Settings

ⓕ font-size

  • -2
  • -1
  • 0
  • +1
  • +2

INTERVIEW'Diversification key for Hanon Systems' success'

  • Facebook share button
  • Twitter share button
  • Kakao share button
  • Mail share button
  • Link share button
Min Sung, vice president for the product groups of Hanon Systems, poses at the company's office in Seoul. The manufacturer of air conditioning and heating systems for vehicles has 40 manufacturing plants and 18 engineering centers worldwide. / Courtesy of Hanon Systems
Min Sung, vice president for the product groups of Hanon Systems, poses at the company's office in Seoul. The manufacturer of air conditioning and heating systems for vehicles has 40 manufacturing plants and 18 engineering centers worldwide. / Courtesy of Hanon Systems

Former Ford executive sets example for global leadership

By Park Jae-hyuk

Korea's automotive industry has gone through a few tough years, culminating in the closure of GM's factory in Gunsan, North Jeolla Province, and following the lingering retaliation from China over the deployment of a U.S. anti-missile Terminal High Altitude Area Defense (THAAD) system here.

Despite these, Hanon Systems has made significant progress amid other unfavorable market conditions, winning a record number of orders last year in its 32-year history.

Min Sung, vice president of the manufacturer of air conditioning and heating systems for vehicles, attributed his company's achievements to its diversification of clients beyond domestic carmakers

This year, the Daejeon-headquartered company received an award from Fiat Chrysler Automobiles and was named one of Ford Motor's aligned business framework network of strategic suppliers.

Hyundai Motor also gave a prize to the supplier, recognizing it as the best product development partner that helped Korea's largest carmaker maximize efficiency and increase its cars' motion ranges, in line with the advent of the era of electric vehicles.

"As a global enterprise with 40 manufacturing plants and 18 engineering centers worldwide, we have continued to diversify our clients," Sung told The Korea Times during a recent interview. "Global M&As in the auto industry and car manufacturers exiting Korea have little impact on our company."

Despite the growing THAAD retaliation last year, Hanon Systems has set up more joint ventures in China.

Its key strategy in the Chinese market was diversification. "We will not be satisfied with existing client-led growth, but will continue to find new local clients in China to build up the foundation for growth in the future," Sung said.

Hanon Systems established a joint venture with China South Industries Group Corp. (CSGC) last year to begin supplying its products to Changan Automobile, the group's affiliate which is also the largest local original equipment manufacturer in China.

Changan Automobile, which produces 2.5 million cars a year, has joint ventures with global carmakers such as Ford, Mazda and Suzuki.

"Under the joint venture, we supply not only our air-conditioning, but also eco-friendly auto parts products," Sung said. "The firm's top-notch auto compressor products will also be produced at the Chongqing Jianshe plant, which is scheduled to be completed in 2019. Following the sale of heat-pump system for eco-friendly vehicles, we will gradually invest in heating ventilation, air-conditioning and power-train cooling products."

Last December, Hanon Systems also finalized a deal with FAWER Automotive Parts to establish a joint venture named FAWER Hanon Automotive Components (FHAC). FAWER is a subsidiary of FAW Group which has established joint ventures with Volkswagen, General Motors and Toyota.

Under the partnership with FAWER, Hanon Systems plans to supply eco-friendly products in China.

According to Hanon Systems, the successful joint ventures in China are largely credited to Sung.

The vice president is known to be well-versed in the Chinese market after living in Shanghai for seven years to pave the way for Ford's expansion in the Asia-Pacific region.

Hanon Systems was formerly Halla Climate Control, a joint venture between Ford and Mando Machinery.

"Amid China's economic retaliation against Korea last year, we achieved meaningful results, partnering with the Chinese government and companies there, so we feel both joy and great responsibility," he said. "When it comes to establishing a joint venture with a Chinese partner, the most important thing is building up trust in the counterpart. Such trust cannot be gained in the short term, but through continuous communications, suggestions and consultations."

Hanon Systems' factory in Dalian, China / Courtesy of Hanon Systems
Hanon Systems' factory in Dalian, China / Courtesy of Hanon Systems

Eco-friendly technologies

Sung said his company aims to take the lead in China's eco-friendly vehicle market with the joint venture.

According to the vice president, Hanon Systems is focusing on achieving eco-friendliness and high efficiency to comply with global environmental regulations.

"Concerns have grown over fuel efficiency, following the growth of the eco-friendly vehicle market, so we are planning to carry out strategic M&As to take the lead in the thermal management market, beyond air conditioning which we have focused on," he said. "Although eco-friendly products account for only 7 percent of our sales now, they account for 50 percent of our newly obtained orders."

As an industry veteran who majored in mechanical engineering at Korea University and got a master's degree in business administration at the University of Michigan, Sung said there is no doubt the auto industry will focus more on eco-friendly and self-driving vehicles.

"Still, many people get defensive about the trend, but consumers will be soon aware of visible changes. The direction of the auto industry has already changed, and companies will soon launch their eco-friendly products," he said.

The company's next-generation products include a new heat-pump system, electric compressor, thermal and emission valve and pump. Hanon Systems has also supplied filters and air-conditioning systems to carmakers to reduce fine dust, which is regarded as one of the most serious threats to Koreans.

"We expect someday drivers will check whether their cars are equipped with Hanon Systems' air conditioning and thermal management systems, if more people are concerned about air pollution," he said.

Hanon Systems aims to post 7 trillion won ($6.3 billion) in sales in 2020. It plans to continue to expand its investments until then.

Formerly known as Halla Visteon Climate Control (HVCC), Hanon Systems is controlled by Hahn and Company, a private equity fund holding a 50.5 percent stake. Hankook Tire also holds a 19.49 percent stake, with the remaining shares being floated on the KOSPI market.

In December 2014, the two domestic companies acquired their stakes from Visteon for 4 trillion won.

Sung has more than 20 years of automotive experience in roles of increasing responsibility at Ford, Visteon and HVCC, supporting Visteon's car interior climate control operations in the Asia-Pacific and manufacturing planning for climate operations in Southeast Michigan.

The inside of Hanon Systems' Dalian factory / Courtesy of Hanon Systems
The inside of Hanon Systems' Dalian factory / Courtesy of Hanon Systems
Park Jae-hyuk pjh@koreatimes.co.kr


X
CLOSE

Top 10 Stories

go top LETTER