Century-old U.S. company builds 'global factory' in China

(ECNS) -- Over 46 years since China's reform and opening up, multinational enterprises have entered a new development phase in China.

Johnson Controls, a U.S.-based building solutions provider, has operated in the Chinese market for nearly 30 years. From selling products to localized operations and building a "global factory", it considers China as an indispensable part of the global supply chain, relying on the Chinese market to serve the world.

Integration: Growing together with China's manufacturing industry

Johnson Controls plays a significant role in the construction of iconic Chinese buildings, including the Shanghai Tower and the Shanghai World Financial Center. In 2023, the launch of Adora Magic City -- China's first homegrown cruise ship -- brought greater awareness of the story between Johnson Controls and China's manufacturing.

Looking back at its development history in China, Johnson Controls has witnessed and been deeply engaged in China's manufacturing industry' upgrade towards high-level, intelligence and greenness.

"We capitalize on China's high-quality development," said Zhang Mei, vice president of procurement for Asia Pacific at Johnson Controls, in an interview with China News Network.

China's economy keeps growing with the construction of many new buildings, she added. Johnson Controls introduced advanced heating, ventilation, and air conditioning (HVAC), building automation and other technologies into China, achieving remarkable success.

According to Zhang, who oversees the procurement supply chain for Johnson Controls in China, the corporation has consistently focused on fostering local innovation and manufacturing capabilities. It aims to maintain market leadership as well as growing together with suppliers, promoting development of the entire industry chain in the country. 

"Now, the integrity of China's industrial chain and local suppliers has reached a new level, comparable to the best in the world and even taking the lead," she said. 

Zhang owed such progress partly to Chinese suppliers' strong will and open minds to improve themselves, praising Chinese engineers for their enterprising spirit, which surpassed many foreign technicians. 

At present, through localization of industrial supply chains, Johnson Controls has achieved a win-win result with the Chinese market -- the equipment supply cycle has been shortened by an average of 70 percent, and the procurement cost has been greatly reduced.

Joint creation: In China, for the world

With the aim of “In China, for China,” Johnson Controls has effectively tailored its operation to cater to the Chinese market through localization. More importantly, as China's industrial chain undergoes an upgrade, innovative vigor began to emerge.

"More and more products are debuting in China," Zhang said. She stated that with the enhancement of China's local innovation capability, many new products have been thoroughly researched, developed, and manufactured in China, then serving markets worldwide.

In August 2024, Johnson Controls relocated the global manufacturing center for its M multistage centrifugal compressors from the U.S. to Wuxi, Jiangsu Province. The compressor's global production base was officially unveiled at its Wuxi factory. "The capacity produced in Wuxi will not only serve the Chinese market but will also supply Johnson Controls' global market," said Zhang.

Despite the "China plus one" strategy discussed by some multinational companies, who prefer diversifying risks from sole operations in China by setting up alternate production bases or seeking more supply sources in at least one other country, Zhang believes that China's supply chain advantages are irreplaceable.

China's manufacturing industry is highly advanced and the comprehensiveness of its suppliers is unmatched in other markets. Shifting the industry chain outside of China offers little advantage, and introduces a lot of uncertainty, Zhang added.

She said Johnson Controls will renovate its plant in Guangzhou, Guangdong Province, and set up a product research and development lab with further investment. At the 2024 China International Import Expo (CIIE), Johnson Controls unveils its new product - YORK HPS-H High Temperature Screw Heat Pump, which was developed in China, continuing to tell the story of "In China, for the world.”

Win-win cooperation: China is the stage for the future

Undoubtedly, as Johnson Controls' important manufacturing base, China will continue to be an indispensable component of its global blueprint. 

Zhang believes the enterprise’s commitment to China is also based on the consistency of China's low-carbon economy and Johnson Controls' development direction, as well as the abundant opportunities presented by the Chinese market.

"The 'dual carbon goals' proposed by the Chinese government greatly align with the development priorities of Johnson Controls. This gives us confidence in our future development in China, even if there are some external fluctuations. Johnson Controls has high growth potential and a large platform to pursue its initiatives in China," Zhang noted.

She also mentioned that the newly established lab at the Guangzhou plant is for developing environment-friendly refrigerant. At the same time, Johnson Controls is committed to creating comprehensive integrated solutions targeted for different vertical markets and to building smart industrial parks, smart airports, and intelligent hospitals with partners in China.

She believes there are numerous opportunities in the Chinese real estate market. "Many cities are gearing up for building renovations, and Johnson Controls is well-positioned to help transform old buildings into more intelligent and energy-saving structures. I envision tremendous opportunities," Zhang stated.

"We hope to seize as many opportunities as possible," she said, emphasizing that Johnson Controls' potential in China is "limitless,” and that it is willing to create a better future together with the Chinese market.