Infiniti Motor Company has made Hong Kong its global headquarters as the brand looks to increase its global footprint in the premium vehicle market with its president, Roland Krueger, leading the way. But while expanding internationally, the company is also investing in developing the city’s local entrepreneurial talents
By Leon Lee
Hong Kong might be a densely-populated metropolitan, but despite its limited amount of space, there are plenty of vehicles on the roads. One look around and it’s easy to spot the latest models of sportscars or luxury sedans. This affinity for cars certainly adds to the appeal of the city for automotive companies to build their businesses here, like Infiniti.
“Hong Kong is a clear hub. We are here to develop thebrand and our market position. We want to become one of the top tier car manufacturers of automotive brands in the premium sector,” says Roland Krueger, President of the Infiniti Motor Company.
The company opened its global headquarters in Hong Kong in 2012, making the move from Japan. Although it is the premium brand of Japanese automaker Nissan, Infiniti first began selling in the United States in 1989. Today, the United States remains an important market for them, but they have also been aggressively expanding around the world in the last several years.
“The move to Hong Kong to set up a global headquarter was a clear signal to the rest of the market and our competitors that we really want to establish ourselves firmly in the global marketspace,” explains Krueger, who came onboard as the president in January from BMW.
“This is important to know because so far, the US is still the main market, but as a business strategy, we want to establish other markets, especially in China, as a second pillar. And to be in that position to establish it as a second pillar, you need full commitment to the market. What we demonstrate by moving to Hong Kong is we have a full commitment to this part of the world. We have a full commitment to establish and develop the brand in China and enlarge our footprint.”
From Hong Kong, they coordinate the business and ensure components like car flow and ordering systems are operating smoothly as they work with roughly 500 retailers in markets all over the world.
A global player
Besides establishing a dedicated global headquarters, Infiniti has also worked diligently on setting up and utilizing alliances and partnerships to expand their global network and expedite production.
Late last year, the Q50L (or the long-wheel base version of the Q50) and the QX50 began production in Xiangyang, China, through a joint venture with Dongfeng Motor. They are Infiniti’s first localized models in the country dedicated to Chinese consumers. The first Infiniti vehicles began selling in China in 2007.
In September this year, Daimler and the Renault-Nissan Alliance broke ground on a new joint manufacturing complex in Aguascalientes in central Mexico. The plant, called COMPAS (Cooperation Manufacturing Plant Aguascalientes), will build next-generation premium compact vehicles for both Mercedes-Benz and Infiniti. The plant has an initial annual production capacity of over 230,000 vehicles as production of Infiniti models is scheduled to begin in 2017. From here, Infiniti plans to build a vehicle predominantly for the North American market.
In the same month, their brand new premium compact vehicle Q30 was revealed at the 2015 Frankfurt Motor Show. The car is set to go on sale later this year and will be produced at Nissan’s production plant in Sunderland in the United Kingdom. Infiniti invested over US$380 million in plant extensions to accommodate for the increased amount of production.
“Naturally you want to be where the market is so we’re utilizing our alliances and partnerships with other companies. We’re utilizing technologies, modules and production sites to have this car produced for us predominantly for the European market and then later we will export this into other markets,” Krueger says.
“The production really follows where the market is. This enables us to be faster in terms of time to market and to have a higher level of efficiency in economies of scale. That’s what we do because we’re still a considerably small player in the market.”
Not only is the Q30 Infiniti’s first vehicle to be built in Europe, it also represents the brand’s entry into the premium compact segment. Krueger explains that Europe is still the world’s largest premium market and in order to be a creditable player in that market, you need to have a premium compact vehicle.
Their global strategy has proven to be successful and profitable. In the first three quarters of 2015, they have sold 16 percent more vehicles globally than they have in the same period in 2014. In October, they set the best sales record in the month globally as well as for individual regions like Canada, Mexico, Western Europe and China.
Although the automotive market has slowed down in China, Infiniti is putting up impressive numbers there. Compared to January to October 2014, they have sold 36 percent more vehicles during the same period this year. In fact, sales in the first 10 months of 2015 in China and Taiwan have already exceeded the full-year sales numbers in 2014.
While the Chinese automotive market is already the largest in the world, the premium segment still trails those of the US and Europe. However, Krueger believes that it has the potential to grow to become one of the largest in the world, if not the largest, reinforcing the company’s desire to establish it as an important pillar in their global business.
When asked about the reasons behind the aforementioned success, Krueger had a very simple response.
“Good people,” he straightforwardly answers, followed by a smile.
Originally from Germany, he has found Hong Kong not only an ideal environment to do business, but a diverse one as well. He proudly points out that in a small team of a little over 100 people in Hong Kong, there are 21 different nationalities.
“I have never seen such a diversity and we actually need to embrace that diversity as an opportunity, as a chance… It doesn’t come like this, we have to have good management structures in place to foster this,” the executive says.
He saw more of this diversity during the application process for the Infiniti Accelerator program, a start-up incubator initiative set up with Nest earlier this year. Working with the theme of smart cities, they received over 145 applications from 38 countries for the eight available spots for start-ups developing technologies that can lead to cleaner and more efficient cities of the future. In the end, four companies from Hong Kong were chosen along with ones from Germany, United States, United Kingdom and Israel. Through the 12-week mentor-driven program, the eight teams will receive training in marketing, management, fund-raising and other essential skills in running their own business.
Entrepreneurship is something the brand completely embraces, hence their involvement with the project.
“We believe in entrepreneurship and we want to foster entrepreneurship. It’s also a little bit of a signal to our own team over here that if you watch those who have a good idea, develop a business case, develop their own company, you can do this actually and we offer a platform to do this,” Krueger explains.
Another benefit of the program is the possibility that Infiniti might come across an idea they like and want to incorporate it into their own business. But rather than just acquiring the company for its ideas, they would prefer to work with them.
“What we will not do is invest into those companies because we believe that independence, in terms of entrepreneurship, is key to success. We would rather have them develop a certain idea for us as an independent company, but we can foster that idea, make it happen and we can embrace whatever they have developed and integrate it into our business.”
Besides the training, the company has opened Infiniti Lab, a co-working space located inside their flagship showroom in Wan Chai, to give the participating teams as well as a rotating roster of start-ups a location to work and showcase their projects. The venue will also be used to host a speaker series where entrepreneurs and business leaders are invited to share their knowledge and experience to the entrepreneur community in Hong Kong.
With this, the brand is firmly invested in developing and ensuring the future of their new home.
As Infiniti continues its steady growth in the global premium market, Krueger has noticed several developing trends in the segment. He is seeing a downsize in terms of sizes of vehicles. Another is developing cars with lower to zero emissions, which Infiniti already offers in its lineup with hybrid versions of the Q50, Q60 and QX60.
He names connectivity as one of the big topics when it comes to the future of the automotive industry.
“The car becomes part of your daily life, it becomes a device like a mobile device. The question is actually what is the direction of doing that,” Krueger says.
With talks about the Google Self-Driving Car and companies from other fields like IT or digital entering and disrupting the industry, he recognizes that they will surely make an impact. But how much of an impact remains to be seen.
Customer service is an asset
While Infiniti’s vehicle lineup might not be as robust as its larger competitors, Krueger sees this as an opportunity.
“As a rather smaller player, of course we don’t have the width and the breadth of the model portfolio in each and every market, so what we’re doing is we focus,” he explains.
“We make sure that we focus on certain things and those things we want to do absolutely right. And that’s part of our strategy moving forward. It’s doing something right for some of our customers because we focus exactly on those things.”
Focusing on customers is something that the brand has done from the very beginning. When Infiniti was launched in 1989, its customer-centric business model with close attention to customer service was new and unique to the industry, giving them an advantage. Eventually other car companies followed suit.
The senior executive believes it is still an asset to the company today, one that they will continue to develop to ensure they have a competitive advantage. This means having well-trained people committed to the same goal throughout the organization, from management, to operational offices and all the way to local dealerships.
“If the customers embrace [something] and they are watching it, we definitely have to be there,” Krueger says.