The China head of leading global elevator maker Kone says the country’s days of double-digit growth may be past, but market prospects there remain bright.
When Kone entered China’s elevator market, in 1996, the Finnish multinational was embarking on a journey of extraordinary growth, with high-rises proliferating across China’s urban landscape. Today, the country provides around 35 percent of Kone’s annual revenue, which in 2015 hit €8.6 billion. Bill Johnson began serving as country manager of Kone’s China division in 2004 and in 2012 became the executive vice president in charge of the company’s newly formed Greater China division. In this interview with McKinsey’s Allen Webb and Jonathan Woetzel, Johnson shared his thoughts on China’s next phase of development, on the growth of services, and on the growing role of digitization throughout Kone’s Chinese business.
The Quarterly: Tell us a little bit about your personal experience with the Chinese growth slowdown.
Bill Johnson: There clearly has been a slowdown in the economy over the last 12 to 18 months, and it’s really begun to impact the elevator business. Last year was down about 5 percent in terms of units ordered, and this year we see another 5 to 10 percent decline coming in our market.
Most of our big customers are cautiously investing in the market and adjusting their development and building plans accordingly. They’re pulling back; they’re waiting. There’s still a lot of money in the system, but it’s being deferred for the time being until there’s a little bit more clarity about which way the economy is going.
China is still a critical market for us; it’s the largest market in the world by a factor of ten. The second-largest market is less than 10 percent of the China market. So we’re not backing off. In fact, we’re looking for opportunities to accelerate some of the things that we’ve been doing.
The Quarterly: What are some of those priorities that you want to push on even harder?
Bill Johnson: Digitization is clearly one of the areas that we’re looking at, and it comes in two separate streams. One is the hardware side, the equipment; and the other is the services side.
For example, with our new remote monitoring, customers can see where our people are at any given time and how their equipment is being maintained—all on their mobile device. This gives them a higher level of connection with us, and that has a lot of value, especially for professional property-management companies.
We’re also increasing our service business and bringing on new people. Getting them up to speed with our technology takes time, so we’re always looking for ways to shorten that education process. We’ve launched new mobile-training tools that allow our people in the field to receive training and tips on their devices throughout the day. We’re able to send out videos that cut our work processes into discrete activities, demonstrated by current employees. We’re also able to provide updates on what’s happening with customers, and we can adjust an employee’s work flow during the day, depending on any issues that happen with customers elsewhere.
So for us, it’s not just about the connection with the customer; it’s also about increasing the technology capabilities of our people. I’m still hiring nearly 2,000 people a year here in China, and I don’t see that slowing down for the next couple of years. In fact, I believe that will accelerate because of digitization.
The Quarterly: Do any of these innovation opportunities solve pain points unique to the Chinese market?
Bill Johnson: Absolutely. One of the things to remember is that in Asia, the density of floors tends to be higher than in most places in Europe or North America. You have many more people per square meter here in Asia. You don’t see those densities anywhere else, except maybe for trading floors in New York City. So you need what’s called the right dispatching. That means using algorithms that can learn how people move throughout the buildings and keep the elevators operating efficiently.
We have other innovations in what’s called people-flow intelligence, which relates to the traffic of people throughout a building. One of the things we’re looking at is how to help our customers design their lobbies so people flow seamlessly through security, entering and exiting the building in a comfortable way.
The Quarterly: What kind of changes are you making on the hardware side to solve these issues?
Bill Johnson: We have several hardware innovations to support the smooth flow of people in densely built cities. One of my favorites is what we call UltraRope, which is a carbon-fiber rope that significantly reduces the moving masses in the elevator system. It enables travel to heights that were not possible before—up to 1,000 meters—simply because the traditional steel ropes were so heavy the walls would not support them. Before, to get up to more than 500 meters, a passenger had to take several elevators, with a waiting time in-between. UltraRope has several other benefits. It’s more durable than traditional steel ropes and doesn’t need to be replaced as often, reducing the need for repair periods when fewer elevators are operating at any one time in a busy building.
No comments:
Post a Comment