Tata Technologies China has overcome multiple challenges to emerge as a contender in a country where its automotive expertise seems custom-built for success
To engineer a better world’ is the vision Tata Technologies swears by with the cutting-edge work it does for clients across the world in the automotive, aerospace and industrial machinery verticals. The company’s subsidiary in China has, as a corollary, been single-minded in its drive to lay down a marker for expansion.
Tata Technologies China has concentrated on cars and their evolution to develop its presence in a market teeming with possibilities. The numbers provide proof of the progress the subsidiary has made. Set up in late 2013 in Shanghai, the operation has grown at a nippy clip, securing a clutch of standout automotive customers and notching up revenues of nearly $20 million in 2016-17.
Engineering, design and product development services are the hallmarks of Tata Technologies globally. The blueprint and the tools are similar for the China subsidiary but its main — and only — deal for now is cars, especially of the electric kind.
“China has been a dynamic market for us,” says Peter Dow, the general manager of Tata Technologies China. “We picked up four new customers in 2016-17, something that would have been very difficult in any other country. We now have 12 customers here and we have the opportunity to become a lot bigger in the years ahead.”
Much of the business Tata Technologies China has in its kitty has materialised over the past two years. The pace at which customer acquisitions has happened is par for the course in a country where speed of execution, and of change, is phenomenal. "The business environment in China is fast and that makes our customers extremely demanding," adds Dr Dow, who has a doctorate in mechanical engineering from the University of Nottingham, UK. "They want things to happen quickly and we have to keep up."
An indicator of the rapidity of Tata Technologies China's progress from 2015 onwards is its employee figures. "Two years back we had eight-nine people; today we are at about 120," says Dr Dow. "We have recruited in China — about 70% of our employees are Chinese nationals — and we have pulled in engineers from our operations in India and Europe."
The company was deliberate in how it went about establishing itself in China (see Staying single). "We took time trying to understand the market and what our value proposition would be within it," explains Dr Dow. "There are a host of openings here at any given moment and we wanted to be sure about which segment to enter, about what to target."
Small engagements were the first step for Tata Technologies China before it made a customer breakthrough with NIO (previously known as Next EV), a high-profile startup that designs and develops premium electric cars. China is among the most fertile places in the world right now for advancements in electric-vehicle technology and NIO is an example of how this fecund ecosystem breeds winners.
“The spark was finding a company looking to expand quickly, one that needed a flexible partner,” says Dr Dow. “A car normally takes about 36 months to develop; NIO wanted to do it in 24. They were looking for a partner who could bring in people and technology expertise. It was a coming together of our capabilities and their requirements.”
Homegrown technological prowess and government support are, according to Dr Dow, propelling China to a global leadership position in electric cars. It’s a reality that slots in perfectly with the advantages that Tata Technologies China has. “There is a big transition to electric vehicles in this country and it’s not as if the technology is from elsewhere. China is on par with America in battery technology and power trains.”
Lighter is better when it comes to reducing energy consumption in any vehicle and Tata Technologies China’s efforts are based on this element of basic physics. “Our objective is to help build vehicle structures with lightweight options,” says Dr Dow. “We target materials and manufacturing processes, particularly aluminium structures, with which we have plenty of experience and knowhow.”
Recruiting capable people is critical for Tata Technologies China. It is a challenge as well. “When you recruit in this country, you don’t do so merely on salary,” says Dr Dow. “We are providing our people with a vision of what the company wants to be. What we have created is a blend of European, Indian and Chinese.”
Tata Technologies China has depended on the trademark mix it brings to the automotive table — subject skills, industry knowledge, customer intimacy and a proven execution model — to succeed in this market. Aerospace and industrial heavy machinery are not in its China spread as yet, which leaves the enterprise free to focus on the automotive space.
“The opportunities in the Chinese automotive industry are huge and the push towards electric cars is driving the business,” says Dr Dow. “We have an engagement with a gasoline-powered car, but the majority of our work is around new material electric vehicles and hybrids.” Autonomous cars and public transport options are, for now, on the agenda for the future.
Tata Technologies China has restricted itself to Shanghai and the surrounding areas for the present but that could change in the days ahead. “Trying to cover the whole of China is difficult, it could have stretched us too thin; but we are now looking beyond Shanghai,” says Dr Dow. “We have a strong strategy that aligns with the current technology requirements in China. We expect to secure further growth in the years ahead as we expand in China.”
Tata Technologies, the parent company, recorded a turnover of $417 million in 2016-17 and has set its sights on reaching $1 billion sooner rather than later. That’s a lofty aspiration but surely possible for an organisation that expects to record double-digit growth.
The customer angle will continue to be crucial for Tata Technologies China to attain its revenue goal. “We have senior leaders spending time with our customers here and that helps,” says Dr Dow. “Expectations are occasionally magnified due to the speed of engagement and delivery in this country. And there’s no beating around the bush for the Chinese; they are more decisive than anybody I’ve seen anywhere else in the world. That’s the difference. Keeping up is enjoyable and exhausting.”
Tata Technologies scouted around for a while before it decided to establish an operation in China.
"We did some soul searching about China and about how it would fit with our strategy," says Samir Yajnik, president, global delivery, and chief operating officer, Asia Pacific, for Tata Technologies. "We knew this market would be difficult to break into. Taking the partnership route was an option but we finally chose to go it alone."
Tata Technologies China got started with its operations in 2013. "We literally began with one person and me and our calling card was the eMO, the concept electric car that we showcased at the Detroit Auto Show in 2012," says Mr Yajnik. "We had a sales strategy that targeted customers we could really tell our story to — about the eMO, our global clients such as Jaguar Land Rover [JLR] and particularly our vehicle programmes."
The narrative Mr Yajnik banked on struck a chord with a bright and shining startup enterprise and Tata Technologies China had its big break. "We had done our homework and we were in the right place at the right time, in the sense that we made a connection with the eMO and JLR strands in our story. We did not go to different markets; we were tightly focused."
Tata Technologies China has more than 120 people today and it has grown impressively on the financials front. "What's wonderful here is that we could go out there alone and make ourselves self-sufficient," adds Mr Yajnik. "We sold our value proposition aggressively and we found competent people. As a result, we have secured a few substantial projects and we are pursuing half a dozen others."
Mr Yajnik believes China can serve as a springboard for Tata Technologies to expand in the wider region. "Ours is a sustained growth story and it's going to continue. We are looking at a requirement of 100 more people in China in the coming three-four months. I wouldn't say we're glad we don't have a partner here, because that would have helped us scale up, but despite that we have reached this point."
China has been a learning experience for the company and much of it has been provided by the subsidiary's local hires. "They have enabled us to better comprehend this market and the expectations here," says Mr Yajnik. "Yes, we need to build strong local leadership assets, but the overall environment is right. An office five times the size of our current one and an operation ten times bigger is what I'm hoping for."