China
During 2005 the division increased its footprint on the Chinese market by acquiring the majority of Wangli, a leading manufacturer of high-security doors and high-security locks. The combination of the Wangli acquisition and good growth by the established companies Guli and ASSA ABLOY China has resulted in 2005 sales almost double those of 2004. Guli continues to focus primarily on manufacturing products for ASSA ABLOY companies throughout the world. Although the residential segment has slowed as a result of various government initiatives, the growth rate in China remains strong.
The sales organization in China has been restructured with the creation of a separate organization to focus on sales to the residential segment.
Together with Global Technologies division, Asia Pacific division has opened a manufacturing plant to the west of Shanghai. The plant will manufacture products for several of the Group's divisions.
Other Asian markets
The South Korean company BEST Metaline, acquired in February 2005, has been integrated into the division during the year and this has developed sales opportunities in Korea for other Group companies. The company manufactures locks, door fittings and automatic doors, and has a strong position in specifying hardware to architects and construction companies. Efforts to introduce BEST Metaline products on other markets are ongoing.
In its other Asian markets the division's companies are focused mainly on sales of Group products. These markets continued to develop well with the exception of Malaysia, whose economy is in a weak state.
Ongoing initiatives
Moving production to low-cost countries
In 2005 two production units in New Zealand were closed down and their production was moved to Asia. The Australian plant for residential products is currently being restructured and the bulk of this operation will be transferred to Guli in China.
As production moves away from the division's mature markets in Australia and New Zealand, the companies there will concentrate on product development, the promotion of brands and services offering local customization, and sales and marketing of products from throughout the ASSA ABLOY Group.
Developing specification skills and total solutions
Innovation and continuing product development are essential if the Asia Pacific division is to maintain an appealing product range and continue to increase its sales. Another important part of the sales strategy is to continue to develop specification skills, both in the division's own sales force and among the distributors through whom most of the products are sold. ASSA ABLOY Australia has a long tradition of specification expertise, which is being used to train people in other divisions.
The specification market is growing, and the ability to support architects by proposing total security solutions and specifying a building with the relevant security standards can very often lead directly to successful sales. In Asian markets in particular, specification sales are an important route to improving local security standards and thereby specifying higher-value products. The division's growing presence in China has already given it increased influence in establishing higher standards there.
KEY PRIORITIES
Innovate – in both products and business methodology.
Capture benefits from low-cost production units by relocating manufacture of mature products and increasing production of low-cost products.
Increase sales in Asia relative to Australia / New Zealand.
Asia Pacific divisionsales by product group
Adding electromechanical technology
The importance of electromechanical security products continues to grow and there is an ongoing program to add more electromechanical products to the division's product portfolio, and to add electromechanical functionality to many traditional products. The opening of the new production plant west of Shanghai has expanded the range of electromechanical products.
Developing sales in China
The key consideration in acquiring Wangli was to develop distribution on the Chinese market. In addition to its manufacturing facilities, Wangli has an established distribution network that can be built on further.
To develop sales in China, the division's existing Guli company is being divided into a manufacturing operation, serving the Group as a whole, and a sales organization selling products on the home market.
The Asia Pacific division will continue with its present acquisition strategy in China. Another vital challenge in developing its expansion there is the recruitment of com-petent personnel. The division is continuing to expand its graduate training program for future managers.
Tilting the balance towards Asia
During the year the balance between the Australian and New Zealand markets and the Asian markets has continued to change. A substantial part of the division's production has moved to Asia, and the growth focus continues to be more on the developing markets of Asia. Sales growth in the division will come both organically and through acquisitions, with most future acquisitions taking place in Asia. Ultimately, more than half of all sales are expected to arise in Asia.
Unique security solutions keep Disneyland safe
In September 2005 the world's fifth Disneyland was opened on Lantou Island, Hong Kong. 5.6 million people are expected to visit the park in its first year, and in 2008 the figure is predicted to rise to 10 million visitors a year. The park has four main attractions: Main Street USA, Adventureland, Fantasyland and Tomorrowland, as well as two big hotel complexes with 1,000 rooms in total. Added to this are a host of restaurants and shops. ASSA ABLOY has supplied most of the security products for the amusement park.
The large number of visitors each day places extreme demands on security, and in many cases required the development of dedicated solutions for Disney. Every door at Disneyland has unique products that are tailored to the colour, design and function of the individual door. The equipment installed by ASSA ABLOY included mechanical and electromechanical locks, door closers and emergency exit fittings.
Reliability and specialist knowledge were the deciding factors when Disney chose to work with ASSA ABLOY. The company's well-documented ability to work with a single client but several subcontractors counted for a great deal. During the course of the project ASSA ABLOY worked with architects, main contractors, subcontractors and installers. An additional factor was past experience in coordinating the complex stages from production to installation.
Disneyland in Hong Kong is the biggest project so far for ASSA ABLOY Hong Kong. It involved collaboration between ASSA ABLOY's Asia Pacific, Global Technologies and Americas divisions.