Bosch leads business transformation with IoT

By Digital News Asia July 27, 2017

Registers US$142.37 million consolidated sales in Malaysia
Increased investment to expand R&D as well as manufacturing capabilities

Bosch leads business transformation with IoT

BOSCH, a global supplier of technology and services, ended its 2016 fiscal year with close to RM610 million (US$142.37 million) in consolidated sales, making Malaysia the second largest revenue contributor for Bosch in Southeast Asia for the second consecutive year. The company’s headcount in 2016 grew by 4% to around 2,700 associates.

Bosch Malaysia managing director Simon Song (pic) sees good opportunities for future business: “The progressive growth of the IoT industry means momentous change and huge new potential for businesses. In this area, Bosch is now making our products web-enabled and ready to provide our customers transformative solutions that help to make a difference in enhancing the competitiveness of their businesses. This will be key to Bosch to further our growth in the country.

“In addition to developing and offering connectivity-based solutions tailored to customer needs, we lead by example as users of connected technology with the gradual retrofitting of our manufacturing plants with Industry 4.0 modules to increase our efficiency and productivity.”

Strong investment in Malaysian Bosch locations

To further strengthen Malaysia as a location for global manufacturing as well as research and development, the Bosch Group invested close to 138 million euros (RM688.19 million) into the country in the past five years – over RM160 million in 2016.

“To meet growing customer demand for our products, the increased investment was channelled into upscaling our production capacity,” said Simon Song.

For example, the company directed investments into growing the engineering team of its Car Multimedia division, and enhancing manufacturing operations for its surface mount technology (SMT).

The new SMT facility, which was opened in March last year, aims to increase production volume to support rising market demand, as well as facilitate more research and development projects. The expansion will enable Bosch to supply a broader array of services for customers locally, regionally and globally.

Bridging the gap with customers through e-Commerce

With the launch of a Bosch branded virtual store Bosch also embarked on e-Commerce in Malaysia in 2016 – a first for Bosch in Southeast Asia.

This venture has opened up new business opportunities with customers, allowing the company to expand its reach directly to customers, beyond its traditional business-to-business model.

Having launched its first online store on Lazada with the Automotive Aftermarket, Power Tools and Security Systems divisions, the company expanded its presence in e-Commerce to 11Street. In 2017, Bosch aims to enter other key virtual shopping platforms in Malaysia.

Development of Bosch business divisions in Malaysia

The Mobility Solutions business sector recorded the highest growth for Bosch in Malaysia. Driven by market trends of connectivity, autonomous driving, and expansion of production and engineering capacity, the Car Multimedia division achieved double-digit growth.

Looking ahead towards connected devices, the division will focus on the production of Connectivity Control Units (CCU) for markets in China, Europe and North America to facilitate automated emergency calls (eCall) in cars and motorcycles.

The Automotive Steering division, earmarked to be Bosch’s manufacturing production hub in Southeast Asia for Mechanical Steering Gears (MSG), similarly recorded a double-digit growth, mainly attributed to the strong demand for MSG in Japanese vehicles worldwide.

The Original Equipment business was steady in 2016, with an encouraging first quarter sales performance in 2017, boosted by the introduction of new vehicle models in end 2016. The Automotive Aftermarket division saw healthy sales growth in 2016, due to the success of its new range of flat-blade wipers and lubricants.

The Power Tools division saw stable growth in 2016, supported by its e-Commerce business platform and marketing concept of the Bosch Power Box, a mobile shop at Forest City located in Johor Baharu, which is one of the biggest construction sites in Malaysia.

Global strategy and business outlook for 2017

For 2017, in light of a subdued economic outlook and geopolitical uncertainty, Bosch aims to achieve sales growth of between 3% to 5%. And despite still heavy upfront investments in safeguarding the company’s future, results are set to rise.

“Business success today gives us the leeway to shape tomorrow’s world,” said Dr Volkmar Denner, chairman of the Bosch Board of Management. “As an innovation leader, we are shaping and driving transformation.”

The focal points of this transformation are changes in the mobility sphere and IoT connectivity. By 2020, all Bosch’s new electronic products will feature connectivity. The key to this is artificial intelligence (AI). Over the next five years, Bosch will be investing 300 million euros in its own centre for artificial intelligence.

In Asia Pacific, Bosch recorded a hefty 8.3% increase in sales in 2016 to 20.8 billion euros (exchange rate adjusted +12 percent). Bosch now generates 28% of its total sales revenue in Asia Pacific compared to 27% in the previous year.