810-068158-015Hu Chengzhong is blazing a new trail for his 40-year-old Delixi Group, which has annual revenue of more than 70 billion yuan. Compared with his long-term deep cultivation and fierce competition in the domestic low-voltage electrical appliance market, the temptation and trap of going to sea are significantly amplified, and the sense of smell and vigilance are indispensable.
Hu Chengzhong is both excited and cautious about it. “Where there is a market, consider where to go. From global sales of manufacturing to global production, this is the need to adapt to the new pattern of economic development, but also a win-win situation for many parties.” In a recent interview, he told the Surging news that Delixi’s overseas business growth in recent years has been more than 30%, and it is increasing its globalization layout, and the proportion of overseas business will increase year by year. “The market space is relatively large, the demand is strong, and the reputation and high cost performance of made in China are the biggest advantages.” But the challenges are also multifaceted, including geopolitical, regulatory, and regime change. What has stood out in recent years is the increased uncertainty about the regulatory approval rules for investment reviews in their home countries.”
Target along the Belt and Road
Hu Chengzhong and Delisi at the helm are all too familiar with Red Sea rivalries and prominent encirclement.
With the leap-forward development of China’s power industry, state-owned, privately810-068158-015 funded and foreign-funded enterprises have been divided into three parts in the high-speed growth of low-voltage electrical appliances market, and private enterprises born from small workshops in the family have to bear the market from large enterprises, but also have to prevent the influx of foreign capital to the market encroachment and merger. In the bitter battle, Delxi and other private enterprises grew rapidly, accumulated the right to speak in the market step by step under the competitive pattern of “suffering from the enemy”, and left behind a large number of state-owned and foreign competitors.
Nowadays, Schneider Electric, Delisi, Chint in China’s low-voltage electrical appliance market in the foreign capital, joint venture, domestic three runway, respectively, the “three-pillar” market pattern has been difficult to shake. On the basis of the main electrical business, Delixi has also extended its business tentacles to military electronics, intelligent ammunition, semiconductors, lithium battery precision cutting mold and other fields.
A new round of manufacturing “going out” is on the horizon. Hu Chengzhong admitted that in recent years, the main pressure facing Delixi is the downturn in domestic market demand, especially the drag brought by the downturn in real estate and other industries. In addition to strengthening research and development and sales advantages to seize the domestic market, firmly go out and vigorously expand the emerging markets along the “Belt and Road” has become an inevitable option.
“Our ‘going to sea’ is not for the sake of going out, it must follow the market and follow the demand.” Hu Chen810-068158-015gzhong told the Surging news bluntly, Delixi does not want to set too specific timetable and growth indicators for this, “the general direction is certain, the road is still to take a step by step, cautious as well.” From the perspective of the direction of the sea, Delixi aims at the countries along the “Belt and Road”, “like the Middle East, Brazil, Southeast Asia and other places, are relatively good market prospects.”
In different business, the mode of going to sea is different. Hu Chengzhong said that in terms of the main electrical business, Delixi generally works with local excellent enterprises or teams, has an agent model, and exports products; In some areas with a better business environment, greater market demand and better resource support, joint ventures with local enterprises will also be established to produce and sell nearby.
Expanding market space through partnerships with local enterprises is also the successful experience of French electric giant Schneider Electric in the Chinese market and Delixi’s “marriage”.
In December 2006, the two sides signed a joint venture framework agreement to set up “Delixi Electric Co., LTD.” with an equal contribution of 50:50. For a time, Hu Chengzhong was pushed to the forefront of the storm, and questions were constantly heard. Some people “predict” that the “first joint venture, after loss, and then control” road will be staged in Delixi, and the domestic brands that have begun to take shape are afraid of being hidden by foreign capital and shrinking. But looking back, in the 17 years since the joint venture was established, annual sales have increased more than tenfold, while helping to expand the development of both companies.
At present, the price advantage of Chinese manufacturing is the concentrated embodiment of strong manufacturing capacity under full market competition. Hu Chengzhong believes that for emerging markets, domestic electrical brands are cheap and good quality, and the market acceptance is higher; For the European and American markets, can export higher value-added products.
Delixi’s Desin Technology (603032.SH) faces the huge lithium battery industry chain out of the sea. Japan and South Korea mold factories have long occupied the main share of the lithium battery electrode cutting mold market, but in recent years, the trend of domestic import substitution has strengthened, and the market share of Desxin Technology has increased. Hu Chengzhong said that for such businesses that provide supporting services to other enterprises, “that is, where the customers go and there is need for us, we will go accordingly.
