by the end of January 2022, there were 1.128 million market entities in Foshan. Although the “invisible champion” is “invisible”, it constitutes an important pole of regional industrial clusters and leads the transformation and upgrading of Foshan manufacturing in the fields of product quality, technological innovation and digital intelligence transformation
“Foshan relies on manufacturing industry to build a city and enrich the people. This is not only history, but also reality, but also the law of development. We must promote the manufacturing industry to the medium and high end as the basis for strengthening the city, promote the quality, efficiency and power reform of the manufacturing industry, and strive to be the leader of high-quality development of prefecture level cities.” ZHENG Ke, Secretary of Foshan municipal Party committee, said.
As an important manufacturing base in China, a number of excellent manufacturing enterprises have emerged in Foshan, including large leaders such as Midea, Haitian and Galanz, as well as hundreds of leaders in subdivided fields and backbone enterprises in key links of the industrial chain. In the 14th five year plan, Foshan put forward the goal of accelerating the transformation from a large manufacturing city to a strong manufacturing city. To give better play to the main role of enterprises, Foshan urgently needs to accurately identify and empower these “invisible champion” enterprises. By identifying the champion enterprises, Foshan will further promote industrial clusters to take a specialized and new development path.
In the investigation, the reporters of well-off magazine and China well-off.com found that Foshan has become the gathering place of “invisible champions”, not only because Foshan has the fertile land for development provided by many well-known large enterprises, but also the business owners who can keep up with difficulties, have a sense of hardship and Shanghai Dzh Limited(601519) and the indispensable benign interaction between the government and enterprises.
The relationship between government and enterprises
Entering the “14th five year plan”, Foshan has won three new positions: the pole city of Guangdong, Hong Kong and Macao Dawan District, the leader of high-quality development of prefecture level cities in the province, and the national manufacturing innovation center facing the world. As an important manufacturing base in China, in order to promote the transformation from a large manufacturing city to a strong manufacturing city, Foshan started the identification of “invisible champion” enterprises in the manufacturing industry in 2020.
Lu Yi, then Secretary of Foshan municipal Party committee, said that invisible champions and high-tech enterprises are the leaders in the majority of market players and the new force to promote high-quality development. All departments at all levels in the city should deeply understand the importance of invisible champions and high-tech enterprises to the overall situation of high-quality development, take the cultivation of invisible champions and large-scale high-tech enterprises as an important starting point for Foshan to implement the new development concept and promote high-quality development, make early decisions and win the initiative, and give birth to more invisible champions and high-tech enterprises under the guidance of the implementation of the “six projects” of high-quality development of manufacturing industry.
“German ‘Invisible Champion’ enterprises have been deeply cultivated, focused and professional in the market segments for many years, and through certain mechanisms, reduce the cost of innovation, R & D and technological transformation of individual enterprises, which is worthy of our learning and reference.” Infore Environment Technology Group Co.Ltd(000967) vice president and chief technology officer Zhang Bin said.
“Foshan’s small and medium-sized enterprises are overwhelming. We should fully stimulate their potential of ‘being able to do great things’, cultivate more champion enterprises with strong market position and high market share, and make them become the’ sharp knife corps’ brave and good at fighting on the battlefield of high-quality development in Foshan.” In June 2020, Lu Yi said at the conference on cultivating invisible champions of manufacturing industry and promoting the large-scale development of high-tech enterprises in Foshan that we should strive to stimulate the development vitality of small and medium-sized enterprises, build an invisible champion cluster of manufacturing industry with market voice and national influence, fully support the development of small and medium-sized enterprises towards “specialization and innovation”, improve innovation competitiveness, build a quality benchmark of “made in China”, and constantly explore markets outside China, especially the blue ocean market. “Build Foshan into an invisible manufacturing champion gathering highland”.
In 2021, Foshan held a symposium on “specialized, special and new” and “invisible champion” enterprises, released the list of 147 “invisible champion” enterprises in Foshan manufacturing industry in 2020 and the list of 326 “invisible champion” cultivation enterprises for the first time, and released the development report of invisible champion enterprises in Foshan in 2020.
The shortlisted enterprises are distributed in 13 industries such as equipment manufacturing, metal material processing and products, household appliances, etc. they have long focused on market segment innovation, product quality improvement and enterprise brand optimization. They are the backbone of Foshan manufacturing.
Foshan can become the gathering place of “invisible champions”, which is not naturally generated. Looking at the relevant policies of Foshan municipal Party committee, municipal government and all districts, it is not difficult to find that the continuous benign interaction between government and enterprises is an indispensable factor for the growth of Foshan “invisible champion” enterprises. The government attaches importance to and understands the private economy, and can formulate an economic development strategy that is both practical and forward-looking; “Invisible champion” enterprises can not only deeply understand and actively implement the government’s economic strategic intention, but also have the sense of “ownership” and never passively wait for the government’s “help”. This relationship between government and enterprises is an important factor for the rapid growth of “invisible champion” enterprises. The government’s good policies come out frequently, and enterprises respond positively, practice the economic development strategy of local governments, and actively participate in and promote regional cooperation.
The 147 enterprises announced this time represent the craftsmanship and excellent quality made in Foshan. Among the 147 enterprises, 128 have been operating in their respective sub sectors for more than 10 years, accounting for 87.07%, and have generally achieved the leading position in the whole industry in terms of product quality, customer satisfaction, product qualification rate and other indicators.
They are the forerunners of digital and intelligent transformation in Foshan. Among the 147 invisible champion enterprises, 61 enterprises have completed the construction and good use of the production management system (MES), 31 enterprises have completed the construction and good use, 9 enterprises have preliminarily tried out, and 3 enterprises have preliminarily completed the construction. In total, 70.75% of the enterprises have built the production management system. In the past three years, 119 enterprises have expanded their assets and upgraded their equipment at the same time.
They also lead the innovation frontier of Foshan’s manufacturing industry. In 2019, 147 “invisible champion” enterprises invested a total of 6.475 billion yuan in R & D, accounting for 16.19% of the R & D investment of the whole society in Foshan, including 22 enterprises with national licensing / recognized research institutions (laboratories, technology centers, etc.), 95 enterprises with provincial licensing / recognized research institutions, and 52 core R & D leaders with industry authority.
Through a comprehensive “physical examination”, 473 enterprises have obtained new guidelines for future development: the 2020 Foshan invisible champion enterprise development report puts forward several breakthrough suggestions for Foshan “specialized and new” group from the perspectives of market development, R & D innovation, production intelligent manufacturing, digital marketing and capital utilization, including expanding new market segments, strengthening the whole R & D system and improving enterprise innovation.
The identification action itself is an incentive to the “champion enterprise”, which makes the “champion enterprise” further clarify the future development direction.
“As a tob based enterprise, we were less concerned by the media in the past and received limited attention and other social resources. This recognition action is conducive to improving the popularity of enterprises and is a good encouragement and beneficial promotion for enterprises like us.” Said Deng Feizhou, general manager of Foshan Huigu Technology Co., Ltd.
Chen Lijian, vice chairman of Foshan Federation of industry and commerce, said that he hoped that the champion enterprises would continue to lead, and encouraged the majority of enterprises to benchmark the champion enterprises and continuously enhance their innovation ability and core competitiveness.
Smart enterprise “leader”
By the end of January 2022, there were 1.128 million market entities in Foshan. Although the “invisible champion” is “invisible”, it constitutes an important pole of regional industrial clusters and leads the transformation and upgrading of Foshan manufacturing in the fields of product quality, technological innovation and digital intelligence transformation.
Founded in 1996, huitailong has created and researched two product systems of whole house hardware and intelligent door lock, with more than 500 patents. It has passed the certification of intellectual property management system. It is a “national intellectual property demonstration enterprise” and adheres to bringing original and high-quality whole house hardware and intelligent door lock products to users. Huitailong adheres to innovation driven development and has a research and development team of 100 people. It is also a “national high-tech enterprise” and “Guangdong provincial enterprise technology center”.
Relying on excellent quality, “invisible champion” enterprises are widely recognized. For example, Guangdong Jianmei aluminum profile factory (Group) Co., Ltd. won the nomination award of 2016 China Quality Award, Guangdong Liansu Technology Industry Co., Ltd., Guangdong Yizumi Precision Machinery Co.Ltd(300415) and other enterprises won the quality award of the provincial government, and the 10kV atmospheric sealed air insulated switchgear developed by hertzman power (Guangdong) Co., Ltd. replaced sulfur hexafluoride greenhouse gas technology solution, which solved the world problem of environmental protection of power equipment.
There are also many “invisible champion” enterprises and cultivation enterprises that have made technological advantages ahead of their international counterparts. For example, Guangdong Keda Hydraulic Technology Co., Ltd. broke through the core technology of “high pressure plunger pump” and filled the gap in China; The marine engineering equipment and wind power installation platform products developed by Guangdong jingindium Offshore Engineering Co., Ltd. are the first in China, successfully breaking the monopoly of foreign enterprises; Guangdong gaoliwei Machinery Technology Co., Ltd. has successfully developed the MES system and customized design platform of insulating glass production line, and the overall technology has reached the international advanced level.
The reporter’s investigation found that most of the leaders of Foshan “invisible champion” enterprises were born around 1970, with certain cultural knowledge, strong sense of hardship and fighting spirit. They are generally aware that yesterday’s glory does not mean eternity. Only by constantly reflecting and innovating can we have tomorrow. Entrepreneurs are clearly aware that enterprises can only survive if they insist on making the best of their products every minute. They are particularly sensitive to new technologies. Once new technologies appear in the market, they immediately feel that many things need to be improved. If they do not improve, they will fall behind. They generally believe that an enterprise can only focus on doing one thing well. Even if it can do several things at the same time, it is better to do one thing best and to the extreme.
According to the guidance of the market, timely adjust the direction of innovation and produce high-quality products, which is the consensus of Foshan “invisible champion” enterprises. Enterprises generally have a “champion consciousness”, always staring at the world’s most advanced level, trying to keep up and try to surpass. It is this awareness of “striving to be the first” and “doing the best” that makes these enterprises create a lot of national “first”.
It is precisely because of such a group of forward-looking and Shanghai Dzh Limited(601519) of “leaders”, Foshan “invisible champions” have sprung up like mushrooms.
Build a “moat” beyond the scale advantage
However, the manufacturing industry in Foshan also has its own problems. The 2020 Foshan invisible champion enterprise development report pointed out that there are weak links in the operation of 473 “invisible champion” enterprises and cultivation enterprises in Foshan, including the relatively low score of market position indicators, and there is still room to improve the absolute market share; The cost control ability in the comprehensive ability index is weak; The compliance operation and incentive mechanism indicators in the safety management indicators need to be improved; There is also room for improvement in the indicators of development potential, such as human resources and innovation capacity-building.
These challenges restrict the further improvement of the benefits of Foshan “invisible champion”. According to the data, among the 147 “invisible champion” enterprises, only 4 enterprises have a net profit of more than 1 billion yuan, and 87 enterprises have a net profit of less than 50 million yuan; The average profit margin of the 13 industries involved is 19.67%, which is lower than the level of 15% ~ 30% of the international “invisible champion”.
“Most of the ‘invisible champions’ enterprises have achieved today’s results, not by absolute leading technology, process and channel layout, but based on comprehensive factors such as early entry, refined operation and cost performance, they can’t build a deep and wide’ moat ‘.” Luo ronghua, head of Guangdong high growth enterprise development service center, said.
Luo ronghua suggested that enterprises can take measures such as strengthening strategic planning, accelerating digital application, embracing new means of digital marketing and introducing chief information officer to achieve objective and quantitative digital scientific development.
Deng Di, a professor at the school of management of Jinan University, believes that in the past 20 years, China’s “invisible champion” enterprises have upgraded and developed from export-oriented to import substitution, and then to high-end leadership in China’s unique market segments and global leadership in innovation driven by both market and technology. They take low price and low service as their competitive advantage, and it is difficult to establish a real “moat” beyond economies of scale. At the same time, China’s “invisible champion” enterprises rely too much on domestic demand and a few large customers, face the long road of internationalization and inheritance problems, and there is also great room to improve their market share.
In this regard, he suggested that if the expansion speed of the industry where the “invisible champion” enterprise is located is not fast, it should be a “big fish in a small pond”, deeply plough the subdivided fields to the end, and truly build its own “moat” beyond the advantages of economies of scale.
“Being a big fish in a small pond is the basic philosophy of German ‘Invisible Champion’ enterprises. If Foshan enterprises want to expand, they might as well learn from German enterprises and expand the share of the original industry first, rather than jumping to another market.” Deng Di said.
Source: well off magazine, published in April 2022
Reporter: Liu Jianhua
