The document summarizes Dürr AG's strategy in China. It discusses how Dürr has established a strong local presence in China over 25 years, with wholly owned subsidiaries and over 1,250 employees. Dürr's business in China has grown significantly, and China is now Dürr's largest market. The strategy involves extensive localization through local R&D, production, purchasing, and management. This allows Dürr to offer competitive solutions tailored to China while expanding exports to other markets. Further localization and integration into global operations will strengthen Dürr's position in China and Asia-Pacific.

1. WELCOME
ANALYSTS‘ TRIP
DÜRR IN CHINA
Ralf W. Dieter, CEO Dürr AG
Shanghai, October 8, 2012
www.durr.com

2. CONTINUED STRONG EMERGING MARKETS
GROWTH EXPECTED
China, India, Russia, Thailand & Indonesia with expected growth >10%
Light vehicle production increase by 27 m units over 5 years!
101.8 CAGR in %
97.5
in m units 92.5
86.0
110 79.6 2,9 3.0
100 74.6 2,8
2,7
90 2,6
2,4 25,9 11.1
80 2,5 24,4
22,2
70 19,5
16,9
15,3
60 24,9 25,7 5.6
23,0 24,2
50 19,6 21,7
40
21,9 22,7 23,6 3.5
30 19,9 19,3 20,5
20
10 17,3 19,3 20,4 21,5 22,7 23,7 6.5
0
2011 2012 2013 2014 2015 2016
source: own estimates, PwC
America Europe Asia (without China) China other last update: July 2012
© Dürr AG, CCI, Dürr in China, October 8, 2012 2

3. CHINA: DÜRR‘S BIGGEST MARKET
Incoming orders Incoming orders Sales revenues
Q3 2011-Q2 2012 Q3 2011-Q2 2012 Q3 2011-Q2 2012
(Q3 2010-Q2 2011) (Q3 2010-Q2 2011) (Q3 2010-Q2 2011)
15% 12%
(14%) (19%)
29% 31%
Mature Emerging (30%) (26%)
markets markets
24%
25% (26%)
41% 59%
(43%) (57%) 7% (24%)
8%
(10%)
(10%)
24% 25%
(22%) (19%)
■ Germany
■ Europe without Germany, incl. Eastern Europe
■ North and South America
Regional business split will remain largely ■ Asia (without China), Afrika, Australia
unchanged in future ■ China
© Dürr AG, CCI, Dürr in China, October 8, 2012 3

4. DÜRR IN CHINA: ESTABLISHED FOR MORE
THAN 25 YEARS
since 1985 since 1991 since 2003
Dürr Paintshop Systems Engineering Schenck Shanghai Machinery Dürr Ecoclean China
new production plant new common facility
operational since 2012 in 2013
Shanghai: Doubling of capacities to around 67,000 m2 until 2013
Comparison: Dürr headquarters in Bietigheim-Bissingen 70,000 m2
Wholly owned subsidaries (100%)
© Dürr AG, CCI, Dürr in China, October 8, 2012 4

5. CHINA: STRONG INCREASE IN BUSINESS
VOLUME OVER THE LAST 7 YEARS
CAGR
2005 … 2012 (e)
in %
Incoming orders (in € m) 146 900 30
Sales revenues (in € m) 83 700 36
Employees (12/31) 271 1,250 1 25
Orders on hand (in € m) 119 1,050 37
¹ plus external workers (~400)
© Dürr AG, CCI, Dürr in China, October 8, 2012 5

6. STRONG RELATIONS WITH ALL CHINESE
AND FOREIGN OEMS
© Dürr AG, CCI, Dürr in China, October 8, 2012 6

7. DÜRR‘S BUSINESS STRATEGY IN CHINA
Cost leadership, localization and innovation
Expansion of local added value („Local Content“): >75%
Import: only core products, e. g. robots
Increase local capacities and competencies: in the midterm: >1,500 employees,
Chinese executives in the 2nd management level
Positioning as „Chinese Player”: strong local presence, less expatriates, more well trained local staff
Become centre of Dürr’s business in the Asia-Pacific region, close collaboration with
Dürr in Germany
Product Strategy
develop products for China: automation, handling, high quality
„First Mover” regarding reduction of energy saving and cost per unit
Future opportunities
paint and balancing technologies: grow with the market, maintain share
environmental, cleaning, filling and testing technologies: gain market share, localize design and
value-added
© Dürr AG, CCI, Dürr in China, October 8, 2012 7

8. BENEFITS OF LOCALIZATION IN CHINA
Import and localization (since 1985)
Customer proximity and development of know-how among local employees
Competitive advantages in terms of labor, purchasing, transport costs etc.
Basis for improving our competitiveness against local suppliers
Less reliance on external factors such as currency, import regulations etc.
Fulfillment of local content requirements of the automobile industry
Image synthesis: German quality supplier and Chinese player (‘buy local’ argument)
Product development geared towards Chinese market requirements
Local service network and local project execution with high level of customer satisfaction
Next phase (since 2009)
Focus on China as export location
International use of local engineering and design
Export from China in addition to import and localization
© Dürr AG, CCI, Dürr in China, October 8, 2012 8

9. PHASES OF LOCALIZATION
Four phases according to Edward Tse (‘The China Strategy’, 2010)
Phase 1
Product
early/mid R&D Purchasing Production Marketing Sales Service
dev.
1990s
Phase 2
Product
mid/late R&D Purchasing Production Marketing Sales Service
dev.
1990s
Phase 3 R&D
Product
Purchasing Production Marketing Sales Service
early 2000 dev.
Phase 4
Product
now until R&D Purchasing Production Marketing Sales Service
dev.
approx. 2020
Dürr has achieved the highest level of localization
Current challenge: Greater focus on the role as global integrator and integration of
Chinese activities into the global network
© Dürr AG, CCI, Dürr in China, October 8, 2012 9

10. LIMITS OF LOCALIZATION
Customer requirements: Request for imports (quality, western standards)
Reputation as high-quality German company: Involvement of German employees necessary
Socio-economic changes in China:
Decrease in labor supply: One-child policy, migrant workers less willing to travel
New politics: Government calls for “end of cheap labor” and “social justice”, wages expected to
rise faster
Increasing shift of mass production: From Beijing, Pearl River and Yangtze Delta to western
provinces (e.g. Sichuan) and to more cost-effective ASEAN neighboring countries (e.g. Indonesia,
Vietnam)
Prevention of loss of know-how and intellectual property:
Import of high-tech products (e.g. painting robots)
Allocation strategy when awarding manufacturing contracts
R&D center in Germany
© Dürr AG, CCI, Dürr in China, October 8, 2012 10

11. SUCCESS FACTOR LOCAL DESIGN
Example: Schenck balancing machines
Chinese product development, also for export to emerging markets
Early presence in China has paid off
Continuous learning curve
Today: Independent development and production
of small and mid-sized balancing machines
Products suitable for the requirements of
emerging markets
Significantly lower costs / higher margins
Product development and production in Shanghai
Schenck headquarters in Germany
Group-wide R&D coordination
Quality inspection
Development of export business
Asia-Pacific region, but also US/Europe for standard machines
© Dürr AG, CCI, Dürr in China, October 8, 2012 11

12. SUCCESS FACTOR ORDER EXECUTION
Example: Paint shop for Changan Ford, Chongqing
Dürr Mexico
Dürr China Basic + Detail Engineering
Detail Engineering
Dürr Korea
Production
Basic + Detail Engineering
Site Management
Commissioning
Assembly
Commissioning
Dürr Germany Dürr India
Project Management Detail Engineering
Global Sourcing
Basic Engineering
Lead Engineering Standardized ERP system
ERP / CAX Standardised CAX interfaces
Systems projects in emerging markets have up to 75% local content
© Dürr AG, CCI, Dürr in China, October 8, 2012 12

13. SUCCESS FACTOR LOCAL SOURCING
Example: Dürr purchasing organization
International Purchasing Local Purchasing China
Center (Germany) (approx. 30 employees)
Operational support Processing
Structural development support Contacts
Tools + qualification Acquisition
Coordination/pooling Monitoring/quality assurance
50% international presence
Current challenges
Covering large project volume
Building supplier structure in new regions (e.g. Chengdu, Gouangzhou)
Further development of export business
© Dürr AG, CCI, Dürr in China, October 8, 2012 13

14. SUCCESS FACTOR IT INTEGRATION
Standardized IT tools support localization
Enterprise Resource Planning (ERP)
CAX
Management Reporting/Consolidation
Dürr Projects
etc.
Dürr investment > € 20 m
(2006-2009)
Benefits
Fast data exchange
Transparency of information across the Group
International project execution and capacity management
© Dürr AG, CCI, Dürr in China, October 8, 2012 14

15. SUCCESS FACTOR HUMAN RESOURCES
HR challenges in China
Recruitment of well qualified employees
Retention of experienced employees
Minimizing attrition
Strong brand, market
leading image
Delegation,
Remuneration
independence
Loyalty + employee
retention
Corporate
Appreciation
community culture
Prospects, career
opportunities
© Dürr AG, CCI, Dürr in China, October 8, 2012 15

16. SUMMARY: STRONG LOCAL POSITION
Early penetration of Chinese market has resulted in a major competitive advantage
Up to 100% localization possible (depending on customer), 50 to 75% on average
Hub for Asia-Pacific business, increasingly as export base for global business
Strategy
Further development of localization (quantitative and qualitative)
Further integration into global value-added structure (export from China)
Development of “Chinese products” for the global market: automation, operation, quality
Leadership in terms of investment, operating and energy costs (total cost of ownership)
© Dürr AG, CCI, Dürr in China, October 8, 2012 16

17. ANALYSTS‘ TRIP
DÜRR IN CHINA
Ralf W. Dieter, CEO Dürr AG
Shanghai, October 8, 2012
www.durr.com