"Italian Design Icons of China' - Casappa SpA
This article was originally published in Italian in Panorama on 1st February 2024.
Please note that this is a courtesy translation of the Italian language article originally published in the Panorama Magazine Issue at: https://www.panorama.it/economia/italian-design-icons-of-china-casappa-spa
We continue our journey among the “Italian Icons of China”, and today's featured Icon is Casappa Spa. Founded in Parma in 1952 by Roberto Casappa, the company has since attained a global presence, boasting offices in Europe, the United States, China, India, South Korea, and Brazil.
Starting from a small workshop where the founder, Renato Casappa’s father - currently the President of the Company - engineered the inaugural straightforward hydraulic pumps employed in American vehicles in the aftermath of the First World War, he and successive generations, who continue to steer the company to this day, have steadfastly invested in innovation and research. This unwavering commitment has propelled Casappa into its current status as a global leader in the construction of pumps and motors, as well as hydraulic circuits.
Paolo Ceriati serves as the Managing Director of the Casappa Group, embarking on his professional journey with the company in 2005. Throughout the years, he has assumed diverse roles within the Quality, Production, and Operations departments, progressively shouldering greater responsibilities. Possessing a degree in mechanical engineering from the University of Parma, his robust technical proficiency and unwavering daily commitment to his profession have been instrumental. Actively involved in shaping and fortifying the international presence of the Casappa Group, he has also held key positions within the company's foreign subsidiaries.
We express our gratitude to Mr. Ceriati for his willingness to participate in our interview, and we are pleased to share his insights with our readers.
Q: Could you provide us with further insights into Casappa, concentrating on the sector you operate in and its presence in the Asian market?
Established by Roberto Casappa over seventy years ago, Casappa is a multinational company that has remained entirely under the ownership of the Casappa family, now in its third generation.
The company designs and manufactures the main components of the hydraulic system (gear pumps and motors with aluminum or cast-iron bodies, flow dividers, variable displacement axial piston pumps, electronic controls, filters) for applications in construction, industrial vehicles, goods handling, agriculture, mining and industry.
Beyond the conventional solutions showcased in the catalog, Casappa engages also in the development of tailor-made projects through close collaboration with clients worldwide.
Casappa's distinctive strength lies in its proactive approach to the global market, manifested through the establishment of new branches worldwide. Reflecting on Casappa's history in the Asian market, the Shanghai branch has yielded positive outcomes and satisfaction by aligning itself with the substantial growth witnessed in China during the initial two decades of the century. The company aspires for the Indian production branch in Bangalore, inaugurated in 2022, to replicate the trajectory of growth and success witnessed in China. This entails capitalizing on local opportunities presented by the forthcoming economic cycle, comprehensively exploring one of the most strategic markets for Casappa. The objective is to stay intimately connected with customers in the Asian sphere through a cutting-edge logistics and production hub, thereby reinforcing Casappa's position as a key player in the region.
Q: For how many years has Casappa been operating in China? What prompted the company to specifically focus on this market?
Casappa Hydraulics Shanghai was established in 2007 within the Pudong industrial district, a deliberate choice driven by the unique economic and social landscape, as well as the presence of top-tier production and logistical infrastructure. The facility, spanning approximately 6,000 square meters and leveraging over fifty years of expertise, encompasses mechanical machining, assembly, testing, painting, pre- and after-sales services, facilitated by a locally supported and trained workforce.
Initially, Casappa's decision to invest in the Chinese market stemmed from external factors, including the desire to accompany key European clients in their internationalization endeavors, the thriving infrastructure and construction sector, the scarcity of local competitors, and the evident cost-effectiveness of production resources.
Over the course of the past 16 years, China's economy has undergone sustained and rapid development. Establishing a foothold in the Chinese market has now become an imperative for numerous medium to large multinational manufacturing entities, including Casappa. Consequently, in November 2022, Casappa approved the expansion of Casappa Hydraulics Shanghai, envisaging a 30% increase in its footprint through the leasing of three new facilities adjacent to the existing ones. This expansion is strategically designed to fortify Casappa's presence not only within China but across the broader Asian region, facilitated by an innovative logistics and production hub. The rationale behind this expansion is rooted in the recognition that China should no longer be perceived solely as a destination market but, more importantly, as a pivotal development market on a global scale.
Q: Concerning the design and manufacturing of hydraulic systems, what distinct challenges do companies in your sector encounter in the Chinese market?
The Chinese market has always been characterized by great opportunities and just as many challenges. As the economic and technological environment has evolved, the competitive arena and market conditions have also changed significantly compared to the past. In recent years, the Chinese business environment has undergone a notable shift, placing an increasing emphasis on the development of innovative and highly competitive solutions, particularly achieving significant strides in mid- to high-end products.
This has prompted multinational companies such as Casappa to accelerate the process of progressive localization of the entire organizational value chain in order to rapidly develop competitive products and customized solutions, pursuing a synergetic and proactive collaboration with local and international customers.
Today, Casappa Shanghai is home to the main organizational functions of Sales, Marketing, Design, Application and Operations, all driven by the same passion that has distinguished the Casappa Group since its inception and characterized by the constant collaboration between our local staff and that of the parent company in Italy. The shared vision of aspiring to play a leading role in this strategic market has allowed Casappa Shanghai to become over time the Casappa Group's regional manufacturing, design and business development hub in Asia.
Q: In relation to last year's IDI theme, what role do new technologies play in the overall design of your company's projects?
Casappa has consistently endeavored to discern the primary technological trends to foster the development of innovative products aligning with the burgeoning demands of the market. Recently, our Chief Technology Officer (CTO) has delineated and identified the technological trends that presently propel the evolution of our business sectors. These trends can be identified as:
· Digitalisation: to measure, to control, to communicate.
· Noise reduction: to reduce noise emission for the operator and the environment.
· Energy saving and low emissions: to reduce fuel consumption or make the type of fuel used in internal combustion engines more sustainable.
· Electrification: reducing or eliminating the internal combustion energy source to reduce emissions.
· Increasing productivity and power density: increasing available power relative to mass, volume or cost.
Among these, Digitalization and Electrification stand out as having the most significant impact, both of which strongly characterize the Chinese market. Consequently, China has emerged as a strategic target market for our most innovative and digitized solutions. Specifically, the recent environmental protection policies implemented by local and central governments, aimed at reducing atmospheric emissions from construction machinery, have provided an opportunity to promote Casappa's cutting-edge solutions in terms of efficiency and digital control of hydraulic power. This has yielded notable and acknowledged advantages in terms of energy savings.
In essence, the challenge we have undertaken is to create a future-oriented product portfolio by seamlessly integrating hydraulic components with electronics. Our focus extends beyond individual components to encompass the entire system. This strategic approach positions Casappa competitively in a world that is undergoing rapid evolution.
Q: In China, as well as globally, the emergence of AI-generated content has exploded in recent years. Has this new normal influenced your company and the way you approach projects?
Artificial Intelligence is a topic that everyone is talking about and is set to revolutionize our lives, not just our companies.
Casappa's challenge is to leverage the potential offered by Machine Learning and Data Analytics to expedite and enhance the reliability of our problem-solving capabilities.
Consider, for instance, natural language querying of data, early detection of market trends, and the processing of large and heterogeneous datasets.
However, AI should not be seen as a substitute for humans, but as a facilitator that allows humans to invest their time in activities with greater added value for the company.
Q: Considering the global drive towards carbon neutrality, what initiatives does your company/sector plan to implement to improve sustainability?
Greenhouse gas emissions stand as one of the principal contributors to climate change. The reduction of these emissions has become an essential sustainability performance objective for companies, demonstrating their commitment to mitigating their climate footprint by opting for climate neutral practices.
With this perspective in mind, Casappa Italia has implemented numerous energy efficiency measures from 2021 to the present, orchestrated by the Facility department. These initiatives have culminated in a notable 2% reduction in energy consumption in 2022 compared to 2021.
In 2024, construction of solar panel roofing for a section of the employee car park will also be undertaken.
The project will generate an annual electricity production capacity of 390,000 kWh, 100% of which will be used for self-consumption and will allow a reduction of approximately 111,000 kg of CO2 per year.
The Shanghai subsidiary has embarked on the same journey of Corporate Sustainability and emissions reduction. In 2022, a solar panel roofing project was successfully implemented for a section of the plant. This initiative boasts an annual electricity production capacity of 587,000 kWh, entirely dedicated to self-consumption. Consequently, it enables a substantial reduction of approximately 612.86 tons of CO2 emissions per year.
All these actions, which are part of a Corporate Sustainability pathway that does not only concern emissions, but also various related issues (D&I, Water Management, Waste, Land), are crafted with the earnest intent of the Corporate Board, which underscores the importance for each individual within the organization to act responsibly, aiming to diminish the impact of our actions on the environment and champion sustainable development.
Q: What advice do you feel compelled to share with managers or investors contemplating investment in Asia?
The Asian world is presently navigating through distinctly varied circumstances.
India will increasingly be an area of interest for international investors and an important growth engine in Asia.
India's economic policy has aligned with the modernization of its production system, incorporating tax benefits and incentive schemes with the ultimate aim of transforming India into one of the world's leading manufacturing hubs.
China, on the other hand, now faces several challenges: trade tensions especially with the US, imbalances in the real estate market, the potential repercussions on the financial market, and other brakes on the economy. Having said that, the economic fundamentals remain robust, and the significant opportunity for managers and entrepreneurs lies in understanding the extent and direction to which the current Chinese economic model could undergo transformation.
What emerges is that the two countries in the long run will certainly have different positions to face with equally different strategies.
Finally, South-East Asia is just starting to assert itself on the world stage, with balances between individual countries still requiring understanding and analysis. Investors or managers will need to carefully consider this “patchy” situation, determining whether to channel their energies and resources into a single country or diversify across various realities.
In all cases, however, it will be inevitable to confront strong cultural, institutional, and social differences. To navigate these, a shift in the business mindset is necessary, involving the elimination of preconceptions and prejudices.
Indeed, those who are determined to pursue the enormous Asian opportunities will have to be able to understand the local historical, social and cultural macro-scenario in order to develop context-specific strategic competencies and build a sustainable, long-term competitive advantage for their realities.
The interview with our Icon provided a comprehensive understanding of the company's expansion and progression in the global hydraulic systems market. Casappa demonstrated its leadership in addressing cultural challenges and integrating advanced technologies, with a growing emphasis on environmental sustainability. This commitment extends beyond China, encompassing other nations where the company has a presence, including the USA, India, and South Korea.
The commitment to electrification and energy efficiency emerges as a pivotal priority for the future, underscoring the significance of innovative hydraulic products tailored to the requirements of the Chinese market, driving towards a sustainable future.
In our series dedicated to Italian companies in China, we will continue to share with our readers the experiences and insights of the main Italian companies in the market.
Edited by: Lawyer Carlo Diego D'Andrea, Vice President of the European Union Chamber of Commerce in China
