Time-tested principles help Fuyao carve sustained business success, niche abroad, report Hu Haiyan and Hu Meidong in Fuzhou.
An expensive business school would probably call it the SIP principle, those letters standing for sincerity, integrity and persistence. But gimmicky, management-speak labels are not for Cao Dewang, chairman of Fuyao Glass Industry Group Co Ltd, and the Chinese business pioneer is happy to let his actions speak for themselves.
"It is sincerity, integrity and persistence that have helped put Fuyao Glass where it is today", said Cao, whose autobiography in Chinese, Xin Ru Pu Ti, (My heart is a bodhi tree) was published on Dec 17.
"As long as you abide by international rules, honor transparency, compete fairly and have a clear understanding of the target market, the international market can propel the growth of Chinese companies," said Cao.
Cao knows a thing or two about "international rules", having become a celebrated figure in the Chinese business world by successfully fighting anti-dumping cases in the United States and Canada.
When talk turns to whether the global market differs greatly from that of China, Cao becomes animated and rejects the proposition with a firm "No" - ironically, in English.
"For me the biggest challenge lies in the language: I cannot speak English. There are also challenges such as a lack of people with the proper international management expertise. But getting into overseas markets is not as difficult as some people imagine."
The leader of the world's largest automotive glass maker by sales said that more Chinese companies will eventually develop their business overseas.
"For example, profits are shrinking domestically, labor costs are rising and high taxes and electricity charges all pose challenges for us. As the world becomes more globalized, every Chinese entrepreneur needs to grow their company into a global enterprise.
"Chinese companies that want to go global need to look into what kind of overseas business expansion strategy is best for them."
Cao, speaking at his home in the suburbs of Fuzhou, capital of Fujian province, said: "There are certain things that need to be weighed very carefully before a Chinese company goes global. First of all, what part of the business are you going to make global? The capital, products or technology? Second, where is the destination? The Middle East or the US or Europe? Third, why is it that this destination appeals to you? Fourth, are you familiar with the target countries' or regions' political and cultural environment? Last but not least, will they be welcome in the market they want to go to?"
Cao, 68, a devout Buddhist, said he loves reading books about the religion, and his home library is full of classical Buddhist books. The traits of sincerity, integrity and persistence that led him to set up Fuyao Glass and make it what it is today are cornerstones of Buddhism, he said.
Fuyao was founded in 1987 in Fuqing county, Fuzhou, and it now employs more than 20,000 people worldwide. It had about 20 percent of the global market for automotive glass last year, with revenue of 11.5 billion yuan ($1.86 billion), 12.2 percent higher than in the previous year.
The group pulled in revenue of 3.67 billion yuan outside China last year, up about 10 percent, and sales outside China accounted for almost 32 percent of the total.
The group's profit was 1.91 billion yuan last year, a rise of 25.8 percent.
Cao attributed these results to a focus on the company's overseas expansion and technological innovation.
The company made its first overseas foray in 1995 when it set up an automotive glass factory in South Carolina in the United States. Its glass is now sold in 61 countries and regions, and Fuyao is an approved original equipment manufacturer for many global carmakers, including Audi AG, Ford Motor Co, General Motors Co and AB Volvo.
Fuyao expects strong overseas sales growth in the years to come, led by the US, Russia and Europe.
"We expect that by the end of 2016, the US market will become our largest overseas market, and that we will have invested as much as $600 million there."
Investment in the US now stands at $400 million.
Last year the company spent $200 million building a factory in Russia that will supply the Russian market and Eastern Europe.
"Our overseas sales are mainly in Asia and North America, but Europe is now becoming a major market. Fuyao is the exclusive supplier for Volvo and the largest supplier to Volkswagen. In Europe, for example Germany, we see huge potential."
Fuyao's overseas expansion will proceed step by step, he said.
"The US is the first target, and then Europe. We now have factories in Germany, and offices in th United Kingdom, Italy and Sweden. We will go deeper into Europe once we have built ourselves up in the US."
He made his first fortune when he was in his 20s after plunging his savings into a loss-making glass company. He turned it into the black, and in 1987, with friends, he set up Fuyao Glass, making automotive glass. The original idea was to make glass just for the Chinese market, he said, and later the company's horizons expanded.
While building sales outside China is a top priority, Fuyao still regards the domestic market as its backbone, he said.
"Domestic and overseas markets are both important to us. Demand in the local market continues to grow, and for Chinese there is a growing trend to buy a new car every four or five years."
Fuyao has four research and development centers, in Fujian, Shanghai, Germany and the US. Each year the company spends about 5 percent of its revenue on R&D, said Cao.
He has gained international recognition for his business acumen, being named Ernst & Young World Entrepreneur of the Year in Monte Carlo in 2009.
As Cao pointed to the trophy he won on that occasion, he said: "Given Fuyao's research and development strength and the strong domestic market ... our growth overseas will continue."
Sun Li contributed to this story.
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(China Daily 12/30/2014 page13)