Gu chunyuan data map
The great changes in China in the past 40 years of reform and opening up are, to some extent, a process of cooperation, competition and even game among private enterprises, state-owned enterprises and foreign enterprises. Foreign enterprises have played an important role in the development and reform of China’s economy, and are also an important weather vane reflecting the business environment and market structure adjustment in China.
Swiss industrial giant ABB was formed in 1988 by the merger of two international companies with a history of more than 100 years-Arcia of Sweden (ASEA) and BBC Brown Boveri of Switzerland, with its headquarters in Zurich, Switzerland.
The relationship between ABB and China can be traced back to 1907, when ABB provided a steam boiler to China, and it really entered the mainland of China in 1979, when it set up an office in Beijing.
According to the official introduction, after years of rapid development, ABB has a full range of business activities such as R&D, manufacturing, sales and engineering services in China, with 40 local enterprises and 17,000 employees in 142 cities. In 2017, more than 90% of ABB’s sales revenue in China came from locally manufactured products, systems and services. At present, China is the second largest market of ABB Group in the world.
Last year, ABB released ABB AbilityTM digital platform and solution in China. This digital action "hopes to get more information with customers through equipment, systems, solutions, services and platforms, and develop richer and better services" and "further consolidate ABB’s leading position in the energy revolution and the fourth industrial revolution".
As a global technology leader in the fields of electrical products, robots and motion control, industrial automation and power grid, what is ABB’s experience in taking root in China, how to adjust its sales strategy in China, and what are its views on domestic property rights protection? On June 10th, Dr. Gu Chunyuan, President of ABB Group Asia, Middle East and Africa and member of ABB Group Executive Committee, was interviewed by The Paper and other media in Zurich.
Gu Chunyuan graduated from the School of Mechanical Engineering of Shanghai Jiaotong University in 1982, received a doctorate in engineering from the Royal Swedish Institute of Technology in 1987, joined ABB in 1989, and was elected as an academician of the Royal Swedish Academy of Engineering in 2015. In 2014, he became the chairman and president of ABB (China) Co., Ltd., and he still held the above positions after taking up his new post in 2017.
"Meet the special needs of the China market through research and development in China"
The Paper:After so many years of reform and opening up, what unique experience can ABB share about taking root in China?
Gu Chunyuan:ABB is lucky, thanks to the 40-year reform and opening-up process in China. ABB set up an office in China in 1979, and set up the first joint venture factory in Xiamen in 1992. Last year, we celebrated the 25th anniversary of Xiamen factory. On the whole, our development is closely related to the needs of the country.
In 1978, China’s machinery industry delegation visited six European countries. At that time, it was suggested to introduce the manufacturing technology of 30 kW and 60 kW thermal power units from BBC. Because of the open policy, it is a natural process for the country to introduce technology and then digest it, so ABB quickly entered China.
After entering, we quickly established a local team according to business rules, first creating a sales team, and then establishing a service team, because ABB not only needs to sell products, but also needs to communicate with customers. At that time, many engineering products in China were imported from abroad.
In fact, we can see that the process of China’s market opening and the introduction of many policies are also crossing the river by feeling the stones.
When ABB first entered China, it faced many policy requirements. For example, many industries could not operate solely by themselves, while others could. With the market competition, the products and technologies completely imported from abroad can no longer meet the requirements of the rapid development of the China market, so we quickly established a joint venture factory. The joint venture factory is used for manufacturing. At the beginning, foreign drawings are produced in China and digested by suppliers. Of course, reducing the cost is not the most important thing, but mainly to meet the needs of customers better and faster.
In the process, ABB’s local team and production capacity have been established. With the development of China market, there are also many competitors. In order to improve our own competitiveness and provide better products and services to our customers, we must introduce research and development.
R&D is an orderly process, and R&D teams and R&D capabilities cannot be established overnight.
Comparatively speaking, sales are relatively fast. As long as personnel are trained, selling ABB products is the fastest way. Services need more time, and engineers who provide services should be instructed and certified. Production is relatively fast, so when you invest in a factory, you can build it quickly by bringing the drawings. But R&D involves talents. It takes time to recruit and cultivate talents, and to understand and digest technology. It has its natural laws, but haste makes waste.
The decision we made at that time was to do research and development in China. This is a long-term consideration, that is to say, we really want to take root in China, and we see that our demand for the China market is long-term. Now it seems that ABB did it earlier and thoroughly in foreign companies.
Meet the special needs of China market through research and development in China. The CEO of Jaguar said that China is now leading the trend of electric vehicles. If you want to participate in such a new industry, but don’t do research and development in China, it is not advancing with the times.
The Paper:In the 40 years of China’s reform and opening up, foreign companies have been one of the most important participating forces. As a bridge between foreign businessmen and China government, can you talk about your feelings about the changes in these decades?
Gu Chunyuan:Because of the reform and opening up and the opening of the market, many multinational companies have come to China, and the market has brought us many business opportunities.
On the other hand, I think the country also sees that these multinational companies can bring advanced technology and management manufacturing concepts to China. More importantly, these enterprises have also trained many talents, and these talents flow in the industry. It can be said that we have trained many talents for the country. Of course, there is also a contribution to the national tax revenue.
I think over the years, in fact, the government’s support for our enterprise is still great. At the beginning, we will encounter many restrictions, but now there are no restrictions and the negative list is basically gone. We are still very grateful to the government for its support for the development of our local enterprises.
In the past, when foreign companies first entered China, many of them could not operate independently. If you want to enter my market, you must set up a joint venture factory and invest in technology-from this perspective, I don’t think foreign companies enjoyed "super-national treatment" in the early days of reform and opening up. In recent years, the market has gradually opened up. At least in these industries that ABB belongs to, enterprises can set up independent legal entities. Compared with the past, the whole market is more and more open.
"The fourth industrial revolution has arrived"
The Paper:IP protection is an inevitable concern for foreign capital entering China. What do you think of this issue?
Gu Chunyuan:Doing research and development and manufacturing, everyone was worried about the issue of intellectual property rights, which was quite normal in the environment at that time.
In recent years, China has gradually strengthened the attention and standardization of intellectual property protection, and established corresponding laws and regulations. More importantly, we should invest a lot of manpower to supervise the implementation of laws and regulations. Supervision cannot rely solely on the government, but also needs lawyers and trade associations. This is also a process of talent cultivation and accumulation.
When we did R&D more than ten years ago, there was actually a discussion within the group. If we entered the core R&D, would there be any risk of intellectual property leakage in the future?
At that time, my point of view was this. At that time, we saw that enterprises and governments in China began to pay attention to R&D investment. In fact, what we should discuss is not whether things will be copied. If people copy my things, it means that my things are the best and represent more cutting-edge technology.
The Paper:ABB is a participant in previous industrial revolutions. What form and when do you think the fourth industrial revolution will appear?
Gu Chunyuan:The fourth industrial revolution has actually arrived. As you have seen, informatization and automation are feasible in terms of technology itself.
The fourth industrial revolution is a combination of informationization and automation, which will greatly improve the efficiency of all walks of life in the whole society in the future. We have seen many applications in this respect, and I think the fourth industrial revolution has arrived.
The Paper:Now that China is generally pursuing modernization and localization of equipment, what kind of adjustment will ABB’s market strategy in China have?
Gu Chunyuan:After so many years of reform and opening up, China has become the second largest economy in the world, but at the same time, we should also see that the past demographic dividends, land dividends and environmental dividends have gradually weakened. Now China’s requirements for environmental protection are not much different from those of western society; Our land cost is also high; In terms of personnel, first, the labor force is decreasing, and second, the labor cost is rising.
Under such circumstances, the past production mode, that is, simple processing, assembly and export, trade processing and trade export, is definitely unsustainable because it is not competitive. In the future, it is necessary to increase added value, and the state should invest in high-end manufacturing to improve production efficiency and competitiveness.
It should be noted that, firstly, ABB produces domestically produced products, all of which are produced locally in China. In addition, what we want to see is an open market, and a competitive market can promote the progress of technology and industry. Therefore, I believe that this country still has very clear policies and a clear understanding.
In other words, we should encourage state investment and support domestic enterprises to participate in competition. Including in Europe, the development of automobile batteries will also emphasize the concept of localization, and batteries cannot be provided entirely from outside. On the other hand, the country will maintain an open and competitive market. Only in this way can local enterprises, multinational enterprises and state-owned enterprises in China have a good growth opportunity.
"The future research trend should start from the deep-seated needs of human beings"
The Paper:ABB’s poster reads "Let’s work together to create a better future". Could you please describe the future trend, mainly scientific research trend? What is it?
Gu Chunyuan:It is basically dangerous to talk about the future. Judging from the historical experience of human society, it will probably be wrong nine times out of ten. But we can see a big direction, which is to meet human needs, that is, deep-seated needs.
The first is our requirements for environmental protection. Maybe five, ten or twenty years ago, people thought this concept was a little empty, but today everyone has a very profound understanding of environmental protection. There is also a degree of freedom that people need.
Which technical route will be adopted in the future, or what it will be like, is anyone’s guess. But the deep-seated demand is that we should protect the earth better for our future generations; We need to maintain the freedom we need as an individual. Of course, there are many other needs.
From this perspective, we can predict many technologies, such as the involvement and introduction of more renewable energy in the future. One of the technological revolutions in this respect is power generation technology, and the other is to improve the efficiency of power generation technology through materials. This is on the supply side, the generation and supply of energy.
On the user side, whether in factories, buildings, homes and trips, everyone’s awareness of energy conservation and environmental protection has gradually increased. This is not simply a matter of using less air conditioners and less lamps, especially when you see that in Europe, it is not because people can’t afford the electricity bill, but rather a situation caused by environmental awareness. When we were young, we had to turn off the lights, which was more because we couldn’t afford the electricity bill.
Such a sense of environmental protection has also generated a lot of energy-saving needs. For example, after the introduction of electric vehicles, users’ demand for electricity is more dynamic, and it also involves safety issues, so many new technologies need to be studied at this time.
Another piece is automation technology. With the maturity of IT technology, automation technology has been used very maturely since 1960s. After 2000, that is, at the beginning of this century, when the IT technology revolution, everyone felt a little bubble at that time, and then the industry gradually stabilized. With the further development of IT technology and communication technology, we can see that the foundation of interconnection already exists.
On this basis, interconnection, including information sharing between machines, people and machines, will affect future manufacturing. Automation technology has also spawned autonomy, autonomy and unmanned. In the future, unmanned driving and unmanned production are all autonomous. Autonomous technology is supported by the combination of automation and information technology, and its wide application. It can greatly improve two aspects, one is convenience, and the other is efficiency.