Hangsheng set to rival the world's auto electronics giants

Gasgoo.com: In 2007, Hangsheng made the list of top 10 auto electronics enterprises in China for the third straight year, being the only independent Chinese company on the top 10 list. Would you please briefly tell us the development of your company?

 
To be a hard-working, ambitious company -- Yang

Yang Hong: Hangsheng was founded in 1993, and it's 15 years "old" this year. The past years can be divided into two stages: the first was from 1993 to 2000, with the sales revenue growing from 2.38 million yuan to 100 million yuan; the second stage was from 2001 to 2007, which period saw our revenue surging from 100 million yuan to 2 billion yuan.

During the first stage, while doing the OEM projects for other companies, we also conducted the research and development, explored our own market and promoted our own brand recognition. By 2000, or the end of the first stage, Hangsheng was ranked 2nd of the auto electronics industry. In those years we're a major supplier for 4 mini-vehicle manufacturers: ChangAn, Wuling, Changhe, and Hafei. Meanwhile we also offered some products for those less-demanding commercial vehicles.

In 1998, we penetrated into the sedan sector--Citroen ZX was the first sedan model that used our products. We secured this order from Dongfeng Citroen (French automaker PSA's joint venture in China) by building a 50-50 JV with a Korean counterpart in Shenzhen. Dongfeng Citroen's feedback was very encouraging and thus laid a sound foundation for our future growth.

In 1999, we also entered the OEM supply chain of Fengshen Auto (the predecessor of Dongfeng Nissan, a JV between Dongfeing and Nissan). We helped our customer save more than 10 million yuan by replacing its previous supplier Panasonic. Now, Nissan（Asia）has given us almost all of its 2009-2013 orders for the entertainment system products. And now we are developing new products in lockstep with several automakers.

We aim to become an industry leader by capturing about 40% of the OEM market in China in the future. We entered the local aftermarket last year, and our dealership network and product promotion have much to enhance. We are also set to straighten up China's current chaotic aftermarket of auto electronics -- Hangsheng started business by entering the overseas aftermarket, and over the past several years our export earnings have increased from 5% to the current 20% of our total sales revenue; also we have rich experience. Now our aftermarket business mainly came from Southeast Asia, Europe and North America.

Gasgoo.com: Hangsheng introduced Autonet's technology from South Korea, then set up a 50-50 joint venture with Autonet in 2003 and has been the supplier of Hyundai in its Korean market since 2001. The joint venture finally collapsed last year due to financial losses. Has Hangsheng got any benefit from this venture?

Yang Hong: They protected their technology pretty well but we were still able to learn something beyond the technological know-how. The innovation includes technological breakthroughs and management of innovation process. I think the management capability is more important than a single solution to certain technological problems.

Actually, in the past several years, the foreign companies haven't stopped looking for possibility of acquiring Hangsheng by temporary technology transfer or joint venture cooperation. After realizing this, we turned down their invitation to pursue our independence and further self- development.

Gasgoo.com: How can you compete with those powerful rivals, as we see joint ventures and wholly-controlled foreign enterprises took up all the other seats in the top 10 list?

Yang Hong: We take the initiative to negotiate with the automakers about the proper strategy and pricing for the supplying project. Relevant technology of these products must be made clear to the executives. Effective communication will make our customers understand to what extent our current price and the quality can be guaranteed, which enables the automakers to trust us as well as to keep an eye on low-priced products.

As for those automakers favoring foreign-brand components, it takes time. It's a process of development as Japanese and Korean automakers block out any "outsider suppliers". For instance, Beijing Hyundai Mobis Automotive Parts Co., Ltd, an affiliate of Beijing Hyundai, is actually dominating supplying of auto parts for Beijing Hyundai. However, I think the blockade will not exist when they can't profit from their vehicles.

We had ever supplied for Hyundai and Kia in the Korean market initially, while Mobis used to sell the components bought from us to Beijing Hyundai at a higher price. Then Beijing Hyundai gave up our products and manufactured the products by themselves, but they finally turned to us again due to high costs. Currently Hangsheng is still Beijing Hyundai's potential supplier.

Gasgoo.com: What's your plan for the coming years by 2015?

Yang Hong: We have three goals--We will make all efforts to catch up with leading auto electronics suppliers including Panasonic, Siemens VDO and Bosche by bringing in the latest technologies and highly-qualified talents; we will commit ourselves to building up a complete network of R&D, manufacturing, distribution facilities; by 2015, we will accomplish an annual output of 10 million units and sales revenue of 10 million yuan, with the net profit at 8%.

If we achieve these targets, we will join the world's top 5 auto electronics suppliers and gain approximately 12% market share then.

To make these targets come true, we'll focus on both the products and the management. We plan to build a total of eight R&D centers globally, with five in China and three overseas -- in America, Europe and Japan respectively. We've already had three of the centers operating in China and the overseas centers are set to provide localized technologies and products.

China's new car sales are forecast to exceed 16 million units by 2015 and the country is expected to overtake America to become the world's largest vehicle market. The big growth offers us opportunities to build up our brand image and promote our supply capacities.