Xi'an, a large central enterprise from Xi'an, is a long-established and well-established electrical equipment manufacturer. Founded nearly 60 years ago, this company has grown together with China's electric power industry, creating one after another with splendor and miracle. What is the trend of China's power industry development? Which original technologies will China West Power exert? What are the plans for scale-out?
A few days ago, the Securities Times 'high-quality development of listed companies in action' interview team went into China's Xidian, Securities Times Deputy Editor-in-Chief Cheng Xiaohai Dialogue with China's Xidian General Manager Zhen Zhenjiang. A grand blueprint for China's Xidian, in Zhenjiang The story is getting clearer.
Deep accumulation, focus on improving power quality
Cheng Xiaohai: China Xidian is the leading manufacturer of power transmission and transformation equipment in China. Please tell us about the growth of the company.
Interview: Cheng Xiaohai, deputy editor-in-chief of Securities Times (left)
Guest: Yan Zhenjiang, General Manager of China West Electric
Zhen Zhenjiang: Xidian is based on five of the 156 key construction projects during the first five years of China. China's power transmission and transformation equipment manufacturing industry is located in Xi'an and was built by the former Soviet Union. Xidian was from China at the time. The old industrial base moved to many industries, the switch was moved from Shenyang, the transformer is Shanghai Electric. Xidian Company is also the army of the west, the builders are red and special, so-called red, some of our old cadres, many of them are During the War of Liberation, some of the soldiers were very good; there were some old experts who were experts in the Soviet Union. These seniors contributed a lot to Xidian. So the establishment of Xidian from the 1950s. After the construction of the 1960s and 1970s, the establishment of China's power transmission and transformation industry base. This power transmission and transformation industry base has played an important role in China's national economic construction. It is an important component of power construction, power engineering. It is also an infrastructure that has a great impact on China's economic development.
Cheng Xiaohai: In the power transmission and transformation industry, what kind of market position is China West Power currently in? What kind of competition is this industry currently?
Zhen Zhenjiang: China's Xidian was built earlier. The only one with the strongest set of domestic power transmission and transformation is Xidian. With the development of China's power industry, many companies have gradually developed, but they are basically involved in the entire power transmission and transformation industry. A product or industry, unlike the Xidian industry chain is so complete, it should be said that Xidian is in the forefront of the entire power transmission and transformation field in China. We are now focusing on the UHV industry, and our target competitors are internationally renowned multinational companies.
Cheng Xiaohai: What new changes have been made to the power transmission equipment products or the market now? Industry information, intelligence, what kind of development trend?
Zhen Zhenjiang: Power grid construction generally has a logical relationship: When the entire power grid is built, the power grid is laid first, and the voltage level is from low to high. This is a process; the water resources generated by our country, the coal resources are all in the northwest, southwest, the load of electricity. They are all in the east, and the distance between the east and the west is basically several thousand kilometers. This long-distance power transmission requires high-voltage power equipment. Through efforts to innovate China's leading position in the UHV grid. At present, the domestic UHV grid construction has reached With the international advanced and leading level, the next step is to improve the power transmission quality of the power grid. This is what we call the improvement of power quality. The power transmission quality of power is both in transmission and in the field of power distribution. With the development of information technology, Smart grid, around the improvement of power quality and the intelligence of the grid, I think there is still a lot of work to do.
Cheng Xiaohai: Actually, what Xidian is doing is to improve the quality of power transmission and transformation power grids?
Zhen Zhenjiang: In the construction of major domestic power grids, Xidian has participated in many projects and played an important role. Especially the power transmission of the Three Gorges Project, the West Power Transmission and other major projects, all of China's first power transmission and transformation lines, from 110 kV, 220 kV, 500 kV, to 750 kV, to one million volts, West Electric is the main participant and all participants.
As a equipment manufacturing enterprise, the improvement of power grid quality is also due to the operation of power grid equipment, including energy saving and energy saving. The improvement of energy efficiency is related to equipment. We have the responsibility and obligation to improve the quality of the power grid. The focus is also on improving the quality of the power grid. Xidian has research and development, innovation, product and industrial upgrading of this technology. I think this is a potential market.
Xidian has already paved the way for the smart grid. You saw the switchgear of our switch factory intelligent GIS today. This was developed earlier. When we first arranged it, the country has not proposed the concept of smart grid. We are going The digital device was deployed in this direction, and then the grid was intelligent. We felt that this matched our deployment perfectly.
The technical standards of our enterprises have become the national standards through continuous improvement. Nowadays, the technical standards of China's switches, transformers and other power equipment are based on the technical standards of Xidian. The first-class enterprises do the standards. Many products of Xidian are truly doing this. step.
The growth rate slows down. China Xidian develops new business.
Cheng Xiaohai: What is the size of the national grid investment this year? What is the future development trend of the country's investment in the grid?
Zhen Zhenjiang: We also saw some information from the grid company's investment plan. In 2017, it was more than 400 billion, which was two percentage points lower than 2016. But in 2018, investment increased slightly, but overall, we think it is basically 5000. This level of 100 million yuan. In other words, in the investment in power grid construction, the current period is a flat period, not as high as before. Especially for the construction of UHV projects, 2017 has shown that the amount of UHV tenders has dropped more, 2018 Year, 2019, follow-up see is still there, but the amount is not as much as 2015, 2016, this is a feature.
From the planning of the power grid company, the investment of 500 billion yuan has increased a lot of distribution networks. In fact, the upgrading of the distribution power grid in China is still necessary. General Secretary Xi Jinping pointed out in the report of the 19th National Congress that the main contradictions in China’s society have been transformed into people in the new era. The contradiction between the growing need for a better life and the uneven development. The demand for electricity is also related to the people’s longing for a better life. Therefore, improving the power supply and quality of the distribution network is also in line with national requirements. In the construction of intelligent power grids, there is no big increase in the total investment in power grids, but there is indeed a change in the investment structure. There is not much investment in UHV equipment, but it will increase in other areas, such as in intelligent, new energy. I think Xidian has this advantage, and we have also made some layouts to actively occupy this market.
Cheng Xiaohai: The investment growth rate of the power grid is declining, the UHV construction project has decreased, and it has certain influence on the company. Are there any specific countermeasures?
Zhen Zhenjiang: The UHV equipment market is the same as any industry development, always from growth to saturation, and finally to a process of decline, so we also made some layouts in the early stage.
A few years ago, Xidian reorganized and acquired some enterprises in the medium-voltage power distribution and distribution basic industries such as Tianshui, Baoji, Chengdu, Jinan, etc., and distributed the power distribution. The market for power distribution is good. Second, We have DC converter valve technology in power electronics. We will extend this technology to develop power electronics. Because power electronics is more widely used, it will be used in many aspects such as rail transit. We have also set up a special one. Power system companies are developing; then they are deploying new energy, from the general contracting of new energy to the core technology of new energy, such as grid-connected power generation, we have product applications.
Flexible DC is also a relatively advanced technology. It is suitable for urban power grids, isolated island power grids, and has a relatively large demand. Therefore, we are also making efforts to break through. China's first South Australia flexible DC project, Xidian, is a major supplier. There will be some reserves.
In addition, around intelligent manufacturing, we also made some layout in advance. Manufacturing is the strength of Xidian, because we are equipment manufacturing enterprises, manufacturing technology is the core of our housekeeping, Xidian extends through manufacturing technology, in the loss The field of substation and some other fields have a technical basis. Therefore, Xidian is no longer just developing in the field of power transmission and transformation, and will expand some new technologies and new fields in the field of power transmission and transformation.
Sailing out to sea with 'One Belt, One Road'
Cheng Xiaohai: With the implementation of the 'One Belt, One Road' initiative in China, the space for power demand growth in the relevant countries is still quite large. The national power companies have gone out. This is an opportunity. How does China’s Xidian seize this opportunity to carry out foreign investment? Business?
Zhen Zhenjiang: We have many historical achievements in overseas markets. We are the first to go out in China's power transmission and transformation enterprises.
In the 1980s, Xidian was famous in Southeast Asia for its high cost performance. Foreign countries always think that China's products go mainly through price cuts. We are not. We rely on high cost performance. More importantly, we also need faster service response. Half of the substation market is occupied by Xidian, including high-end markets like Singapore, which are products of first-class enterprises. Xidian’s products have basically occupied its market after entering. There is also Hong Kong in China, Hong Kong. The two major power sectors in the region, China Light and Hongkong Electric, are basically using Xidian's switches and transformers. From these examples, we have capabilities in terms of technology, engineering construction, operation management, etc.
With the introduction of the national “One Belt, One Road” initiative, China West Power is a good opportunity. We are in Africa, including many places like Sudan, Ethiopia, etc., and South America, we have undertaken a lot of engineering, high quality Products go abroad.
As the products go out, Xidian will also go out of the industry. This is the practice of manufacturing companies. International multinational companies are using the external resources, including the market, human resources and other resources to promote the industry when the company is strong. The main reason for the industry to go out is to have technology and brand advantages. Xidian has this advantage through technological innovation.
China's Xidian has deployed overseas bases, such as Egypt and Indonesia. This is a relatively large scale, and then technical cooperation with the Russian power grid. The industry's going out means that our technology and brand can go out and achieve a leap.
In the past, China's equipment manufacturing industry wanted to build a base abroad. It is difficult to build a base abroad. Now we are relying on our technology. Because these countries are also our technology, we will carry out joint ventures with them through technology brands. There are 80 countries and regions, most of which are related to the countries along the 'Belt and Road'. This year we are planning to make some industrial layouts in the 'Belt and Road' countries or regions.
We have some overseas layouts, including those like Croatia. Some cooperation has basically been confirmed. So, around the implementation of the 'going out' strategy, we must seize the opportunity of the “Belt and Road” initiative to let products and industries go out at the same time. It is our responsibility to create more foreign exchange income for the country.
Cheng Xiaohai: Did Croatia have a specific plan for further expansion of overseas base construction and increase the scale of overseas investment?
Zhen Zhenjiang: We have a plan. In 2020, China Xidian Overseas's operating income will account for 20% to 30% of total revenue. The concept of a general multinational company should not be less than a quarter of its overseas business. Through product supply, the big goal is to find suitable projects in South America, Middle East and Africa through overseas industry layout.
Cheng Xiaohai: Last year, China’s Xidian Annual Report reported an overseas income of 1.6 billion. Will there be a big increase this year, or next year?
Zhen Zhenjiang: Some time ago, we just reviewed the strategic plan for half a year. We all agreed that the country’s “One Belt, One Road” initiative provides us with a good opportunity for overseas development. From the perspective of Xidian itself, the domestic market is subject to some challenges and needs Constantly increase the development of overseas markets. From the perspective of strategic planning, we must increase the development of overseas markets. It is planned to achieve 20% to 30% of overseas business by 2020, in order to be able to stand up to the concept of multinational companies.
Cheng Xiaohai: What is the current order for the company's business? What measures or means will it take to win more orders?
Zhen Zhenjiang: Our order at the beginning of the year was more than 20 billion. Recently, there are some UHV projects in China. We will seize these projects. While expanding the intranet market, we will expand the overseas market and overseas markets as key markets.
I just said that 20 billion is the order we have accumulated. A considerable part of this year's new orders is for overseas orders. Overseas, the overseas market has great potential, especially overseas. It is very advantageous. With the technical capabilities of enterprises and the improvement of competitiveness, enterprises like Xidian are fully capable and fully developed overseas. We now regard overseas markets as our key breakthrough targets.
China West Electric Products
Power transmission and transformation complete set of capabilities
Cheng Xiaohai: I read a document, that is to say, China West Power is the only central enterprise in the power transmission and transformation equipment industry. I wonder if this is accurate?
Zhen Zhenjiang: This statement is not accurate. It can be said that we are a central enterprise with strong capacity in the power transmission and transformation equipment industry. Now there are also some power transmission and transformation equipment enterprises. They all produce individual products, not transformers or switches.
During the period of the Fifth Five-Year Plan, the state has placed Xidian as an industry, so our power transmission and transformation capacity is the strongest in the country. As a central enterprise has greater responsibility, Xidian needs to implement the national strategy. This is the responsibility and opportunity. The national strategy also brings a lot of room for development.
There are new requirements in the new era. We believe that we must improve our manufacturing capabilities. Next, China Xidian will also develop smart manufacturing business. We will also provide industrial services to some enterprises in the future. China Xidian has undertaken 7 countries of the Ministry of Industry and Information Technology. Demonstration project. In terms of military-civilian integration, China's Xidian is relatively weak, but at the same time it has great potential for development.
In the implementation of the rural revitalization strategy, China's Xidian has an advantage in power distribution. We have recently a project that is working on a project that is about energy storage. Now photovoltaics and solar power, everyone thinks this electricity is garbage, mainly Because it does not store electricity, it is not a very smooth wave. If there is an energy storage device, it can. So we are now conquering energy storage technology.
As a central enterprise, China's Xidian, while implementing the national strategy, also brought us opportunities for development.
Cheng Xiaohai: According to the information, China Xidian is the industry with the strongest independent innovation capability in the industry. Please tell us about the technology research and development and innovation. What are the special high-end products of China Xidian, which have already been put into the market?
Zhen Zhenjiang: The history of the development of Xidian is the history of innovation. Shortly after the establishment of Xidian in 1959, the former Soviet Union quickly stopped aiding construction, which led us to be technologically autonomous. In the 1980s and 1990s, we benefited from the Three Gorges Project. 4. The technical cooperation of foreign multinational companies has mastered many advanced technologies.
With the development of the national grid, such as the implementation of 800 kV and 1000 kV UHV projects, foreign countries have no mature experience to learn from. Our enterprises must have their own technological innovation. In recent years, Xidian has been grasping innovation and getting its own in the industry. Status. The specific approach is:
First, China Xidian has been continuously improving its innovation capabilities. In 2006, China Xidian made a relatively long-term scientific and technological plan, determined the company's development goals, which technologies are the core, and how to innovate themselves;
The second is the R&D structure. We basically built two major levels, one is the group level, the other is the enterprise layer, and the group level is gradually under construction. We are determined to set up the Academia Sinica, which is entirely owned by Xidian. We have researched the research funds for the research institute. Dean is a professional manager who has experience in international technology management. We have set up R&D centers in several industrial companies.
The third is that we carry out top-level planning and design on key product projects. Around the domestic power grid construction, as well as UHV exchange, DC converter, converter valve, switch, etc., all these equipments are independently developed by us.
There are also some core technologies that we are trying to overcome, such as generator protection circuit breakers, flexible DC technology, and many experimental equipments are also doing their own. We are also actively involved in some national science and technology projects, such as the national 863, 973 projects.
China Xidian has achieved many achievements in recent years. We have won 12 National Science and Technology Progress Awards, including 2 special prizes and 4 first prizes. Xidian has won the Central Enterprise Technology Innovation Special Award for two consecutive terms; earlier In the layout of intellectual property management, the company quickly broke through 2,000 patents, including more than 300 invention patents, including 9 Chinese patent awards and 3 gold awards.
Xidian also pays attention to the participation in the revision and revision of industry standards. In particular, going abroad is more important to reflect the importance of standards. In recent years, in order to go global, Xidian has re-tested overseas export products because some countries have product standard systems and domestic Different, the requirements are different.
Cheng Xiaohai: In 2013, GE became our second largest shareholder. How has the cooperation with the other party been over the years? How does its entry help the company's market technology?
Zhen Zhenjiang: The cooperation between China West Power and GM is quite pleasant. Our cooperation has three aspects. The first one is that GM shares in Xidian and holds 15% of the company's equity;
The second aspect of cooperation is that we have established a joint venture company. Compared with our original tradition, we are engaged in joint ventures. This joint venture company is still controlled by us, just in Xi'an. We mainly want to improve the entire industrial chain of Xidian. The national grid technology is developing very fast. In particular, information technology is now faster, the product technology of the joint venture needs to be localized, like the control and protection of many subway projects in Beijing, and other areas of the subway. This joint venture has advantages.
In the third aspect, at the time, we cooperated with GM to help GE to sell our power transmission and transformation products through GE's network in the global market. Through communication with GE, we can better understand the characteristics of overseas markets, including power development in various countries. Happening.
In addition, in terms of technological development, we jointly cooperate with each other at the commanding heights of technology, and learn from each other's strengths. From the perspective of their own, this cooperation has a positive effect on the internationalization of Xidian.
Cheng Xiaohai: For many years, China Xidian has been committed to the manufacture of power transmission and transformation equipment. Is there any idea of entering a new field outside the power transmission and transformation industry?
Zhen Zhenjiang: It should be said that there is definitely something. The first step we want to do is to associate with our own business. Upstream and downstream, at least there are some similar technologies. For example, the intelligent operation and maintenance of the power grid. Xinjiang has many petroleum systems, sometimes A system has one or two hundred substations below 110,000. Their requirements for these substations are that the substation can be handed over to China West Power from construction to operation. Xidian also proposed that the next step is to conduct online monitoring and remote diagnosis. Reduce costs, in this case, in the future, Xidian will no longer simply provide power transmission and transformation equipment, and no longer provide simple services, but become a smart operation and maintenance system service provider.
At present, there are still many areas of equipment in our country, especially high-end equipment is controlled by people, and there is no localization. Our power transmission and transformation equipment has been localized. It turns out that some high-end equipment is basically done by foreign companies. The joint efforts to gradually realize the localization of power transmission and transformation equipment.
Confidence in achieving results, continue to enhance core competitiveness
Cheng Xiaohai: The company's sales to the first largest customer accounted for 52%. There is a voice in the market that thinks this ratio is high. What does the company think about this?
Zhen Zhenjiang: At that time, when the state established the Xidian Power Transmission and Transformation Base, the first purpose was to first meet the national power grid construction. In these years, the national power grid construction space is very large, and the power grid technology is also progressing rapidly. China's power grid construction is currently in all power grids around the world. It is all the most advanced. At that time, the state had a request. There is such a large market share in China. The central enterprises must first meet the needs of national construction. Therefore, it is normal for the company to account for a relatively high proportion of the largest customers.
There is still a lot of space in power transmission and transformation technology, such as improving the quality of power. Everyone eats and divides coarse grains and fine grains. Electricity also has fine electricity and coarse electricity. What is fine electricity? It is the user's high security and stability requirements for the power grid. There is a term for technology, called chopping of voltage. If we use the application of these devices to make the grid stable, then the price of the company equipment can be higher. I believe that some high-end users, including hospitals, pharmaceutical factories, etc. Do not dare to power off, even the voltage does not dare to have a wide range of fluctuations, there are some potential markets and users, Xidian to do work in these areas.
Cheng Xiaohai: From 2012 to 2016, the company's net profit has been growing continuously for five years. The net profit in 2017 was the first decline in the past six years. What caused it?
Zhen Zhenjiang: There are two main reasons. The first UHV product, Xidian has a technical advantage. Therefore, at that time, the UHV has a lot of business, while other conventional products will do less. Objectively speaking, The profit margin of UHV products is still better than that of conventional products. As the market demand for UHV products declines, there will be some impact.
The second is the rise in raw materials in the past two years. The rising prices of raw materials have some impact on the overall profit. We need to expand new profit points and strengthen the development of the extranet market. Industry and enterprises have a life cycle, and we will strengthen our management in the next step. , implement lean production, lean manufacturing, to reduce costs.
Many foreign companies will improve their competitiveness through mature costs and products. Therefore, Xidian will also carry out these tasks, which is to reduce costs and improve management in the traditional and conventional markets, so that our products are competitive. Second, it can improve efficiency.
Cheng Xiaohai: The company proposed that the estimated sales revenue this year is 14.93 billion. How confident is this indicator to be completed this year?
Zhen Zhenjiang: We should be able to complete this indicator this year.
Among the accumulated orders of more than 20 billion at the beginning of the year, we can also calculate them. Some of them can be realized this year. Because the production of UHV equipment has a cycle, it usually takes one or two years. According to the production volume, at hand Order scheduling should also be scheduled for this time.
Cheng Xiaohai: Can you sum up, what are the core competitiveness of China Xidian?
Zhen Zhenjiang: The first is original technology, we have no infringement. At the time, when GE cooperated with us, the first thing to do was to confirm whether there was any infringement by Xidian. They thought that it would be equivalent to selling products for us, if Xidian had Infringement, it will also be associated. GE hired international third-party agencies to do intellectual property appraisal, after evaluation, Xidian's technology is completely independent innovation. The core of Xidian is innovation ability, mainly product technology and Manufacturing Technology.
The second is that Xidian has a talent advantage. Because it can't do anything without it, Xidian has a large number of professional and technical personnel. No matter from the scientific and technical personnel, the technical staff is very rich. The technical workers of the manufacturing enterprise are also very important, not We can cultivate it in two or three years, and we also have many excellent craftsmen.
The third is that China West Electric has done a lot of work from the planning and management of science and technology, making plans, breaking through major projects, and establishing decision-making innovation institutions. The West China Institute of Advanced Research is among the best in the world, China West Electric Processing, testing capabilities are world-class. Especially testing capabilities, because these testing companies are likely to develop some high-end products.
Cheng Xiaohai: What is the overall development strategy of the company in the future? What kind of overall goal does China West Power finally achieve?
Zhen Zhenjiang: Based on the field of power transmission and transformation, it is the main business defined by the State-owned Assets Supervision and Administration Commission of the State Council. The State-owned Assets Supervision and Administration Commission requires the central enterprises to highlight their main business. By the 13th Five-Year Plan, we have identified the following business segments:
The first one is the power product, which is our original tradition.
The second is the power system. The power system is not only the original ones, but also many power electronics industries, as well as new micro-networks.
The third is electrical products, electrical products are mainly applied to the national power distribution field, as well as marine and rail transit, including many projects for military and civilian integration.
The fourth is industrial automation. China Xidian plans to improve this manufacturing technology by intelligently manufacturing this field. We are going to make this piece bigger as an industry.
The fifth is the complete set of equipment and engineering contracting. We actually have a certain foundation overseas. We have done a lot of EPC projects, and the next step is to strengthen, because this can truly reflect the advantages of Xidian’s complete set of capabilities. Some places have not played well, and this aspect needs to be strengthened.
China's Xidian is in a fully competitive field. This has its advantages and disadvantages. Everyone often feels the disadvantages. It feels that there is no monopoly industry to earn money in the industry we are in. However, full competition forces the company to constantly surpass itself and continue to innovate. This has formed the advantage of Xidian itself.
As the company develops to a new stage, it is the key to enhance the company's innovation capability. For China's Xidian, it is to become the most innovative and competitive world-class enterprise in the field of UHV power transmission and transformation. I believe China West Electrical energy is done.