Literature | Geng Kangqi, a Chinese businessman's strategy
In Forbes China's Best CEO in China in the last three years, only three CEOs have succeeded in Lianzhuang based on stable comprehensive scores. Two of them are Wang Chuanfu, chairman of BYD, Zeng Yuqun, chairman of Ningde Times, and the other is Zhu Xingming, chairman of Huichuan Technology.
Since April, new energy vehicles have become more popular. With a lock sheet exceeding 100000 yuan, Xiaomi Auto is also at its peak.
However, there are many people who are popular. Lei Jun said at the press conference that he had developed a super motor to refresh the ceiling of the industry, which was questioned by netizens, "Xiaomi is going to redefine its own research, isn't it a branded product?"
When there was no argument, a company named Huichuan Technology came forward: "Xiaomi Super Motor V6s was jointly developed by Huichuan and Xiaomi, but Xiaomi Super Motor V8s was all self-developed by Xiaomi".
In a word, it proves that Xiaomi has also made Huichuan Technology, a company that has always been hidden behind the scenes, come to the front in a rare way.
New energy vehicles have always had the "big three electricity" theory of power battery, motor and electronic control, which accounts for more than half of the cost of the whole vehicle, and the level of technology is directly related to the quality of car building, which is also the most intense field of competition between domestic enterprises and foreign brands.
However, Huichuan United Power, which was established by Huichuan Technology in 2016, has achieved great success in the field of "big three electricity" in just a few years.
In addition to the motor and electric drive system, it is deeply bound to new energy automobile giants such as GAC Ai'an, Xiaomi Automobile, Ideal, and Xiaopeng; In the electric control market, according to the statistics of NE Times, Huichuan United Power will overtake Tesla and BYD with 848000 shipments and 10.2% market share in 2023, ranking second among domestic electric control enterprises and first among third-party suppliers.
With its leading power, the revenue of Huichuan Technology's new energy sector also increased sharply from 10 million yuan in 2010 to about 9.4 billion yuan in 2023, accounting for about one-third of its total revenue in 2023.
This invisible champion with a market value of more than 160 billion has not only become a leading enterprise in China's industrial control industry, but also has the reputation of "small Huawei" in the industrial control industry.
The founding team of Huichuan Technology, which was founded in 2003, is the pure Huawei Legion. 16 of the 19 sponsors have Huawei background; Among the nine board members, there are four former Huawei employees. Zhu Xingming, the founder, served as Huawei's product director.
China's world manufacturing power is supported by numerous industrial production lines, each of which has a "brain" behind it, and many core parts such as "arms" and "legs" are supporting it.
Huichuan is a core supplier of "brain", "arm" and "leg" for the production line. Its servo system, low-voltage frequency converter, medium and high-voltage frequency converter, motor and other general automation products developed, produced and sold span elevator, textile, 3C manufacturing, photovoltaic, new energy vehicles and many other industries, beating Siemens, Mitsubishi and other foreign giants to become the domestic king.
Huichuan is also behind such "super projects" as the world's first 16MW high-power wind turbine and CNPC's 10000 meter deep Chuanke 1 Well, which are listed as the "Top Ten Power in 2022" by the SASAC.
What is more enviable is Huichuan's amazing performance.
Since its listing in 2010, the compound rate of revenue and profit growth of Huichuan Technology has exceeded 50%, far exceeding that of listed companies in the same industry. In 2023, Huichuan's revenue will reach 30.42 billion yuan, up 32.21% year on year; The net profit reached 4.071 billion yuan, up 20.12% year on year.
According to the data of Oriental Fortune Choice, in 2023 alone, the total number of Huichuan's reception institutions will reach 3099 times, which can be called the A-share star enterprise most concerned.
It is not easy to become bigger and stronger in a professional field. However, from frequency converter to general automation, to new energy and rail transit, every diversified expansion and cross-border of Huichuan has become a top expert in the industry, and each step can follow the tide and take the lead.
In 2001, Huawei suffered double failures in CDMA and PHS services. Ren Zhengfei published Huawei's Winter to transfer and divest non core businesses as a survival strategy to survive the cold winter.
Zhu Xingming, who joined Huawei less than four years ago, was also sold to Emerson along with his wholly-owned subsidiary, Ansheng Electric, and packed up and left. However, the foreign capital is generous, and the M&A cost was 750 million dollars, and Ansheng executives also received millions of compensation.
However, many of the men of Huawei Science and Technology who have left as a result are not very interested in being executives of the top 500 multinational companies. After saying goodbye to Huawei, they left one after another to start their own businesses, becoming the famous "Huawei Emerson" in the A-share listed companies.
Zhu Xingming is a typical example. He not only doesn't want to be a senior manager of foreign capital, but also wants to fight with foreign capital.
At that time, one of Ansheng's businesses was the inverter market widely used in textile machinery, metallurgy, oil and gas industries, but for a long time, this market was dominated by Japanese brands such as Fuji and Mitsubishi, and European and American brands such as ABB and Siemens.
Zhu Xingming refused to accept this tone, determined to change the reality, and came up with a strategy of differentiated competition at the beginning.
He once said, for example, "Westerners think like their diet culture. Bread, meat and desserts are standardized modules. In industrial products, each component is also built into a standardized module, which is paid one by one. High flexibility means high costs."
However, in China, "Chinese people want to mix and cook various ingredients before packaging and selling them; in terms of products, Chinese people also like to talk about the whole, preferring 'buy one get one free' and 'quality improvement without price increase'."
Huichuan's product strategy is clear. "Can we combine the western advanced industrial production mode with the low-cost solutions preferred by China to form a mode integrating flexibility and low-cost?"
Then, Huichuan Technology gave birth to a solution based on "special plane" - a "non-standard mode" product integrating control and drive based on general and modular products and specific needs of specific industries.
Zhu Xingming also has his own insight into the industry leading the advanced army.
In May 2002, the "bidding, auction and listing system" of land was officially introduced, and China's real estate industry became hot. Many high-rise buildings have sprung up, but the domestic elevator enterprises doing supporting work are all engaged in the assembly of spare parts.
Zhu Xingming found an opportunity to show his skills. "The elevator industry cannot be broken, and Huichuan must be broken first before it can be established! We should be sword casting masters who can tailor magic weapons and sharp weapons for all swordsmen."
Therefore, Huichuan introduced the elevator integrated controller from the vector frequency conversion. This integrated scheme greatly simplifies the commissioning work and reduces the on-site installation period of equipment by half, which just precisely solves the customer's pain points, and the result is a hit.
By 2008, Huichuan Elevator integrated controller business has ranked first among domestic brands. In 2010, Huichuan was listed on the GEM of Shenzhen Stock Exchange. The prospectus shows that the gross profit rate of the integrated products sold to elevator equipment manufacturers is as high as 64.6%, which shows its kingship.
However, Zhu Xingming was somewhat depressed. Since 2006, he has proposed that "the days of industrial automation are changing, and the single inverter business is difficult to develop in the future. Servo system is the core product of future automation."
However, after Huichuan developed the servo in 2009, the promotion was very poor. Basically, 10 servo systems were taken out for field test and 7 servo systems could be returned.
After the listing of the company, Zhu Xingming began to make another dash for the servo system. "If the first-class experts can't do it, then find the world-class experts." He went to Europe to find the international top experts, and finally made servo products that are close to or even better than the international top experts.
Moreover, after this battle, Huichuan has also formed three magic weapons to develop itself:
International experts+domestic experts+domestic supply chain.
Since then, Huichuan has copied the experience and mode of elevator industry to textile, air compressor and other industries, constantly realizing the substitution of domestic imports, and constantly pushing China's industrial control to new heights.
Zhu Xingming said that in order to survive, start-ups should adhere to the common sense of fighting big with small. Once the survival stage is over, enterprises should think about another way, which is called "fighting big with big".
In 2016, Huichuan, which has exceeded the market value of more than 30 billion yuan, began to strive for greater success and boldly crossed into the field of new energy electronic control. Even if the company fell to a double low point of profit and share price due to continuous investment in 2019, Zhu Xingming also stuck to his goal:
"As long as Huichuan is not ST, it will definitely carry out the automobile business to the end!"
Behind such obstinacy is Zhu Xingming's clear vision of how Huichuan can become a large company: only large industries can create large enterprises. The automobile is a trillion level market, and the new energy automobile is a historical opportunity. Huichuan must make every effort to seize it.
More importantly, "the automobile business is not only a key step for Huichuan to achieve the goal of" striving for greater success with greater efforts ", but also an important test field for us, and a sign of the growth and maturity of Huichuan's capabilities."
It is precisely because it has shouldered the market and capital pressure and continued to deploy new energy electronic control with high R&D investment that Huichuan has cultivated a new growth pole and continues to gain greater returns with the wave of new energy.
If Huichuan is a "small Huawei", Zhu Xingming can be said to mean a little "Ren Zhengfei".
Like Ren Zhengfei, he is thoughtful and insightful about industrial economy, scientific and technological innovation, and enterprise operation and development. He is also a passionate preacher within the company. Ren Zhengfei likes to publish articles and speeches in the company, as does Zhu Xingming.
On December 23, 2023, at the 20th anniversary celebration of Huichuan Technology, he made an "epic review" of the 20-year development of Huichuan with a long text of more than 20000 words, from enterprise experience and lessons to strategic transformation, organizational talent training, to entrepreneurship and corporate culture.
The difference is that Zhu Xingming is also relatively keen to participate in external activities, and even share and preach. He is the president of Shenzhen Huarong Chamber of Commerce, and was invited to be a lecturer to share with you the details of enterprise operation without reservation.
He learned western strategic and management thoughts hungrily and worshipped Wang Yangming and Inamori. However, Huawei and Ren Zhengfei are the most admired teachers.
"President Ren often teaches us that Huawei is to build a management system that does not rely on life. In local language, it is an 'iron fist and flowing army'. Any company can make distinctive contributions and achievements by relying on the system."
Therefore, Huawei uses a piece of paper to explain clearly the methodology of "one finger Zen" for an enterprise, product, etc. Huichuan has "one strategy", that is, from strategy, organization to business and talent selection, it follows the logic of "entropy reduction", which is simplified and unified step by step, and builds its own management system.
The benefits of systematization are first standards, norms, and then efficiency. For example, Huawei orders around the world from information to production lines only take 17 minutes. Huichuan used to take 48 hours, but now it can take more than one hour.
In order to keep his management and thoughts up to date, Zhu Xingming has also kept two habits for a long time: meeting the experts and managing major issues.
He said that he must meet 8 outstanding entrepreneurs every month. Not to make orders, but to learn about industry and enterprise trends from customers and learn the pattern of China's high-end entrepreneurs. This is like the "two antennas" overhead, which determine the direction of Huichuan's reform.
Zhu Xingming also found that the fate of Huichuan always resonates with the GDP curve, the transformation of population and energy structure and other factors of the times, and is more closely related to real estate policy, dual carbon strategy and other major events.
Therefore, whenever a major event occurs, he will write an article to study the impact on the operation of Huichuan. In addition, Huichuan has formed a set of thinking methods of "five looks and three fixations" from looking at customers to looking at the macro level. The five looks include looking at industry, market, customers, competition, and yourself, and then output strategic opportunities; "Three fixations" refer to the determination of strategic control points, objectives and strategies.
Huichuan has always been able to follow the industry tide, and even not waste "crisis", to a large extent, thanks to "managing major issues".
When the financial crisis broke out in 2008, Zhu Xingming boldly proposed: increase research and development, increase market expansion; During the Asian financial crisis in 2012, Huichuan adopted reverse operation. The resulting benefits are five to ten times higher than usual.
Under the epidemic crisis, Huichuan has doubled its performance in three years with the 18 word policy of "reducing costs, ensuring performance, strengthening supply, seizing opportunities, practicing internal skills and looking forward to the future".
Zhu Xingming, who believes in the system, also believes in heroes. He believes that the system can only solve 90% of the problems. The company must have a group of "paranoia" who dare to pierce the sky and ground to optimize and change the system.
"If a company is not paranoid, it will not succeed."
Huawei has a legendary "wolf culture", while Huichuan emphasizes the "paranoid spirit". Once an industry is selected, it will "smash" and persevere. One year, two years, five years, eight years, until the completion.
Of course, Zhu Xingming was not always smooth. At the initial stage of the company, he was faced with the challenge of backbone leaving. Behind his decision to enter new energy vehicles in 2016, he also made a strategic blunder to abandon the PV inverter, which is the second largest in the industry.
But he was frank and frank in the face of these things, and even had a gift attitude towards disasters.
"1% of a person's awakening depends on others' reminding, and 99% depends on countless cuts."
This is a sentence by Kazuo Inamori, which Zhu Xingming regards as a motto for facing difficulties.
[1] The 20th Anniversary Keynote Speech of Huichuan Technology: The Way to Breakthrough - Times, Values and Humanities
[2] From Slave to General: Three Wars of Industrial Control "Little Huawei"
[3] Zhu Xingming: Entrepreneurs need to change three lives Shenzhen Huarong Chamber of Commerce
