Shunde is largely an industrial zone and its industrial production accounts for more than 55% of the regional GDP. Its household appliances production accounts for 15% of the country’s total. It is also second to none in the country in terms of the strength of its home appliances and furniture clusters, and in the number of independent brands. Private enterprises account for 80% of Shunde’s industrial production and are among the highest in the country’s important industrial zones. Since the advent of China’s reform and opening-up, until Shunde’s establishment as a production bastion, there have been many famous private enterprises founded by legendary entrepreneurs. Many of these founders started out as peasant entrepreneurs in township enterprises before China’s opening up. They have built national and even global enterprises with their hard work and perseverance.
Midea Group and He Xiangjian
Midea Group is the benchmark for Shunde’s manufacturing and home appliances industries. On the Fortune 500 Global List 2018, Midea ranks at number 323 with 2017 sales of 240 billion yuan and group net profit of 17.3 billion yuan. At present, the company has 12 strategic business units, 150,000 employees at home and abroad, nearly 200 subsidiaries, more than 60 overseas branches, and 20 research institutes around the world. In 2007, the group set up its first overseas production base in Vietnam. Currently, there are six overseas production bases in Vietnam, India, Egypt, Belarus, Brazil and Argentina. In addition, there are 12 domestic production bases distributed nationwide. Midea’s overseas sales account for 45% of its total sales. Midea Group is the leader in the internationalization of Shunde’s enterprises. Its foreign investment amount exceeds US$5 billion, accounting for the vast majority of the US$6.285 billion overseas investment amount approved by Shunde District.
In 1968, He Xiangjian led 23 people to raise 5,000 yuan to set up the “Beijie Office Plastic Production Group” in Beijiao, Shunde, and produced plastic bottle caps in the form of a village-run enterprise. In 1980, it began to produce electric fans and entered the home appliances industry. In 1981, it officially registered the “Midea” trademark. In 1985, it began to manufacture air-conditioning products. In 1992, Midea became the first township enterprise to be approved by the China Securities Regulatory Commission to be listed on the Shenzhen Stock Exchange under the name “Guangdong Midea”. After listing, the company’s main business income grew rapidly from 487 million yuan in 1992 to 2.5 billion yuan in 1996, entering the ranks of China’s largest home appliances manufacturers. In 2000, the company’s sales amounted to 10 billion yuan; in 2010, it further broke through 100 billion yuan and realized the miracle of ten times sales growth in ten years. In 2012, He Xiangjian, the chairman of the company, resigned and his position was replaced by professional manager Fang Hongbo. In 2013, the group was reorganized and its listing status was transferred from Guangdong Midea to its parent company, Midea Group. Midea Group is considered by the securities market to be a company with modern corporate management capabilities, and nearly 20% of its shares are held by international institutional investors.
Table 1. Major indicators of Midea Group, 2017
In terms of brand awareness, Midea ranks number 26 in the BrandZTM Top 100 Most Valuable Chinese Brands in 2018, and it has been the highest-ranking home appliances brand in China for three consecutive years. The company is one of the top 10 companies and also one of the top 10 public companies in China Central Television’s National Brands Plan in 2018.
Many of Midea’s products have a leading position in both domestic and foreign markets, as seen in the following table.
Table 2. Midea’s product market share
Midea Group plays an important role in the industrial transformation and upgrading of Shunde District. The company invested 8.5 billion yuan in research in 2017. The company has 500 doctoral researchers in Shunde, accounting for about 1/3 of the 1600 doctorates in Shunde District. Midea’s sales from research are about 3.5%, which is significantly higher than the average of 2.4% in Shunde.
In 2016, the company acquired German-based KUKA — one of the world’s top four robotics companies. It has also established joint laboratories with domestic and foreign scientific research institutions, such as the Chinese Academy of Sciences, Tsinghua University, MIT, UC Berkeley, Stanford University and Purdue University to build a global innovation ecosystem.
According to International Clarivate Analytics’ The State of Innovation 2017, Midea is a leader in invention patents in the home appliances industry. In 2017, Midea applied for 16,934 patents in China, including 7,714 invention patents. By the end of 2017, Midea had applied for more than 70,000 patents. It currently has 35,000 patents.
Table 3. Number of
patents of the world’s top ten home appliances manufacturers, 2016
Midea is one of the earliest home appliances companies in China to enter the e-commerce market. In 2017, the domestic online sales amount of Midea was about 40 billion yuan, accounting for 30% of sales. It is the brand with the highest market share in the online home appliances sector.
Table 4. Midea’s offline and online home appliances market share and ranking
The success of Midea Group in the home appliances industry has made the company a model for the home appliances industry in Shunde. The company’s overseas expansion model has also been emulated by other companies in Shunde. Midea Group’s “Smart Home + Smart Manufacturing” development strategy has been adopted by Shunde District as a blueprint for the development of the home appliances industry. Midea has become an important corporate member of the Shunde District Government’s economic development strategy known as “Technology Shunde”.
He Xiangjian, the founder of Midea, was born in 1942 and is the most famous farmer entrepreneur from Shunde. With his hard work and perseverance, wisdom of making good use of talents (see the article “Shunde and the World Economy” for details) and philosophy of “change is the only constant”, He Xiangjian vigorously promoted the reform of the internal shareholding system of the company, thereby enabling Midea to become the first listed company that is reorganized from a township enterprise. He also actively implemented the segregation of shareholders, board of directors and management team, and created a precedent for the reform of private enterprise equity, equity incentives, professional managers and modern enterprise. He also established a charitable fund by investing more than 10 billion yuan and used the fund to carry out charitable causes such as poverty alleviation, disaster relief, pension, education, etc. For this, He Xiangjian won the title of “National Model Worker,” among others.
On November 26, 2018, the central government celebrated the 40th anniversary of China’ reform and opening up. In the list of 100 outstanding contributors to the reform and opening up, there are 9 people from Guangdong, including 2 from Foshan City. He Xiangjian, a forerunner in restructuring and listing TVEs on the stock exchange, is awarded a Reform Pioneer medal.
Country Garden and Yang Guoqiang
Country Garden is another 200-billion-yuan enterprise from Shunde. On the Fortune 500 Global List 2018, Country Garden ranks at number 353 with 2017 sales of 227 billion yuan and net profit of 26.1 billion yuan. In 2017, the company sold 60 million square meters of completed real estate (both wholly-owned and joint ventures), with a total sales of 550.8 billion. It is one of the largest real estate developers in China and the world.
Country Garden and Midea are both located in Beijiao, Shunde, and they are the only two 200-billion-yuan enterprises in Shunde. The GDP of Beijiao began to surpass Shunde’s traditionally richest locale, Ronggui, in 2013, and these two companies contributed a lot to this achievement.
The company has completed 1,500 real estate projects worldwide, and its property companies manage more than 3 million homes. At the end of 2017, the company has 1,468 projects in progress, covering 30 provinces, 220 cities and 768 towns and districts in China.
Country Garden’s tagline is “Give you a five-star home”. The company emphasizes that its properties, environment, facilities, property management, and corporate culture all attain industry-leading five-star standards. Country Garden is famous in the real estate industry for its large-scale new district development and high concentration of internal resources. It provides a one-stop service ranging from property landscaping, interior design, after-sales property management and building materials.
Country Garden was listed on the main board of the Hong Kong Stock Exchange in 2007. In recent years, the company has entered the field of industrial villages development, and has carried out the development of new energy vehicle towns and robot development zones in Shunde. The company hires highly educated postdoctoral staff in order to enter these new fields. Currently, it employs nearly 600 such talents, ranking first among Shunde enterprises.
Country Garden’s founder Yang Guoqiang is another well-known peasant entrepreneur from Shunde. He is from a poor family and it is said that he only wore his first pair of shoes when he was 17 years old. Yang Guoqiang started as a construction contractor. In one of his construction projects, he took over from a developer who had a bad sale. He provided the land for free to a famous middle school and brought the sale back to life. He is a pioneer in large-scale real estate development using a school-home combination. Yang Guoqiang’s professionalism and enthusiasm for his work is well-known in the industry.
Yang Guoqiang attaches great importance to education and has established many free charity schools such as Guohua Memorial Middle School and Guangdong Country Garden Vocational College. In October 2018, Yang Guoqiang donated 2.2 billion yuan to Tsinghua University, the largest single contribution since the establishment of the university.
Galanz and Liang Qingde
Founded in 1978, Galanz was formerly a township factory specializing in down products. In a span of 40 years, the small township factory started by 7 people has developed into a multinational white goods group with nearly 50,000 employees. In 2017, its sales of 21 billion yuan ranked it 269th in the top 500 Chinese private enterprises. Galanz was selected as one of the top 100 Chinese brands in 2017 and ranked 46th.
Galanz is the leader in the production of microwave ovens and electric ovens. Galanz’s microwave oven ranks first in China and third in the world; it ranks second in China and second in the world in the electric oven market. In the China Brand Power Index ranking, Galanz maintained its number one position in the microwave oven industry from 2011 to 2017 and was awarded the “Golden Brand” award. Its customer satisfaction and customer referral indexes maintained their leading positions as well.
Galanz’s steady development and growth in the past 40 years is a testament to the success of China’s reform and opening up. In its first 10 years, Galanz started from scratch to create a textile industry worth over 100 million yuan. In the second 10 years, Galanz moved from the textile industry to the microwave oven industry, becoming one of the first township enterprises in China to successfully transform into a modern enterprise, and it also became the world leader in the microwave oven market. In the third 10 years, Galanz began to build a multinational white goods group with microwave ovens, air conditioners, refrigerators, washing machines and household appliances as its core. In the fourth decade, Galanz invested more than 3 billion yuan to upgrade to smart production and promote the automation of the entire industrial chain. In particular, Galanz imported from Europe an automatic production line for dishwashers with an annual production capacity of 1 million units; invested nearly 100 million yuan to launch a world-class drum and box production line; launched the world’s first automatic assembly line for microwave ovens; and launched the world's first automatic electric steam furnace production line.
Galanz possesses the full range of technology to produce white goods. It has independent research and development and professional manufacturing capabilities to produce household appliances such as microwave ovens, electric ovens, electric steamers, refrigerators, air conditioners, washing machines and dishwashers, and components and parts such as control tubes, compressors, transformers and computer boards. Galanz is the leader in the industry in terms of automation and R&D.
Galanz is another exemplar of the internationalization of Shunde’s enterprises. Since the 1990s, the company has been active in attending exhibitions around the world, and has established a wide range of strategic partnerships with global retailers. It has adopted a very pragmatic brand development model — the “5+1” model. The “5” refers to cooperative brands, joint venture brands, rental brands, and cooperation with international top brands from standard OEM to ODM. The “1” refers to its self-owned brand. Galanz has established subsidiaries, R&D centers and business branches in the United States, Germany, the United Kingdom, Japan, Chile, Spain, Russia, India, Vietnam, Australia, the United Arab Emirates and other countries and regions. It has also set up localized marketing teams to increase the global brand of Galanz. As of 2017, Galanz has applied for 2,498 domestic and international patents and has registered independent trademarks in 138 countries and regions around the world.
Liang Qingde, the founder of Galanz, was born in 1937 and also a famous farmer entrepreneur. He started 3 businesses. In 1978, he founded the Shunde Guizhou Down Factory; in 1988, he founded the Guizhou Animal Products Enterprise (Group) Company; in June 1992, he founded Guangdong Galanz Enterprise (Group) Co., Ltd. His entrepreneurial story has become the stuff of legend. In the early days of Galanz, he seized the opportunity to move into the microwave oven industry in 1992 with the “5+1” model. In 13 years, he set up 19 production lines around the world and established cooperation with 250 multinational companies. A well-known example goes like this: To produce a microwave oven in the US needed 800 yuan, Liang Qingde cooperated with multinational companies to move the production line to Galanz and produced it at a price of 400 yuan. Liang Qingde used a week to complete the multinational companies’ one-month order, and used the rest of the time to produce his own products.
Liang Qingde passed the baton to his son Liang Zhaoxian in 2000. Galanz has maintained its status as a private enterprise and has not been listed. Liang Zhaoxian was awarded the title of Outstanding Entrepreneur of Guangdong Province during the celebration of the 40th anniversary of reform and opening up.
Guangdong Vanward New Electric and Gas and Lu Chuqi
Established in August 1993 and listed on the Shenzhen Stock Exchange in 2011, Vanward is the leading manufacturer of gas water heaters, kitchen appliances and hot water systems in China. It has seven major production facilities in Shunde, Zhongshan, Gaoming and Hefei. The production facilities cover an area of over 1 million square meters. In 2017, its sales reached 6.5 billion yuan and its profits amounted to 400 million yuan. Vanward gas water heaters rank first in China and second in the world; its kitchen appliances rank third in the country and second in the world.
The company is the pioneer and promoter of China’s gas appliances development strategy. It has led or participated in the drafting and revision of national standards for gas water heaters, gas cookers and disinfection cabinets. It has obtained more than 1,300 patents and is the most patented company in China’s gas appliances industry. Vanward has 7 innovation platforms, such as “National Enterprise Technology Center”, “Clean Energy Academician Expert Workstation” and “Postdoctoral Scientific Research Station”.
The founder of the company, Lu Chuqi, was born in 1949. At the age of 38, Lu Chuqi started his business after leaving his job as a technician. The success story of Vanward is widely circulated in Shunde. Lu Chuqi was awarded the title of Outstanding Entrepreneur of Guangdong Province during the celebration of the 40th anniversary of reform and opening up.
Keda Clean Energy and Bian Cheng
Keda Clean Energy was established in 1996 and was listed on the stock market in 2002. It is a high-tech enterprise specializing in the production of large-scale processing equipment for ceramic stone and engaging in the planning and construction of ceramic stone production facilities. It has garnered the title of the “Chinese Ceramic Machine”. The company’s sales in 2017 were 5.73 billion yuan and the profits were 479 million yuan. The company covers an area of about 705,000 square meters and employs more than 4,900 people. Among them, 30% are armed with high and intermediate academic qualifications. The company has recruited some of the country’s well-known experts and professors in the stone industry.
In just 20 years, Keda Clean Energy has grown from a handicraft workshop to become the first in China and the second in the world in the ceramic machinery industry, and has become a benchmark for Shunde’s machinery and equipment industry. Since its establishment, the company has successfully developed China’s first SML (H) 21/16 stone continuous mill, China’s first SJS48 granite sand saw, China’s first automatic deep osmosis vertical glue production line, China’s first thin sheet (composite board) production line, China’s first marble static pressure line saw, and so on. Keda’s product technology level is at the forefront of its international peers. It is China’s most professional and most comprehensive stone equipment manufacturing enterprise.
Keda’s chairman, Bian Cheng, joined the company in 1998 and gradually established a scientific and efficient management system. He practices the concept of “distributing money to entice people”, and has successfully attracted a large number of outstanding talents from home and abroad to build Keda. He has effectively transformed the company from a single equipment supplier to an enterprise that supplies the complete range of ceramics technology and equipment. The company has played a key and leading role in the technological advancement of the ceramic machinery industry worldwide. Bian Cheng was awarded the title of Outstanding Entrepreneur of Guangdong Province during the celebration of the 40th anniversary of reform and opening up.
Entrepreneurship has played an important role in the economic development of Shunde, and it is difficult to appreciate the development of Shunde without understanding this. Shunde has produced and nurtured new entrepreneurs and enterprises throughout its history. Today, with China’s economic transformation, innovation has become the main driving force for Shunde’s economic development. In the process, Shunde will once again foster the growth of new entrepreneurs and businesses. The constantly thriving entrepreneurial community is the source of Shunde’s economic life.