Sime Darby eyes growth opportunities in China

The group is aggressively pursuing strategies that allow them to accelerate its core businesses and enlarge footprint in key markets there 

By NUR HANANI AZMAN / Pic TMR

SIME Darby Bhd plans to establish a foothold in China’s Tier 2 and Tier 3 cities in the near future, where the demand for luxury cars is high and competition is lower. 

Chairman Tan Sri Samsudin Osman (picture) in Sime Darby’s 2021 annual report said the group has been aggressive in pursuing strategies that would allow the group to accelerate the growth of its core businesses and enlarge footprint in key markets including China. 

“A focal point of our growth ambitions is our businesses in China. China is not only the world’s single biggest luxury car market, it is also the fastest-growing. Our strategy for China is to aggressively enlarge our network to capture a bigger slice of this market. 

“Our low gearing level of 23% arms us with the capacity to pursue growth opportunities, both organic and in the form of mergers and acquisitions,” he said in the annual report filed to Bursa Malaysia yesterday. 

“Sime Darby Motors entered China through the opening of a 2S after-sale centre for BMW in the Guangdong and Hainan provinces Today, it represents a diverse range of luxury and super luxury marques in China including BMW, Lamborghini, Rolls-Royce, Volvo and McLaren,” he added. 

In China, the luxury car market expanded by 14.7% in 2020 and 37% in the first half of 2021. 

According to the annual report, Sime Darby’s China operations sold 44,356 cars in FY21, an increase of 31.6% from last year. 

The outlook for luxury cars remains bright in the medium term and the group has expanded its network in anticipation of this. 

In FY21, Sime Darby opened seven new facilities including one each in Tier 2 and Tier 3 cities. 

This brings its network in China to 35 facilities in 13 cities, situated predominantly along the Southern and Eastern seaboard. 

“We intend to continue expanding our addressable market by growing our retail footprint,” the report read.

The annual report further noted that China is currently the world’s largest market for electric vehicles (EVs) and is set for further growth with the Chinese government setting a target of 40% of all motor vehicle sales to be EV by 2030. 

This shift to EV aligns with the aspirations of carmakers and Sime Darby’s commitment towards “Delivering Sustainable Futures”. 

“In the last two years, Sime Darby has opened four EV facilities in China and one in Singapore. The group plans to leverage on these new partnerships to expand its network and explore synergistic opportunities within the EV ecosystem,” Samsudin said. 

On the industrial side, Samsudin believed there are great opportunities for construction in China, spurred by the Chinese government’s infrastructure stimulus projects to stimulate the economy. 

“Besides growing in China, we recognise that other emerging markets such as India and Indonesia have similar demographic potential and we will leverage our know-how of operating in Asia to explore opportunities in these markets,” he added. 

He said Sime Darby sees exciting growth potential for this business with its hospital assets in Malaysia and Indonesia poised to benefit from ongoing shifts in structural megatrends such as ageing demographics and increasing demand for quality healthcare with rising affluence. 

“During the year, we accelerated the growth of this business through the acquisition of Manipal Hospitals Klang, a tertiary hospital located in Klang, Malaysia. With this, our healthcare portfolio now consists of seven premium hospitals in Malaysia and Indonesia and a day surgery centre in Hong Kong,” he said.