President & CEO
Key Safety Systems, Inc.
Gasgoo.com: Could you give us an introduction to KSS? What products and services it offers?
Jason Luo: KSS is one of the leading global safety restraint system suppliers. In China, we call it “百利得”. In English, we call it Key Safety Systems. Today we have about 9000 employees globally; we have a 36 manufacture facility and sales facility around globally. Actually next week we'll have one more facility adding to this which we'll open our Indian plants. We produce air bags, seat belts, steering wheels, and electronics, to almost every global OEM.
Gasgoo.com: Could you tell us about KSS operations in China and their roles in KSS's global strategy?
Jason Luo: Now we have two joint ventures in China, one in Tianjin, producing steering wheels; one in Shanghai, producing air bags, seat belts, steering wheels. And we have the China KSS company that provides the sales and engineering support for the local customers in China. The China operation is part of the global operation of KSS. The main focus of China operation is to grow in China, make sure we can capture the China market, can provide the product and service to our customers here, but also we would like to bring more parts from China exported to the customers located in other countries, as long as they are competitive. We are looking to get the components from China to support KSS's other operations. One of the things we are doing today is we are launching a major cushion cutting operation in Shanghai plant. The cushion, one of the most important part of the air bags, are being shipped to Europe, to KSS other operations.
Gasgoo.com: In safety and service products, almost all global players have operations in China, such as Autoliv, TRW and others. And there are also some local players, like Dongfeng Jiule and Jinzhou Jinheng. What advantages does your company have to compete with global players and local competitors?
Jason Luo: Like any industry, you have the competitors. In the same space, we compete here in China, we have those competitors you've just mentioned. In terms of the advantages of KSS, We believe, first we are the first company to invest the largest scale R&D in China. If you visit our joint venture tech center in Pudong, which is the largest one we put into China versus all the competitors, we have the first world class R&D facility in China, with highest led cross facility. Of course our competitors follow up with that. In KSS there is no restraint to bring any new technology to China, and we are fast, we are flexible, I think those are our advantages.
Gasgoo.com: KSS has reached a strategic cooperation deal with Chery, what does this mean for your company?
Jason Luo: I think not for our company, but also for Chery automotive. We believe Chery automotive is a good company, growing fast, has a lot of potential. Of course safety system is one of the important parts of the car system, so we are very honorable to work with Chery, to provide the technology and product to it.
Gasgoo.com: When EMG acquired KSS years ago, KSS has been in bankruptcy for two years and it has lost $40 million. However two years after the merger, KSS has achieved double-digit profits. So what's the magic power? How did you achieve the turnaround?
Jason Luo: I'm glad to answer this question, actually I'm part of the turnaround team. We went into bankruptcy in 1999, there is no difference than other OEM you see in U.S., or Europe, we're highly leveraged, and have a lot of production capacity that do not have the right focus. From 2003 this management team and the honorship has been very focused on the right areas that help improve the business, customer, product and also our global strategy. With all the efforts we put into the place, we achieved turnaround.
Gasgoo.com: In recent years more and more OEMs and auto parts businesses have been acquired by private equity funds. EMG also has a lot of experience in acquiring failed businesses in energy, processing and manufacturing sectors. What impact would this kind of acquisition have on automobile industry? What benefits will Chinese automobile and auto parts sectors get from these acquisitions?
Jason Luo: I think now EMG is the former ownership of the key safety. In March this year, we change our ownerships to another equity fund called Crestview. As far as the benefits the company gets from the private equity, there are a couple of things: first, they bring the financial discipline into the company, a lot of company getting into troubles because they don't have financial disciplines; secondly, they can provide the capital, sometimes the management to help the company to restore the profitability and growth strategy.
Gasgoo.com: What benefits can Chinese automobile and auto parts sectors can get from the acquisitions?
Jason Luo: I don't know exactly how active private equities are in China, they are very active in the U.S. The private equity fund normally provides the fresh capital for the company to grow, provide the right management skill to help the company to turnaround. I think in china the situation would be a little bit different, because typically the china company supply base are relatively small, so it's not that attractive to the large scale private equity forms at this point, it may come later.
Gasgoo.com: Chrysler and Chery have recently reached an OEM agreement. Does this herald the coming of more OEM productions in China's automotive industry?
Jason Luo: I think so, I think this is a good start.
Gasgoo.com: Thank you for your time.
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