Matthias Sieverding, KM's president of extrusion technology, speaking May 20 at a Chinaplas media event.

GUANGZHOU, China—German machinery maker KraussMaffei Group GmbH is building a new plant in China that will double its capacity there, as the company expects to see China play a larger role both as a source of research and development and as a machinery export base.

The Munich-based company disclosed at a media event May 20, ahead of the Chinaplas show, that it started construction on the new plant in the city of Jiaxing. KM said it is part of increased capital investment under its parent company, China National Chemical Corp., or ChemChina.

"We have a strong focus on China, not just because we're part of the ChemChina family but because we see a lot of growth potential in the market," said Matthias Sieverding, KM's president of extrusion technology.

"It is our clearly stated strategy that we'll start exporting more of these products out of China to the markets that we serve worldwide," he added.

The new Jiaxing plant is KM's second recent expansion in China.

In January, KM said it had turned a former ChemChina production site in Sanming into a factory to make a new line of standardized all-electric injection molding machines, dubbed PX Agile, that are targeted initially at cost-conscious Chinese customers.

Sieverding said the Jiaxing plant, located about 60 miles southwest of Shanghai, will produce the full range of KM equipment, including injection molding machines, extruders, robots and polyurethane equipment.

"It's absolutely one of the key elements of our growth strategy here in China," Sieverding said, adding that KM has outgrown its current China factory, in Haiyan, near Shanghai.

The project also is a continuation of KM's expansion into mid-range price and technology offerings that the company has not previously offered.

ChemChina acquired KraussMaffei in 2016, and successfully listed KM on the Shanghai Stock Exchange in December. At the time, KM executives said the stock listing would provide a significant new source of capital.

'Middle-tech markets'

At Chinaplas, KM will unveil several new lines of made-in-China equipment for the local marke—the PX Agile machines, along with a new series of twin-screw extruders called ZE GP Agile, and LRX Agile robots.

KM said those products are aimed at "middle-tech markets," below the higher-end markets that the company's German factories serve. Chinaplas runs from May 21-24 in Guangzhou.

Stewart Zhang, vice president of injection molding machinery for KM China, said the machines represent KraussMaffei's expansion into a more standard machine offering.

The company wants to combine German technology with research and production in China that can better meet local pricing requirements, said Leo Yuan, vice president of extrusion in China for KraussMaffei.

But KM executives said it's not just about price.

Boosting China's role in R&D also is about tapping into the fast-paced developments in automation and artificial intelligence going on in the country and bringing that to world markets, said Nadine Despineux, president of KM's new digital service solutions unit.

"China is a clear accelerator for our global digitalization strategy," she said. "We use the speed that is in this market, learn from it and bring it to the rest of the world."

The company launched the digital service unit in mid-2018 as part of its broader digitalization strategy, dubbed Compass.

"China is the fastest moving nation when it comes to digitalization," she said. "By far the highest investment in artificial intelligence was in China last year. Forty percent of global robots were purchased in China last year."

Sieverding said one of the factors driving increased investment in China-based R&D is that its Chinese customers are often eager to try new technology and are "much more flexible than some other regions of the world that we serve."

"Not so bureaucratic, you would say, as we sometimes are in Germany," Sieverding said. "That is a huge asset for us and allows us to develop projects here in China and that then you roll out globally."

Sieverding did not disclose the amount of money to be invested in Jiaxing but said the factory would double the number of employees compared to the Haiyan facility, to 700. He said the facility would be 614,000 square feet.

The Jiaxing facility is expected to open in mid-2020. Sieverding said part of the reason for building in Jiaxing, and for ongoing investments in its German facilities, is to have larger technical centers modeled on a smaller one KM opened in the United States two years ago.

"For us, it's important to have a good process technology center here in China because we see a lot of new developments coming out of China that will be setting worldwide trends," he said.

"We see the flow of ideas has truly become global," he said. "We see that now there are developments coming out of China that could be very interesting for the European market, that makes us want to do the investment in a new plant with more capabilities for doing R&D going forward."