Editor’s pickTo the power of one: Two heavyweights weigh in on the future of China

24-07-2018
HOMAG,Addie Kwan,HOMAG China Golden Field,Pekka Paasivaara,tapio,digitalisation,

HOMAG has undergone a corporate identity change, marking a clear signal to the market that represents the company’s new thinking: high quality, digital content and machines that can be connected to the IoT platform called tapio. 

Addie Kwan: We are one family

As long as civilisation exists, people will always need furniture. Since the invention of the wheel, from harnessing the donkey for transport to the power of digital, so much has happened in the history of the industrial world. “How exciting is that?” Addie Kwan, managing director of HOMAG China, offered.

The future here will be very dynamic as China becomes one of the greatest production powerhouses in the world, if it isn’t already.

China is successful because it has a very well-established and complex supply chain. “You can get whatever you need— paper, glue, materials—very quickly and at a good price,”

Mr Kwan said. “It will be hard for other Asian countries to compete on this point.” As one of the largest producers and consumers of panel products, China has more than enough to meet the needs of furniture manufacturers, he added.

As China trends towards high tech production, Mr Kwan stressed that digitalisation is a must nowadays. “As a total solutions supplier, HOMAG is concentrating on developing software as much as we are working on the hardware.

Our customers make money from our machines. I think that is the value we can offer them.” In the past 40 years, price was always tabled as a key deterrent to conclusive sales. Now, this has changed as buyers consider performance and service to be some of the more important aspects of the package.

Mr Kwan and his relationship with HOMAG began in 1982 when he first approached the German woodworking machinery company to seal a partnership. As the brand established itself in China, Mr Kwan entered into a joint venture with HOMAG and the two are now one family.

“And oh were they jealous when it happened!” Mr Kwan joked, on how industry peers viewed the marriage.

For HOMAG China Golden Field, the joint venture made sense as it meant that Mr Kwan did not have to worry about working with different dealers or setting different pricing or commission policies. As one family, it made operations very focused, efficient and streamlined. It was a win-win situation.

Mr Kwan added, “I think we are going to have a good time and a lot of success.”

 

HOMAG China Golden Field and the HOMAG Group have collaborated for 35 years. From left: Addie Kwan, MD of HOMAG China Golden Field; Pekka Paasivaara, CEO of the HOMAG Group.

 

 

2017*

(In EUR million)

2016*

(In EUR million)

Order intake

1,366.3

1,165.3

Sales revenue

1,223.6

1,082.0

EBIT

85.7

44.9

Employees (Dec, 31)

6,371

6,126

Key figures for the HOMAG Group (*Figures according to Dürr annual report)

Pekka Paasivaara: We are excited about what's ahead

HOMAG has undergone a corporate identity change, marking a clear signal to the market that represents the company’s new thinking: high quality, digital content and machines that can be connected to the IoT platform called tapio.

Under the “Design meets digital” tagline, the company has also introduced more software as well as a more intuitive user interface. There are digital aids for operators and all data is cloud connected. The hardware appears in a new design but there are no changes in the high quality users expect from the product. The software is the main product that has seen the most upgrades.

The open source platform tapio, launched last year at LIGNA, for instance, is catered for all in the woodworking industry. It is not just a HOMAG cloud, but one for customers to tap on and connect their machines—regardless of brand— onto the platform.

“But not just machines, tapio combines digital products for the entire wood industry with thousands of machines, materials and tools,” Pekka Paasivaara, CEO of the HOMAG Group, said. “We see this IoT platform as the future. We are investing heavily in our machines and software, and we want to drive the whole industry into this digital age.”

As the China market evolves, enquiries for solutions that can deliver quality have also been going up. Some years back, Chinese manufacturers were still going mass production style.

Now, the larger players are changing their business model to adopt a more integrated production line that requires highly flexible production systems.

“We see this trend growing very strongly in the future and we can act with strong, professional advice… Our customers need flexible production lines so they can offer their own customers a wide variety of products such as kitchens and wardrobes," Mr Paasivaara said.

“We are following the market very intensely and building up competencies accordingly. Having a local team here helps us to be flexible in terms of developing products adapted for the local market."

In March, the HOMAG Group entered into a strategic partnership with Kuka, a Chinese robotics company. On the one hand, the collaboration will see HOMAG benefitting from Kuka’s expertise in robotics and programming tailored for the Chinese market; Kuka on the other hand, will benefit from HOMAG’s strong, global sales network and experience in the woodworking sector.

The Group closed 2017 with bump-ups on all key financial indicators. “We saw significant growth and we are happy with that… I think we have secured our position further as a market leader,” Mr Paasivaara said.

The number of employees has also gone up from 6,126 in 2016 to 6,371 in 2017. “Our global team is very excited about the new HOMAG and how it is driving innovation in this industry. They see positive response from our customers and they are excited,” Mr Paasivaara conti nued.

“We still have targets in the future, we are on a growth path and we are excited about the good things we can offer.”


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