From a very small step to a real offensive strategy

1
From a very small step to a realoffensive
strategy

• May 8, 2002

2
1994 Umicore wants to expand internationally

• Umicore sells in the whole world, but its
  manufacturing is very much concentrated in Europe
  and in the USA
• China is seen as an opportunity, but how and
  what?
• Exploration of the world of metals in China in
  1994

3
Sales and marketing in China

• Our marketing group has an office in Hong Kong to
  serve the Chinese market for some time
• This helps to understand the Chinese market
• A liaison office is set up in Guanzhou we have
  our first employee on mainland China

4
1995 Umicore goes for a Joint Venture

• A market opportunity was identified Cobalt
  powders, a product that we know and a market that
  we know
• Cautious attitude
• no conflict of interest with existing business
• very little transfer of technology
• Joint Venture structure, but Umicore takes
  controlling stake
• small investment initially, renewal only later

5
Shanghai Blue Lotus Metals Ltd.

• Location in an area that is easily accessible
• Partner state owned enterprise, good
  reputation, but weak in marketing and technology,
  cash poor
• Plant take over of existing operation, first
  improvements with little transfer of know how

6
The Joint Venture

• Umicore negotiates a 75 stake
• Umicore appoints general manager
• Umicore brings cash, technology and market savvy
• The partner brings fixed assets and existing
  market
• From the beginning ambition is to become bigger
  than what the Chinese partner has ever done

7
Challenges in the first years

• Control the partner
• Sell product
• Sales channels in China we quickly set up our
  own sales offices in Shanghai, Guanzhou and
  Beijing
• Collect receivables
• Improve the standards

8
Evolution of sales a success story
9
A more offensive strategy

• Second initiative anticipate Chinese
  development in alkaline batteries
• Be the only Zinc powder producer
• This time
• newly built plant
• transfer of technology
• no input from the partner

10
Zinc powder plant

• Start up in 1999
• Sales times five in 3 years
• Market dominance thanks to technological lead
• Doubling of capacity planned

11
Sales organisation real offensive strategy

• The sales group has grown in number of people
• Umicore products from all over the world now sold
  in China
• Umicore brand is very well known in China

12
The Joint Venture today

• Profitable activities 1.7 m profit in 2001
• 9 m turnover, Return on capital employed 24
• 85 employees
• New facilities

13
Next...

• At least 3 other acquisitions and joint ventures
  in the works
• Business of Umicore set to become very big in
  China
• Two way stream of sales international business

14
Conclusions

• It is possible to start small and in a modest way
• Once the investment starts to bear fruit, expand
  quickly and aggressively
• Trust, technology, control and sales coverage are
  key parameters for success