Network equipment major Hengtong finds the perfect formula for diversification along Belt and Road stretch
Hengtong Group Co Ltd, a producer of optic fiber and telecom network equipment, will increase its overseas investments and acquisitions in view of the huge growth potential in countries along the Belt and Road Initiative.
The Jiangsu-based Hengtong says it plans to establish two to three overseas industrial bases and make two to three overseas acquisitions each year.
In the internet era, construction of telecom networks, particularly those using optic fiber cables, has become a significant indicator of a country’s development. The company has stepped up building such networks in overseas markets.
“If there is no optic fiber, there is no internet, let alone big data and cloud computing,” said Cui Genliang, chairman and president of Hengtong Group.
Cui said communication infrastructure is relatively backward in some countries along the Belt and Road Initiative, which provides huge opportunities for Chinese companies like Hengtong to expand overseas.
The initiative aims to build a trade and infrastructure network connecting Asia with Europe and Africa, along ancient trade routes.
“We will firmly grasp the opportunities brought by the initiative and continue to push forward the internationalization strategy in the next decade,” said Cui.
Founded in 1991, Hengtong has seen its businesses expanding from telecom and electric power to finance, culture, tourism, real estate, capital investment and internet platforms.
The optical fiber giant now serves various national programs, including intelligent cities and communities, ultra-high voltage and intelligent power networks, new energy, ocean engineering, big data, internet of things, high-speed trains, aerospace, national defense and other high-end fields.
The company has put forward a goal called the “50-50-50 internationalization”. That means, more than 50 percent of its products will be sold overseas; more than 50 percent of its capital will come from overseas; and more than 50 percent of its professionals will have an international background, according to the company.
Moreover, it will serve both the domestic and international markets, integrate and make use of the domestic and international resources, as well as widen the domestic and international financing channels through investments in overseas mergers and acquisitions.
So far, it has established seven research and development centers overseas, and branches for marketing and technology services in more than 30 countries and regions.
It has registered trademarks in more than 100 countries and regions. Its business covers 120 countries and regions. Its optical fiber network products account for a 15 percent share of the global market.
Its first overseas factory was set up in Brazil in 2012, followed by a joint venture in India in 2013. It also bought optical fiber and electric power enterprises in Indonesia, South Africa, Spain and Portugal in 2015.
Cui said: “These moves will promote the industrial transformation, upgrading and global expansion of our company, further enhancing its competitiveness.”
Cui emphasized the key to compete with other international giants is to increase independent innovation, improve core competence and produce products with cutting-edge technologies.
At present, Hengtong is the only Chinese company with the state-of-the-art technology in optical fiber communication and owns related intellectual property.
Technology expertise and high-quality products can make a Chinese label a successful global brand, Cui said.
Additional revenue mainly came from overseas markets in recent years. In 2015, its overseas revenue accounted for 20 percent of total sales.
“Success in international markets is a touchstone of an enterprise’s competitiveness,” said Gao Anmin, Hengtong’s vice-president for international operations.