ZURICH Dec 15 China's new elevator market will
likely contract for a third straight year in 2017, raising Swiss
lift maker Schindler's chances of making more
acquisitions there, as local companies struggle to compete on
price, Chief Executive Thomas Oetterli says.
Oetterli, who became CEO of Schindler this year after
previously heading its Chinese business, is chasing
multinational rivals Kone and United Technologies'
Otis unit to win more market share in China, which
accounts for about 60 percent of new lift installations
Acquisitions like the 25 percent stake Schindler bought in
Chinese liftmaker Volkslift Elevator earlier this year will
likely account for half of Schindler's mid-term growth in China,
Oetterli said, with the other half coming from expanding the
existing new-lift business and small but fast-growing servicing
Three years of market contraction in China, with a fall of 5
percent last year, 7 percent forecast for this year and up to 3
percent in 2017, have caused prices for new elevators and
escalators in the world's second-biggest economy to plummet by
"high single-digits" annually, Oetterli told Reuters in an
This trend has hit Chinese elevator makers hardest, he said,
since international companies previously trimmed costs for their
equipment to similar levels as domestic lift makers. With little
price difference, customers are likely to prefer multinational
suppliers like Schindler, Oetterli said, due to a perception of
"That has happened in the last two to three years," he said.
"Most of the Chinese companies were struggling. I assume a
certain concentration process will continue in the next one to
Other companies including Kone have also said the fragmented
Chinese market, with about 400 original elevator equipment
manufacturers, thousands of service companies and intense price
pressure, is ripe for consolidation.
In June, Schindler bought into Volkslift, whose annual
revenue exceeds 100 million Swiss francs ($98.82 million).
Schindler, which said the move expanded its presence in China's
eastern Zhejiang province, has not said who owns the other 75
percent stake. An email to Volkslift on Wednesday was not
Before that, Schindler in 2014 raised its stake in its joint
venture with Chinese-owned XJ Elevator Co. in the Hunan province
to a majority.
But not every takeover prospect is attractive, Oetterli
"It always has to make sense, from a strategic point of
view, in terms of product offering or geographical footprint,"
he said. "This was the case with XJ Schindler and also with
Despite the persistent market contraction in China, Oetterli
still expects his company's full-year profits in the range of
780 million francs to 830 million francs, up from 689 million
Swiss francs in 2015. It is being helped by buoyant U.S. sales
and unit disposals.
(Editing by Greg Mahlich)