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Our reporter Guo Yangchen and Zhang Jiazhen reported from Suzhou

(Foster, President and CEO of Zeiss Greater China. Interviewee/Photo)

Recently, the R&D and manufacturing base of German optical instrument giant Zeiss in Suzhou Industrial Park officially opened. It is understood that Zeiss entered China in 1957. This is the first time that Zeiss has purchased land and built a factory in China. The total land area exceeds 13,000 square meters, and it will become an important R&D and manufacturing base of Zeiss in China in the future.

From signing the contract in November 2021, starting construction in October 2022, to officially putting into use in April 2024, the entire process of the construction and production of the Zeiss Suzhou R&D and Manufacturing Base took only 18 months. This "Suzhou speed" is a true reflection of the accelerated utilization of foreign capital by Suzhou, the "strongest prefecture-level city".

Relevant statistics show that in 2023, Suzhou's imports and exports will reach 2.45 trillion yuan; in the first five months of 2024, the total value of foreign trade imports and exports increased by 10.4% year-on-year, close to the best level in history during the same period. Suzhou has attracted 486 investment projects from 175 Fortune 500 companies, with a total foreign investment of more than 160 billion US dollars, ranking third in the country.

What kind of charm does Suzhou have for foreign-funded enterprises? Why does Zeiss firmly promote its localization strategy in China? With these questions, a reporter from China Business News recently interviewed Maximilian Foerst, President and CEO of Zeiss Greater China.

"The completion of the new R&D and manufacturing base marks a solid step forward for Zeiss in China and strongly confirms our commitment to the localized innovation strategy." Foster said that the new base covers the entire process from product innovation to mass production. "We will also move some global functions here to make the new base a model of innovation and localization."

"Zeiss will work closely with its headquarters in Suzhou and Shanghai to jointly build the 'Zeiss Yangtze River Delta High-end Equipment Innovation and Development Ecosystem'. We will use advanced product technologies to promote the creation of new quality productivity and provide strong impetus for China's high-quality development." Foster further stated.

Purchased land and built a research and development base in China for the first time

China Business News: As the first self-built project in China, what role does the Suzhou R&D and manufacturing base play in Zeiss' global strategy?

Foster: Building a research and development and manufacturing base in Suzhou is a clear development goal set by Zeiss in China. Purchasing land to build a project shows that the company's investment strategy in China is long-term.

Comparing with Zeiss's previous base in China, we can see that the company's connection with the local supply chain has been greatly deepened. We are increasing our R&D efforts, combining the local supply chain with Zeiss's R&D and manufacturing capabilities, and thus deeply promoting Zeiss's localization strategy in China.

At the same time, this is a LEED (Leadership in Energy and Environmental Design, a green building rating tool) gold standard building. We installed a photovoltaic power system on the roof. In terms of digitalization, we introduced AGV (automated guided vehicles) to complete the entire procurement process and are fully connected to the global supply chain network, which means that the balance between different bases can be achieved in the background.

China Business News: Suzhou is a core city in the Yangtze River Delta region. What conveniences will the establishment of a R&D and manufacturing base in Suzhou bring to Zeiss's development?

Foster: Suzhou has three major advantages. First, it has abundant high-quality talent pool resources. For high-tech companies like us, we value the ability to reserve excellent talents more than cost, and Suzhou happens to have such a rich talent pool.

Second, a complete supply chain and supplier cluster. The Yangtze River Delta region is a very unique ecosystem. Zeiss has formed a comprehensive supplier network in Jiangsu Province, Zhejiang Province and Shanghai in the Yangtze River Delta region, covering multiple fields such as machinery and optics. These suppliers are very professional, and the local logistics system is well-developed, which helps to improve R&D efficiency.

Third, Suzhou Industrial Park has unique advantages. The administrative management, infrastructure and staffing of Suzhou Industrial Park are excellent. The park management is open and transparent, the administrative staff is efficient and capable, and any problems encountered by the project can be effectively solved. Thanks to this, we are very happy to invest here.

China Business News: It took only 18 months from the start of construction to the completion of Zeiss Suzhou R&D and manufacturing base. During this period, what kind of help and policy support did the local government provide?

Foster: We received full support from the local government from project preparation to construction implementation. The government responded quickly to the company's needs, helped answer questions, understand requirements, and smoothly complete the approval process. Their consistency at the strategic level ensured the smooth progress of the project. The government also provided important support in land acquisition. We maintain good communication with various government departments, which makes it more meaningful for the company to invest locally.

The Suzhou R&D and manufacturing base may look like a factory, but it is actually quite complex. We develop and produce measuring machines, X-ray machines and other medical equipment here. These sub-sectors have a lot of specialized content that requires cooperation from local government departments.

China becomes the driving force of innovation in the global market

China Business News: What are Zeiss’ investment and development plans in China in the next 3-5 years?

Foster: We are also thinking about whether the scale of the production and R&D base is sufficient from a long-term perspective. From the current perspective, the situation is not tight, and there is still some available space for production capacity to be moved in.

The Suzhou R&D and manufacturing base is only the first phase of the project, and the future investment will be even larger. The company's investment in pure manufacturing sites may decrease, but its investment in R&D, innovation, cooperation and acquisition of local companies is expected to increase.

China is becoming an innovation driver in many of Zeiss' global markets. There are some very good startups in China with advanced technology and innovation capabilities. We also hope to make good use of China's innovation capabilities, whether through Zeiss' own R&D team or by acquiring smaller local innovative companies.

Zeiss has already laid out a large number of production bases in Shanghai, Guangzhou, etc. From the perspective of manufacturing footprint, we have done very well and will pay more attention to innovation in the future.

China Business News: Zeiss Greater China Headquarters is located in the China (Shanghai) Pilot Free Trade Zone and has Zeiss' first enterprise-level innovation and R&D center outside of Germany. In the future, what kind of connection will there be between the Suzhou R&D and manufacturing base and the Shanghai headquarters?

Foster: There are two issues behind this. One is the space issue. The company’s space in Shanghai is almost used up, so we chose to expand in the neighboring city of Suzhou and will transfer a considerable part of our industry to Suzhou.

Another reason is that the Shanghai base is located in the free trade zone, and we are more focused on manufacturing products with a higher import rate or products that need to be exported to other regions. If the relevant products pay more attention to China's local supply chain, and a large part of the products enter the local market, then the Suzhou R&D and manufacturing base will have more advantages.

Looking at future development, the second model will have greater room for growth than the first model because the Chinese market is growing rapidly, and in the second model, the degree of localization development will be deeper.

China Business News: Zeiss spends about 11% of its global turnover on innovation every year. What is the proportion in China? In what areas will Zeiss China continue to promote innovation?

Foster: In the field of innovation, our investment in China is close to the global average. Previously, the company mainly engaged in optical mechanical systems in Suzhou, and now it has further expanded into two important new areas: X-ray and electron microscopy.

X-ray technology is a new area where Zeiss maintains global leadership and is closely related to the new energy vehicle business. Battery research is mainly carried out in China and is also closely related to X-ray technology. Electron microscopes use electron beams, which is a completely different concept compared to conventional optical technology. We are expanding the production lines of these new technologies, and at the same time, we have invested heavily in software and digitalization in China and around the world.

(Editor: Zhang Jiazhen, Reviewer: Tong Haihua, Proofreader: Zhai Jun)