Roland Bent, Chief Technology Officer at Phoenix Contact, on the prospects for Industry 4.0 in China

What importance do Asian markets currently have for Phoenix Contact?

First of all, Asia is not a homogeneous establishment. There are completely different national economies that function and develop very differently.

So one after the other…
Japan is a highly developed market that is very interesting for us, even with strong growth in recent years. Japan has a high level of technological competence of its own. Therefore, a foreign company there has good opportunities with products that Japan’s own economy does not have. The basis of our positioning in Japan was connection technology, which Japanese companies need for the international market. Today, however, our entire product portfolio is interesting.

There is still one big economy – Korea. Here, the focus is no longer only on the large corporate groups. Industry 4.0 and Smart Manufacturing are also intended to raise suppliers and the entire industry to a new level. The issue is at the top of the political agenda, as was communicated at all levels during my recent visit to Korea.

Will China remain a key market for Phoenix Contact?

Yes, China remains the big growth engine in Asia. For us, this is a very important market that is still really booming. China and its global players are pursuing the path to an innovative economy very consistently and strategically. At the moment, higher automation and intelligent production are even leading to a new industrial boom in China. Here we are investing in new technologies that the Chinese do not yet have themselves.

What does this development mean for the future?

This development leads to a huge need for training and further education in the industry. China reflects this in its education systems. There is an enormous change taking place – from a purely academic orientation to more and more application-oriented education, including university education. China knows that people with practical training are needed in order to remain innovative in the future.

 Innovation needs people with special training

How does competitiveness depend on the exclusive knowledge of German providers?

It would be a misinterpretation to hope that high technology could be sold to innovative customers and at the same time include one’s knowledge from the markets even today. We have our own development teams in China and network intensively with our Chinese customers to find specific solutions for them. In connection technology as well as in automation, I have to get together with the customers at an early stage so that they can understand the applications technologically and discuss them with us at eye level. I need local know-how and resources, people who can implement solutions with customers. So knowledge sharing should not be prevented at all. It is the new foundation of our business everywhere.

Intellectual Property – what role does this topic play in this open world of knowledge?

Unfortunately, it will be very difficult to prevent the very crude approach of copying a product exactly. There are certainly still one or two attempts at fake products. However we would underestimate competition if we thought they did not have their own innovation process. The best copy protection is still a high speed of your own innovation.

And how does a technology leader maintain its unique position in this constellation?

The task is simply to stay fast enough, to develop further, to bring new things and thus to remain attractive for customers. For example our now 60.000 products are a result that shows our competence and know-how – from the expertise in interfaces to the software for Cyber Security Software: to be creative from this full range of mastered technologies, to be able to develop complex applications and specific customer solutions, we remain attractive in the market.

How does the concept of the Technology Academy, in which they appear together with other medium-sized companies, help?

The concept does not focus on the presentation of a single product, but shows how different components interact in a production line. Making this clear is the common basis for success in China. In a group of predominantly German manufacturers, we can demonstrate our competence – and our ability to integrate aspects of the digital world into networked overall solutions. Moreover this is a win-win situation for all sides – for us as manufacturers as well as for the visitors.
We have a great interest in multiplying this together with the Technology Academy. We also have comparable activities of our own at ten different Chinese universities. They operate demonstration plants for smart manufacturing that were set up under our direction.

 To be creative from the full range of mastered technologies and to develop specific solutions – so that we remain attractive in the market.

How does Phoenix Contact communicate its corporate culture and build employee loyalty?

There is no silver bullet for this. But it must become clear that you are giving the Chinese employees something special: qualification that increases their own market value, genuine appreciation, the feeling that they will continue to work on cutting-edge technology in the future. In addition, it is also important to offer employees opportunities to shape their future. However that has its limits when it comes to compensation. With such rapid development as in China, especially locally around Shanghai, this is a real challenge if well-trained employees leave the company because of it. We ourselves still have this very well under control at the moment. The concept and stability of a German family business are factors that should not be underestimated for managers.

What are the effects of the current trade policy tensions?

The global and geopolitical situation has already triggered a great deal of uncertainty. We are noticing that our Chinese colleagues are sceptical about the future. That is not a good development – we have to be clear about that. That has never led to anything good, this development.