A partnership with academia

Building knowledge for trade and development

Vi Digital Library - Text Preview

Globalization of R&D and TNC Strategies: Siemens

Presentation by Armin Sorg, 2005

Download original document (English)

What: An interesting power point presentation by Siemens chief economist for an UNCTAD expert meeting on Globalization of R&D and TNC strategies. The presentation deals with Siemens globalization of its R&D activities. Who: Relevant for anyone teaching globalization of R&D. How: Can be used for a lesson/course on globalization of R&D and TNC strategies.

Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


GENEVA 24 January, 2005
UNCTAD EXPERT MEETING


GLOBALIZATION of R&D
TNC STRATEGIES


Siemens


1|18




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Content


ƒ This is SIEMENS


ƒ R&D at SIEMENS


ƒ R&D in Developing Countries


ƒ Conclusions


2|18




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Siemens: Global Network of Innovation
in Electrical Engineering and Electronics


3|18Source: Siemens


The top ten companies in our business


(in fiscal 2003)


Total sales (in billions of euros)


Sales in electrical capital goods
(in billions of euros)


57.3


28.6


Hewlett-
Packard


(USA)


120.5


26.5


79.6


75.6
74.2


63.1 64.9
64.2


38.5


GE
(USA)


IBM
(USA)


Hitachi
(Japan)


Siemens
(Germany)


Sony
(Japan)


Matsushita
(Japan)


66.9


Toshiba
(Japan)


NEC
(Japan)


Samsung
Electronics


(Korea)


43.5


30.4


37.1


36.3


56.8


17.1


46.7


21.0


1 US$ = 0.91551 EUR
1 Yen = 0.00772 EUR
1 Won = 0.00077 EUR Siemens‘ Business Segments:


Sales in 2004 (in billions of euros)


Information and
Communications


Medical Transportation


Automation
and Control


Power


Lighting


20.8


17.1


10.8


4.1


13.3
7.0




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


World E/E-Market - Structure
2004 by region


4|18


The world electrical/electronic market is a „Triad Market“:
90% of the global E/E-Market is concentrated in the major trading areas.
Developing Countries´ global E/E-Market share is 21.5%.


Areas proportional to market volume
In real terms: 2004 prices and exchange rates
Developing Countries = Non OECD Countries


Share of the E/E-Market 2004 (global volume: EUR 2,490 billion)


CIS/NME/Africa 4.8%EuropeAmericas Asia-Pacific25.9%37.6% 31.7%


of which:
Developing Countries 2.6% 0.7% 13.4% 4.8%


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


R&D at Siemens (2004)


5|18


Germany
51 %


International
49 %


R&D employees: 45,000
(employees worldwide:
430,000)


Information and
Communications


Automation
& Control


Lighting


CT


Power


Transportation


Medical


Total R&D budget: € 5.06 billion
(6.7 % of sales)


About 95 % at Groups, Regional Units,
Subsidiaries and Associated Companies
for development of products, systems
and manufacturing processes


About 5 % at Corporate Technology
for research, technology development
and consulting


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


R&D at Siemens


6|18


R&D Expenditure of the Top Ten Electrical Engineering Companies
2003
without external R&D orders and public funding


1) Without GECS (GE Capital Services)


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Speed as a Measure of
Innovative Strength


7|18Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Worldwide Activities in R&D


8|18


Bracknell


Pretoria


Lisbon


Zaragoza


Toulouse


Eynsham
Berlin


Brussels


Budapest


Milan


Melbourne Sydney


Bratislava


Roke Manor


Paris


Helsinki


Zurich


Porto


Bombay


Istanbul Seoul


Penang


Tel Aviv


Buenos Aires


Sao Paulo
Curitiba


Shanghai
Yokohama


Burlington


Orlando


Auburn Hills


Arlington
Knoxville


Mülheim


Dresden Erlangen-Nuremberg
Regensburg


Salzburg


Graz


Vienna


Karlsruhe


Taipei


Issaquah


Hoffmann
Estates


Bangalore


Beijing
Tokyo


Lake Mary
Austin


Newport News


Princeton
Piscataway


Norcross


Danvers


Linz


Changchun


Xi‘an


Chengdu


Nanjing


Tianjin
Ichon


Tilbury


London
Peterborough


Drummondville
Chatham


Johnson City
Pittsburgh


Madrid


Sophia
Antipolis


Netanya


Pandrup
Oslo


Göteborg


New Delhi
Kakegawa


Kawasaki


Munich


Hong Kong
Goa


Santa Clara


Berkeley


Sacramento


Concord


San Diego
San José


Mountain View


Athens


St. Petersburg


Treviso


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


R&D over Different Time Zones


9|18Source: Siemens


R&D Centers: 20 or more locations 3 to 6 locations single location


9 a.m. 3 p.m. 9 a.m. 4 p.m.


4 p.m. 9 a.m.




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


800 2.700


45.000
41.500


0


10.000


20.000


30.000


40.000


50.000


1994 2004


Siemens R&D Personnel


10|18


2% 6%


Worldwide


Source: Siemens


Employees


Developing Countries
• Brazil


• China
• India
• Malaysia
• Mexico
• South Africa




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Production Locations 2003


11|18Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Development of Siemens
R&D Activities (schematic diagram)


12|18


t


R&D
Activities


GER


EU 15
(without


GER)


USA


EU
(10 new


members)


Developing
Countries


1950
---------------


2004


1995
---------------


2004


1990
---------------


2004


1980
---------------


2004


1960
---------------


2004Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg 13|18


The larger the Market,
the higher is the R&D Intensity


Source: Siemens


E/E-Market per capita 2003 in EUR




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Case Study China
Local R&D Activities


14|18


ƒ Since July 1998, Siemens and the Chinese Academy
for Telecommunications Technology (CATT) jointly
develop a new solution for 3G mobile networks.


ƒ Siemens Communications has located R&D activities
in Beijing.


ƒ SOMATOM Smile, the world’s most compact and cost-
effective CT device, is developed and produced in
Shanghai for the local and export markets.


ƒ Siemens Numerical Control Ltd. stands for R&D and
develops numerical control systems tailored to the
requirements of the Chinese market.


ƒ Beijing joined Munich and Princeton as an “User
Interface Design Lab”.


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Cooperation with
16 Chinese Universities


15|18


• Southwest Jiaotong University
• University of Electronic Science


& Tech. of China


Harbin Institute
of Technology


South China University
of Technology


• Shanghai Jiaotong
University


• Tongji University


Zhejiang University


• Tsinghua University
• Northern Jiaotong Univ.
• Beijing University of Posts


& Telecommunication
• University of International


Business & Economics


Huazhong Univ. of
Science & Technology


Xi'an Jiaotong
University Shandong University


Southeast University


Jilin University


Harbin


Changchun


Beijing


Jinan
Nanjing


Shanghai
Hangzhou


Guangzhou


Wuhan


Chengdu


Xi’an


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Conclusions (1)


ƒ Realization of market economy principles
ƒ R&D friendly environment


ƒ Government relations, bureaucracy
ƒ Costs, taxes, subsidies, intellectual property
ƒ Attitude of society toward risk; trust in science


ƒ Developing clusters
ƒ Role of universities; supply of excellent brains
ƒ SME


ƒ High IT-standards
ƒ Internet connectivity
ƒ Broadband


ƒ Good quality of life for R&D personnel
16|18


R&D Policy Requirements (governments)
What is necessary to attract R&D:


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Conclusions (2)


17|18


ƒ Presence in lead markets
ƒ Close to production
ƒ Close to customers
ƒ Cooperation with public research
ƒ Strong patent portfolio
ƒ Network of excellent people
ƒ Networking regional capabilities


e.g. Europe: medical, automotive, automation
USA: I&C, biotechnology, nanotechnology
India: software
China: production technologies


R&D Strategy Requirements (company specific)
What is necessary to build efficient international R&D
networks:


Source: Siemens




Siemens AG
Chief Economist /
Corporate Relations
Armin Sorg


Conclusions (3)


18|18


The main determinants for R&D activities are
markets, brains and costs


Building up R&D facilities is a strategic, organic,
long term oriented investment. It must be seen in
the context of the overall business conditions of
countries and regions.


Source: Siemens




Login