Editor's note: At the start of the new year, Shandong Province held its 2022 work mobilization conference, which called for a focus on "ten major innovations" and for a determined effort to open a new chapter in building a strong, modern socialist province in the new era. Companies are the main actors in innovation, and entrepreneurs are the explorers, organizers and leaders of innovation-driven development. Dazhong.com · Poster News presents "Entrepreneurs on Innovation", the corporate part of its series "Ten Major Innovations in Jiaodong", which looks at how key companies in the five cities of the Jiaodong region are responding to the call and becoming strong innovators, and at the pioneering, enterprising spirit of their entrepreneurs.
Dazhong.com · Poster News reporters Sun Yonglian and Hao Yushuai, reporting from Weifang
"This is a compressor wheel. It is fitted mainly to the turbochargers of medium- and high-speed marine engines. Its share of the domestic market is currently 70–80%, and it is also sold to Ukraine, Europe, South Korea and other countries and regions. This is our own technology, and it won the Second Prize of the National Science and Technology Progress Award." On a recent visit to the plant of Weifang FuYuan Turbocharger Co., Ltd. in Fangzi District, General Manager Chen Liang pointed to a compressor wheel as he explained it to the reporters.
FuYuan is a high-tech enterprise dedicated to the development and production of high-speed turbomachinery. Its main products are turbochargers, air-bearing centrifugal blowers and air-bearing centrifugal compressors for fuel cells, and it mainly provides turbocharging solutions for engines and energy-saving blower solutions. FuYuan is not a large company, but it is a national "Little Giant" specialized-and-innovative enterprise, a Shandong Province single-champion enterprise and a winner of the Weifang Mayor's Quality Award. It is currently the leading Chinese brand of turbochargers for seagoing ships, ranks first by domestic market share, and is the only company in China's turbocharger industry to have won a National Science and Technology Progress Award.
From a textile machinery factory that had suffered a heavy blow to first place in China's turbocharger industry today, FuYuan's successful turnaround has followed the path of innovation-driven, high-quality development.
Core technology must be in your own hands
Low fuel consumption and plenty of power are the qualities people value most when choosing a car. What determines them is the engine or, more precisely, the fuel system, the turbocharger and a series of other components inside it. The performance of the components determines the performance of the engine and the quality of the car. Weifang FuYuan Turbocharger Co., Ltd. makes one of the engine's core components: the turbocharger.
Chen Liang told the reporters that the turbocharger is a component with very high reliability requirements. Its core performance attributes are high temperature capability, high speed and high efficiency, and it plays a vital part in engine performance and emissions. Small as it is, it belongs to the same family of high-speed turbomachinery as the aircraft engine. Its technical requirements and technology content are very high, which demands a great deal of the manufacturer's R&D and innovation capability. FuYuan has been on this path for more than 30 years.
"Take this wheel. It uses an advanced blade profile whose shape is aerodynamically better, which allows the turbocharger's pressure ratio to be raised from 4.0 to 6.0. That figure is fully competitive with the best international products. As a result, for the same engine displacement our turbocharger lets a marine engine deliver 30–50% more power."
Although China's own turbocharger brands have developed rapidly in recent years, what they hold in the domestic market is mainly the low- and mid-range commercial vehicle and off-road segments; more than 80% of the high-end market in China is still held by foreign companies. That is the overall state of the Chinese turbocharger industry, and FuYuan's aim is to change it: to move into the high-end market and replace imports.
Chen Liang said that a gap is in itself a great deal of room to grow. China now has a large number of contract manufacturers of components, and manufacturing itself is already quite mature. The weakness is the lack of proprietary technology and independently developed products. If that hurdle is overcome and the technology is held firmly in one's own hands, it is a qualitative step up for the company and for the whole industry.
"That is what our company does now. We develop and produce ourselves, we hold the core technology and the initiative, and we take this one component as far as it can be taken in the industry. My factory may be small, but when it comes to turbochargers the big companies cannot beat us. What we offer is specialization and focus. It is a hard road, but a solid one," said Chen Liang.
Withstanding all the pressures of innovation
The development path of a technology company is never going to be easy. Chen Liang admits that the confidence that comes from holding the initiative has a heavy price, and huge R&D spending is part of it. Products have to be developed and designed continuously, samples made and performance tested, and the company works with universities, research institutes and even foreign experts, all of which is costly. FuYuan invests RMB 20–30 million in R&D every year; only sustained investment in R&D makes sustained development possible.
"This kind of R&D investment is actually very risky, because many of the products you develop may not succeed, and all the money you have put in may well be lost. Profits in the machinery industry were already thin in recent years. We use the money we earn ourselves for R&D, and we also have to buy new equipment and optimize capacity to keep developing. That is a heavy burden for a company," said Chen Liang.
Technological innovation is a road full of unknowns and uncertainty, yet it is the only way for a company to break out, renew itself and reach the top of its industry. Rather than making more money more quickly, FuYuan prefers to withstand the pressure, work quietly on its products, improve step by step and gradually make itself irreplaceable, so that the company can move forward steadily however the external environment changes.
In recent years, with the introduction of a series of national, provincial and municipal tax cuts and project subsidies, FuYuan has received a measure of financial support. In particular, Weifang's citywide system of dedicated service officers for companies has solved many practical difficulties for the business. Chen Liang said that government support has given them a very good external environment and strengthened their confidence in tackling difficult problems.
The secret of "only I can solve it" is innovation
After decades of accumulated experience, FuYuan is now one of the strongest turbocharging technology companies in China. The marine turbochargers it has developed can already fully replace foreign products on the medium- and high-speed engines of coastal fishing vessels and cargo ships.
"Previously, 95% of the Chinese market for turbochargers for large ocean-going ships was held by foreign suppliers. Prices were high, service was poor and users suffered. That gave us room to develop." For a specialist developer and manufacturer of turbochargers, the question of how to achieve a technical breakthrough, so that its products can go from coastal waters to the open ocean and Chinese users no longer depend on foreign products, became FuYuan's development goal and the focus of its innovation.
In 2018 the company began developing turbochargers for large ocean-going ships. Faced with technical bottlenecks, FuYuan sought outside help and worked with the Turbomachinery Research Laboratory of Tsinghua University, and in 2019 it delivered its first turbocharger for large ocean-going ships to a customer. Customer feedback since then shows that core indicators of the FuYuan product, such as pressure ratio and flow, are better than those of foreign products. "This turbocharger of ours filled the gap in China for ocean-going ships," said Wang Zhongqi, head of the Product Design Department at the company's Technology Center.
"My products are what keep me going." Chen Liang says frankly that his happiest moments are when a large customer comes to him with a problem to solve, because it means that among all its suppliers only FuYuan is able to solve it. "How do I keep that unique appeal? The secret is innovation: mastering new technology, making new products and having the ability to help customers solve their problems."
When FuYuan people go out to talk business, they share one idea: what they sell is not a product but a turbocharging solution that improves engine performance. The product is only part of the solution; more of it is technical service and support for the development of high-performance engines.
Foreign technology is not impossible to match
Walk into FuYuan and, from management to technical staff to shop-floor workers, everyone has an infectious enthusiasm; when they talk about their products, their eyes light up. That light has nothing to do with money or company size. It is a heartfelt affection and confidence, and it is entirely in keeping with Chen Liang's philosophy: products determine a company's standing, and you should love your products as you love your own children.
"I keep thinking that one major reason international relations have been unstable in recent years is that the rise of our country's industry has taken some of the profits of foreign companies. That is a good thing: it shows we are growing stronger, and it shows that when you really put your mind to it you find that foreign technology is not impossible to match." Chen Liang told the reporters that their aim is to lead among Chinese companies, compete with foreign companies on technology, service and cost, and ultimately replace foreign products, to the greatest benefit of all concerned.
Running the company well is not only about profit. Building a company that lasts a hundred years and a brand that can stand up to foreign competitors is the goal and the motivation of FuYuan's people. Chen Liang believes that a good company does not have to be big but must have value: it must allow individuals to realize their own worth and must also be of value to society and the country, and that cannot be measured in money.
To move toward this goal, a company must stand at the forefront of technology and at the top of its industry, with the help of top talent and research institutions. FuYuan made its arrangements early. It has established long-term technical cooperation with a number of research institutes and universities in China and abroad, set up research platforms including a provincial technology center, a provincial engineering research center and a provincial "One Enterprise, One Technology" center, and secured cooperation with several leading researchers in China and abroad. At the same time, the company trains its own research staff, who now make up one fifth of all employees. Its reserves of talent are ample and its support for technological innovation is strong.
In Chen Liang's view, a company needs not only technological innovation to progress; innovation in thinking and awareness is just as important. When the external economic environment is poor or the company faces a crisis, being able to adjust course in time, avoid risks and complete a safe transition and transformation is also a form of innovation.
FuYuan, whose plant was built in the 1970s, has witnessed the rise of industry in Weifang along the way and has also lived through several crises, some of them near-fatal. Behind each escape from danger lay a new way of thinking and a bold experiment. Looking for opportunities through the ups and downs, developing with the trend through the fluctuations and growing stronger with each test: FuYuan's path may offer some lessons for small and medium-sized companies that are currently unsure of their way.
Editor: Pan Ting. Reviewed by: Liu Beibei
