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Apr 29, 2013

Volkswagen's German IRO in Beijing

Thomas Küter, IR manager at Volkswagen, is on a two-year placement at the car maker’s Chinese headquarters

While travel is a big part of IR, that usually means fleeting stops in global financial centers before rushing off for the next flight. Not for Thomas Küter of Volkswagen: the IR manager is currently undertaking a two-year stint at his company’s Chinese headquarters in Beijing.

The placement highlights the importance of China to Volkswagen. While deliveries in western Europe declined in 2012, the firm saw Chinese demand rise by nearly a quarter. The owner of brands including Porsche, Skoda and Audi sold 2.8 mn vehicles in the communist state last year, making it second only to GM in terms of sales by a foreign car maker.

Thomas KüterGiven this rapid growth, it’s unsurprising the Beijing office has received ever-more requests for meetings from investors, mainly those based in Europe and the US. That demand ultimately led Küter to pack his bags and head East. In doing so, he joined a small band of IROs from European firms who have taken up long-term positions in Asia. Others include British Gas owner BG Group, which moved an IR team member to Hong Kong last year, and French healthcare firm Sanofi, which set up an IR office in Shanghai in 2011.

When did you move out to China?

I moved there permanently in February 2012, but there were certain steps before that. The first contact for me – and the first big step for Volkswagen’s IR in China – took place in 2010 when we organized an investor conference. It was a huge event for investors and analysts in Beijing that lasted two days. We have two joint ventures in China, one in Changchun and one in Shanghai, but the co-ordination comes from Beijing, so that’s why we invited people to Beijing.

I first went there for three months. It was part of a trainee program where I had the opportunity to go abroad, which I took and went to Beijing. This test phase was successful so I decided to move out there for two years.

Why did Volkswagen decide to have a permanent IR position in China?

Over the last few years, we have received more and more requests from investors – especially from Europe and the US – to see our operations in China, and the CFO in China asked for permanent IR support. We also saw a certain necessity to have someone permanently there as it’s much easier to cover all these requests when you have someone on the ground who can co-ordinate meetings and talk to people directly.

What kind of events do you take part in today?

There are so many conferences the banks put on over the year: Access China, Access Asia, Access Germany in Asia, and so on. We now get, as a rough guess, 10-15 invitations to really huge conferences, not only in China, but also in Tokyo, Singapore and Hong Kong. I also have responsibility for Australia, which makes sense geographically, and there we participate in one conference a year.

There are also a couple of big conferences happening in Beijing, one organized by JPMorgan and another by Morgan Stanley. It’s not only about Shanghai: many companies have their representative office in Beijing so there are several events going on in the city.

Do you see more buy-side and sell-side contacts moving out to Asia?

The numbers are increasing. As you may have heard, some auto analysts have now moved to Asia, or at least have an office over here. Morgan Stanley, for example, has a European analyst focusing on European autos in Shanghai, and Bernstein now has its main analyst for autos in Singapore.

Now that it’s known we have an IR office in China, the interest of Asian portfolio managers and analysts has also increased. We constantly get requests for investor visits where we organize a management meeting with Chinese or Asian investors only.

Has your proportion of Asian investors changed?

I can’t say that, since we placed an IR office in Beijing, it’s significantly increased. Of course, you have to be cautious as not everybody is reporting holdings. When we are on the road talking to local investors, sometimes they tell me they have no fund that is able to invest in European stocks. We are listed only in Europe and have an ADR program in the US, but some investors can invest only in Hong Kong or Shanghai listed stocks.

Sometimes they run – or at least say they want to open – a fund that focuses on global stocks; I would say that’s a trend. But sometimes you have meetings where you get the impression you are talking to people more interested in competitors or suppliers.

Most of our Asian shareholders come from Tokyo, Singapore and Hong Kong. There are, however, other cities like Kuala Lumpur, Taipei, Seoul or Shanghai where it makes sense to be on the road at least once or twice a year to meet current or potential shareholders.

What is it like living in Beijing compared with Wolfsburg, where Volkswagen has its headquarters?

It is very, very different. The size of the city is amazing: in Germany, you have just a few cities that have more than 1 mn inhabitants, while in China you have cities of 20 mn people. The style of living is also different. Here, we live in a big compound, compared with small apartment buildings in Germany, and there are some serious problems here with air pollution. To deal with all these things makes it an adventure. At the same time, it’s already very westernized in some parts of town.

How do you stay in touch with the rest of the team?

We are in very close contact. I go to Germany three or four times a year for the annual press conference and also for quarterly results conference calls. The rest is just day-to-day business and we have a weekly call.

Have you tried to learn the local language?

I’ve been learning since I arrived, although there hasn’t been a lot of progress during the first year.

But it’s also not very necessary. I do most things in English, at least when I talk to analysts or investors. And internally, we often speak in German – there are a lot of German-speaking Chinese people who work for us here. Where the cars are produced, there are a lot of people who speak only Chinese, but in our headquarters in Beijing you can get around quite comfortably with English and German.

Career path: Küter’s road to Beijing

2001: Commences studies of economics at Leibniz University Hannover, Germany

2008: Writes diploma thesis on hedge funds and sustainability

2008: Joins Volkswagen Group as IR officer

November 2010-January 2011: Seconded to Volkswagen Group China

February 2012: Takes up role of investor relations manager at Volkswagen Group China