Siemens Restructures business to cut costs

Absrtact: From October 1 onwards, our new structure will come into effect, after this year's adjustment, the company merged from the original 16 business groups into 9, and Siemens China will also operate under this new framework. September 16, Xu, vice president of Siemens (China) Ltd.,





"Our new structure will come into effect from October 1, after a year of adjustment, the company merged from the original 16 business groups into 9, and Siemens China will also operate under this new framework." September 16, Xu, vice president of Siemens China, told the 21st century economic reporter during the 2014 Siemens Innovation Forum.





this May, Siemens officially released the "2020 Company Vision"-in the original electrification, automation based on the digital as the company's future focus, while the organization of its restructuring, the abolition of the "business area" level.





fiscal Year 2013 (October 1, 2012 to September 30, 2013), Siemens's total revenue in China reached 6.14 billion euros, down 3.3% year-on-year, accounting for about 8.25% of the group's total revenue. Siemens expects a series of corporate efficiency initiatives to save about € 1 billion a year for the company and to take effect at the end of fiscal 2016.





restructuring business cut costs





last July 25, Germany's Siemens company released its second profit warning in the year, announcing its goal of raising its operating profit rate for fiscal year 2014 to 12%. Two days later, Löscher, the chief executive who helped Siemens survive the "bribery scandal", was announced to have been replaced by Chow Kei, who was financially born. Although the board did not specify the reasons for replacing the CEO, it is widely accepted that Siemens ' continued decline in recent years is the main reason for Löscher to step down.




The profit margin for Siemens was about 9% per cent in 2012, according to
, while the profit margins of its main rivals, ABB and GE, reached 10.3% and 15% respectively. Although Siemens has increased its profit margins in recent years through a series of measures such as selling communications and expanding medical services, it is still lagging far behind GE's average annual net interest rate of more than 10% per cent.





Moreover, Siemens ' total revenue in China has slipped for two consecutive years as Siemens ' third-largest market in the world, and reform is more imminent. It is understood that the old organizational structure of Siemens, with industry, infrastructure and urban, energy and medical four basic business areas. Take the Industrial business field for example, the following includes industrial automation, driving technology, customer service, Metallurgical technology Department of the four major business units.





but since October 1 this year, Siemens will enable the new organizational structure, the abolition of the original "business area" level, and the existing 16 business groups to 9. In addition, the medical service will operate independently, which means that regional organizations can be set up according to the needs of the local medical market, and as part of the reorganization, Siemens is also ready to split the business.





"a very important piece of the project is the hope that through the internal transformation of the enterprise, so that Siemens closer to customers, for which we call the middle of the business group in the field of the entire level of the pull out, followed by many of the internal functions of the unit to do integration, such as the Human Resources Unit Now all integration into a single human resources functional department. "Xu said.





according to Xu, the current Siemens in China to carry out the continuous operation of about 76 companies, employs about 32,000 people, the restructuring is mainly for the business area of management, basic staff are not affected.





"may have formerly been a manager in a career area and will now be transferred to other units in the company for similar jobs." "Xu stressed that the aim of the adjustment is to have more staff to work on the front-line rather than to lay off staff," although the total number of employees is reduced, but not much. ”





bets "digitized"





According to a reporter learned from Siemens, a data show that its newest business groups are: power generation and natural gas, wind power and renewable energies, energy management, building technology, transportation, digital factories, process industry and drive, medical and financial services, and set a certain range of target profit margins for each business group.





In addition to traditional electrification, automation, Siemens also will be digitized as the main future growth areas. The reporter noted that in the Siemens nine-dah business group, the digital factory set the target profit margin of 14%-20%, second only to financial services (15%-20%, in terms of property rate of return).





"Digitization is one of the three major future directions for Siemens, and for a traditional industrial company such as Siemens, data can be the basis for corporate innovation, and we can use this data through intelligent algorithms that can be used to help us make decisions through the analysis of large data." "Zhu Yu, dean of Siemens China Institute, said to the 21st century Economic report.





In addition, Zhu Yu also believes that in the automation control, it platform, systems engineering, power and energy technology, and other aspects of the digital can be combined with the key development direction.





It is worth noting that, following the decision of the New York Stock Exchange to retire in May this year, Siemens once again announced that it would be delisted from London and the Swiss stock exchange as the deal was too weak. According to the plan, the Siemens stock will be in London from the beginning of October to withdraw the city, next January will withdraw from the Swiss stock market.





"Siemens has more than 90% of its stock transactions taking place in Frankfurt, Germany, so the rest of the stock market does not have any substantive significance to us, but it will increase the management costs, so we will continue to withdraw." "Xu said.