Saurer

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Saurer: The China Challenge

Question 1
Comparing with the China staple fiber twisting machines, Saurer Twisting Systems (STS) has a number of strengths. The STS are leading product and incorporated state-of-the-art engineering. The technology and R&D helped STS to build up functional brand, the STS machines helped the customers to improve efficiency, quality and productivity. Hence STS is a strong brand and highly regarded by many customers. Being the largest manufacturer of textile machinery, Saurer can offer full solutions to customers. According to Exhibit 4, there are Sauer’s products in different steps of the textile value chain from spinning to embroidery. Thus, Saurer has the capability to penetrate into textile industry in a great depth by extensive product offering. However, STS do not have the price advantage comparing with local Chinese competitors. STS had simplified the functions of the sophisticated machines into “good enough” machines so as to cater for the needs of China market, however, the pricing is 31.6% more than Muratec, and twice the price of Rifa i.e. the close competitor. As Chinese customers tend to be price-sensitive, they would prefer low-priced manufacturers like Rifa for faster pay-back. In addition, STS products are imitated and the functions copied by Chinese competitors because of weak protection of intellectual property in China. This weakened the strength of STS in terms of product functionality. Most of the locally made twisting machines were copies of those manufactured by Saurer or a Japanese competitor. In some cases, the colors of the machines and the brochures – including printing errors – were reproduce Saurer’s usual position in the high-end market meant that identifying and reaching customers for low-end solutions would be challenging for its sales force. Since the company had historically focused on customers with high-end needs, it sales force had little contacts with the low-end segment. Saurer also...
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