Otis ready for race to the top

El­e­va­tor company con­fi­dent of strong growth in do­mes­tic mar­ket

China Daily (Canada) - - BUSINESS - By LYUCHANG lvchang@chi­nadaily.com.cn

Sky­scrapers and im­pos­ing build­ings are a common sight in most first- and sec­ond-tier Chi­nese ci­ties. But with growth mush­room­ing and ur­ban­iza­tion go­ing into over­drive, de­mand for big build­ings and high-speed el­e­va­tors is also spi­ral­ing in China, says Tony Black, pres­i­dent of Otis El­e­va­tor (China) In­vest­ment Co Ltd.

Black has done his arith­metic well. China is al­ready the world’s largest man­u­fac­turer and seller of el­e­va­tors, with an­nual de­mand grow­ing an av­er­age 20 per­cent over the past decade.

The num­ber of el­e­va­tors and es­ca­la­tors sold in China in 2013 alone was about 600,000 units, ac­cord­ing to data from the China El­e­va­tor As­so­ci­a­tion.

Beyond the big num­bers, Black says, China is now a ma­jor bat­tle­field for for­eign and do­mes­tic el­e­va­tor firms due to the rapid pace at which tall build­ings are ris­ing. “The de­mand for lifts in China is not just about be­ing fast but also about go­ing far­ther,” he said.

In 2012, Black, a 30-year veteran, was de­puted to over­see the US-based Otis El­e­va­tor Co’s op­er­a­tions in China. Though he was a lit­tle bit ap­pre­hen­sive ini­tially, Black says it was the “sin­gle mostim­por­tant step in his ca­reer”.

“China is al­ready the world’s largest mar­ket for new el­e­va­tors and es­ca­la­tor in­stal­la­tions. It will also not be long be­fore it be­comes the largest el­e­va­tor/es­ca­la­tor ser­vice mar­ket. It is get­ting closer to the tar­get,” he said.

Black, how­ever, knows that grab­bing a big­ger slice of the grow­ing el­e­va­tor pie may not be that easy.

The top pri­or­ity for Otis is to dou­ble its foot­print in the next five years, so that the company can keep pace with the rapid ur­ban­iza­tion in China.

“Big ci­ties will grow with even more sky­scrapers, while small ci­ties will have a ver­ti­cal ori­en­ta­tion,” he said.

That said, Black is also happy with some ma­jor ac­com­plish­ments in China. Otis has con­cluded deals with a long list of land­mark projects like the Tian­jin Goldin Fi­nance 117 Cen­ter, a 117-story build­ing un­der con­struc­tion, and Ping’an Fi­nan­cial Cen­ter, a 115-story sky­scraper un­der con­struc­tion in Shen­zhen, Guang­dong prov­ince.

“Th­ese are not only good for business but also good for our brand im­age in the long term, be­cause it shows the con­fi­dence that cus­tomers have in us,” Black said.

“Main­tain­ing the top slot in China is tough. We need to be close to our cus­tomers in the in­dus­try, and the mea­sure of suc­cess is of­ten gauged by the speed of our re­sponse,” he said.

Black, who started work­ing with Otis at the grass­roots level as a ser­vice me­chanic and tra­versed through other de­part­ments like re­pair and in­stal­la­tion in his more than three decades of ser­vice with the company, be­lieves that ser­vice is what will sep­a­rate the leader from the rest of the pack.

“Ser­vice is all about two things. It is about pre­vent­ing call­backs and shut­downs, and be­ing able to re­spond

China is al­ready the world’s largest mar­ket for new el­e­va­tors and es­ca­la­tor in­stal­la­tions. It will also not be long be­fore it be­comes the largest el­e­va­tor/es­ca­la­tor ser­vice mar­ket.” TONY BLACK PRES­I­DENT OF OTIS EL­E­VA­TOR (CHINA) IN­VEST­MENT CO LTD

quickly when there is a prob­lem,” he said, adding that he per­son­ally mon­i­tors the company hot­line to see how fast Otis re­sponds to cus­tomer queries and com­plaints. “In most of the cases our re­sponse lev­els have been quite sat­is­fac­tory.”

The company has re­cently set up a large spare parts cen­ter in China which can des­patch parts within 24 hours to any­where in the coun­try.

Otis has more than 2,000 ser­vice me­chan­ics and about 300 branches and ser­vice of­fices in China. Black, how­ever, said that the company would in­crease both by 20 per­cent in the next few years.

Zhang Lex­i­ang, deputy sec­re­tary-gen­eral of the China El­e­va­tor As­so­ci­a­tion, said though most of the profit in China’s el­e­va­tor in­dus­try comes from new in­stal­la­tions, there is enough room for fur­ther growth in the ser­vice mar­ket.

“About 65 per­cent of the global mar­ket for new in­stal­la­tions is in China. The af­ter­sale ser­vice mar­ket will also clock a high growth rate as the num­ber of ag­ing and overused el­e­va­tors in­creases,” he said.

Zhang said China would need to strengthen reg­u­la­tions and over­sight of the el­e­va­tor main­te­nance mar­ket, as it is im­por­tant for long-term in­dus­try safety.

Un­like the el­e­va­tor and es­ca­la­tor mar­ket in theUnited States and Europe, where ser­vice ac­counts for more than two-thirds of the to­tal rev­enue, the Chi­nese ser­vice mar­ket is still in its in­fancy due to lack of qual­i­fied tech­ni­cians and reg­u­la­tions.

“Otis will make ad­di­tional in­vest­ments on tech­nol­ogy and tal­ent in China,” Black said.

The company has also in­vested in a new re­search and de­vel­op­ment lab in Tian­jin to un­der­take me­chan­i­cal and elec­tri­cal per­for­mance tests, and re­li­a­bil­ity and noise vi­bra­tion tests.

Otis has also launched its GeN2 el­e­va­tor in China, a new prod­uct that uses 75 per­cent less en­ergy and has patented flat polyurethane belts in­stead of con­ven­tional steel ropes, which re­duces wear and tear and makes for a smoother ride.

Black de­clined to give a spe­cific sales fore­cast for China, but said that he ex­pected lift sales to clock dou­ble-digit growth.

“What is hap­pen­ing now in

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