bosch and the European Union chamber of commerce are running their Europe-Korea Business Plan Competition where university students will showcase creative ideas that tackle difficult challenges.

“We need to start very early to attract talent,” Kaess said.

One by one, groups of students are currently displaying their ideas as well as their business plan for their possible start-up idea. At the same time they receive valuable mentoring help from European companies and get their first infusion into the workings of a foreign company.

Kaess explained that innovation today means to completely do things differently from the past, be it services or products.

Bosch focuses on two aspects of innovation: the invention of new products and cost cutting innovations.

To foster the company’s talent, Bosch uses a very strong process-driven approach while creating an open atmosphere for employees to contribute.

“We don’t like an approach of telling people what to do,” he said.

By Yoav Cerralbo (yoav@heraldcorp.com)