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        Song zhiping: adhere to an open and inclusive road of internationalization

        Publisher: Administrator 2019/1/5 9:04:04

        The 20th Peking University guanghua New Year BBS was held at the national convention center on December 23. The theme of BBS is "a better China: dare and move forward", which aims to pay tribute to the 40 years of reform and opening up and look forward to a new vision of development. Song zhiping, chairman of China building materials group co., LTD., distinguished professor of management practice, guanghua school of management, Peking University, and President of China enterprise reform and development research association attended the BBS and delivered a speech.

        In his speech, he said that despite the changes in the international environment, Chinese enterprises should stick to an open and inclusive road of internationalization and unswervingly expand opening up, especially focusing on exploring diversified markets and building up China's image of peaceful development and never seeking hegemony.

        Song zhiping said that in recent years, China building materials group's international operation has made positive progress, has accumulated a lot of experience: respect for international division of labor, adhere to the global procurement; Focus on joint development of third-party markets with multinational companies; Strengthen enterprise market behavior, less play the national flag, equal participation in the international market competition; In cooperation with countries along the "One Belt And One Road", the three principles of "making contribution to local economy, cooperating with local enterprises and doing good deeds for local people" are pursued.

        The following are the full views of the guests:

        Distinguished dean liu qiao, distinguished teachers, alumni, distinguished guests, and fellow students,

        Hello everyone, today I am very glad to come to the 20th Peking University guanghua New Year BBS, according to the meeting arrangement, combined with the theme of the conference, I would like to talk about the topic of "adhere to an open and inclusive road of internationalization".

        There are three reasons behind the trade friction

        I would like to share with you my thoughts that we should take an open and inclusive international road. Why do you say that? The trade frictions between China and the United States are the biggest concern of the international community.

        The first reason is that the western countries, especially the United States, are not adapted to the rapid development of China. While they say they want to see a prosperous, fast-growing China, they don't necessarily think so. And I think you get the idea.

        The second reason: trade imbalances. Although the trade imbalance is not China's fault, the Numbers are there. Around the trade protectionism, this year the sino-us trade friction seems to be more serious, but in fact small contradictions, conflicts over the years did not broken, just now to express more fierce, the main reason is the trade imbalance, in fact this is no fault of Chinese enterprises, americans over the years to take off the real to virtual, gave up a lot of manufacturing, they themselves back into industrial in the reflection.

        Third reason: they have a deep misunderstanding about our "One Belt And One Road" initiative, and they think we are competing for the market and show great anxiety.

        How to deal with trade protectionism

        Faced with such a situation, what should we do? Personally, I think we should pay attention to the following aspects when dealing with this kind of trade protectionism.

        On the macro level, we need to be more open. First, it is important to attract foreign investment through greater openness and foster an integrated market atmosphere. As you know, in the first jinwu fair held last month, there were 3,600 multinational companies participating in the exhibition. The scene was extremely grand. As the number of booths increased, many multinational companies have already settled their booths for next year or even the year after that. This shows that our openness is very attractive. As a big consumer country with a population of 1.4 billion and a rising power, the United States has attracted multinational companies. So that's one of our strengths.

        You may recall that before 1992, many western countries imposed sanctions on us. Comrade deng xiaoping's "southern tour speech" in 1992 stressed that we should continue to promote reform and opening up. We should also use reform and opening up and open still wider to resolve problems. General secretary xi jinping said at the expo, "the door of China's opening will not be closed, but will only open wider", "China's economy is a sea". This is a voice for the world.

        Second, we should expand our markets and reduce our over-reliance on the single market. Put your eggs in a few baskets. That's what we're trying to do now.

        Third, in terms of publicity and guidance, we should foster a good image in the world that China sticks to peaceful development and will never seek hegemony. At the congress celebrating the 40th anniversary of reform and opening up, general secretary xi reiterated that "China will never seek hegemony no matter how developed it is", which drew warm applause from the audience.

        At the micro level, we can also take the initiative to do some things.

        First, respect international division of labor and conduct global procurement. As Chinese enterprises, we should respect international division of labor, carry out global procurement, and enable multinational companies to develop symbiotically with us. This is what Chinese enterprises should pay special attention to in the process of development.

        Second, focus on joint development with multinational companies in the third market. Because the previous market was dominated by multinational companies, Chinese companies will inevitably compete with each other when they come. How to deal with the relationship with multinational companies is very important.

        Third, respect intellectual property rights. Respect for intellectual property rights is a major task for us, because we cannot develop an independent innovation system without respect for intellectual property rights. It could also reassure some high-tech multinationals.

        How does China building materials develop international management?

        China building materials has done a good job in internationalization. At present, 65% of the world's cement and glass factories are built by Chinese construction materials, and EPC, or "turnkey" project, is built with Chinese technology and equipment. If you think about it, an enterprise in such a big field can occupy 65% of the market, which is a big number. There are nearly 400 large cement plants around the world, all built by Chinese building materials. Now China building materials is making "six one" strategic layout, including 10 building materials industrial parks, 10 overseas warehouses, 10 international laboratories, 100 EPC projects, 100 building materials chain stores, 100 outsourcing factory management. By 2020, the "six ones" will be completed, which is also a big process of internationalization.

        China building materials has taken an open and inclusive international road in practice.

        First, China's building materials adhere to global procurement. Do EPC China building materials, in the turnkey contract engineering equipment for global sourcing, will first consider the domestic equipment, because its cost performance is good, but some of the key technology of equipment involved, will also to Europe, the United States, some big company purchase, rather than blindly to localization, this creates a cooperation between us and competitors. So every time we visit a foreign country, we also visit a competitive enterprise. On the one hand, it strengthens the market, and on the other hand, it reduces the vicious competition.

        Second, jointly develop third parties. For example, in recent years, Chinese building materials and French companies in the fields of cement, glass, machinery and equipment have jointly developed more than 200 projects in Africa. For example, many french-speaking countries in Africa used to be old French companies. Now Chinese companies have gone to those regions. We also advocate cooperation with them. Now we are also developing markets in southeast Asia and central Asia jointly with mitsubishi of Japan.

        Third, strengthen the market-oriented behavior of enterprises. China building materials is a central enterprise, which has just been approved as a pilot enterprise of state-owned capital investment company. However, what we invest in are all mixed ownership enterprises. The proportion of state-owned shares in most enterprises is below 30%, especially in companies engaged in international competition. Under such a background, we try our best to play the national flag and participate in the international market competition on an equal footing, which we have paid great attention to these years.

        Fourthly, three principles should be pursued in the "One Belt And One Road". One is to contribute to the local economy; Second, cooperate with local enterprises; Third, do good deeds for the local people. When I went to an event in Zambia, the President said, "Mr. Song, let me ask you a question first. Why did you invest in Zambia?" I mentioned the above three points to him, especially the second one, "cooperate with local enterprises". "We welcome Chinese companies," he said. "but we are worried that local companies will be crushed. When I went to Ethiopia not long ago, the President said, "Mr. Song, what we really want is for you to develop local talent and transfer some technology to us." I think this is also our idea in the early days of China's reform and opening up, so I can understand. We adhere to these practices, in the "One Belt And One Road" construction process, we can really "go out", "go in", can be integrated. We built an industrial park in Zambia. Before the project, we drilled 100 Wells and built a hospital and a school. When I went to school to see the children, sent 10 football, gave each student a pencil box, the children sing "arm in arm, heart to heart, we and building materials in a family". I am very happy to hear that the way we "go out" should be this way, to become a local favorite enterprises.

        Fifth, strive to develop seven markets, "do not put eggs in one basket". "Neighbourhood" all the way along a total of 65 countries, the Chinese building materials lock, the Middle East, Africa, central Asia, South Asia, central and eastern Europe, asean, South America and so on seven key areas, group of dozens of doing international business enterprise to develop each have emphasize particularly on, according to the market of precision farming, precision, elaboration technology, fine management, adopt the "cutting" mode, build the "base", based on the can "walk in" for a long time, can achieve long-term development.

        Sixth, in the process of "going out" internationalization, we should not only go to countries along the "One Belt And One Road" route, but also hope to enter developed countries and integrate with the markets of the United States, Japan and Europe. On the one hand, we hope to cooperate with American, Japanese and European enterprises and introduce their advanced technology. On the other hand, we have to invest in them. We recently invested about $500 million in a fiberglass business in south Carolina, and it worked very well. The head of an American company asked, "why do you invest here?" I said, "don't you also invest in China? A Chinese journalist once asked, "Mr. Song, why do you invest in the United States?" And I said, "well, it's like you and me, and the market can merge."

        In short, to counter trade protectionism, we need to adopt an open and inclusive mindset as a major country, and do our best to ease conflicts and resolve differences. For enterprises, we used to talk more about "market for technology", and in the future it may be "market for market". It used to be said that "China is the factory of the world". In the past, we often talked about "the world is China's market". In the future, we may also talk about "China is the world's market". Only in this way can we take the initiative to defuse the threat posed by trade protectionism and unilateralism.

        I'll leave you there. Thank you.

        Host: this year marks the 5th anniversary of the One Belt And One Road initiative. The political, economic, legal systems as well as languages, religions and financial systems of the countries along the "One Belt And One Road" route are very different and complex. Can you share what difficulties and problems you have encountered and how to solve them?

        Song zhiping: "One Belt And One Road" is really a big topic, China building materials has come all the way, you just said that there are at least three major difficulties. First, how can we be accepted by the people of the countries along the "One Belt And One Road"? This is very important. Because we are not a short - term business will go, but do long - term development of the market. Therefore, how to integrate with the local, let the local acceptance, has become a very important issue. I just mentioned a few practices of Chinese building materials.

        Second, deal with the relationship with multinational companies. It's better to do co-development, not "I'll take you". In practice it seems possible. In the past few years, China building materials co., ltd. has worked with multinational companies to jointly develop the third-party market, and has also tasted some benefits in this respect. Because in "One Belt And One Road" many countries, the original is their market, and on the hand of many orders, customers. Together, we will have more opportunities.

        Third, "One Belt And One Road" to pay attention to the prevention of risk. For example, the exchange rate is not stable, difficult to settle foreign exchange and so on. I had this problem on a recent trip to an African country. This is not surprising. In the 1980s, we also went through the process of using foreign exchange certificates and controlling foreign exchange.

        Host: what are the special challenges for Chinese enterprises to enter developed countries to expand their market?

        Song zhiping: the United States and other developed countries in the re-industrialization, return to industry, this is also a great opportunity, so we invested in the United States fiberglass enterprises. The same goes for Europe. We do business, also cannot abandon these markets. Compared with the markets of countries along the "One Belt And One Road" route, the overall market risk in Europe and America is a little lower. For example, in terms of exchange rate and foreign exchange settlement, there is no problem of "One Belt And One Road" countries. In fact, China building materials has done a lot of business in Europe recently, for example, in the United Kingdom, Portugal, France do a lot of photovoltaic business, recently in Spain to develop new housing business. What's the biggest problem with investing in these countries? It's about managing labor relations. Because unions are strong in these countries, we have to adapt. The general manager of one of our enterprises in Germany was ill. Our chairman in China went to see him and did a lot of such work, which made the relationship between the employees of the local enterprises and the shareholders of China building materials get very good. Every time I visit the local company, they are wearing the badge of China building materials, holding China building materials business card.

        Host: judging by the statistics, overseas acquisitions by Chinese companies fell rapidly in 2018. Why is this happening? How? Have trade frictions affected Chinese companies' ability to exploit markets through cross-border mergers and acquisitions?

        Song zhiping: yes. We have acquired several companies in Germany, which was relatively easy to enter at the beginning, but there were some problems recently. In fact, Chinese companies account for only 10% of foreign acquisitions of German companies, not a huge number, but they are nervous. I think we should pay attention to some problems when carrying out overseas mergers and acquisitions. One is to emphasize enterprise behavior, try not to play the flag of the country; Second, we merge any enterprise, in fact, the merger of the enterprise's heart is more complex, this time we should be appropriately low-key, not with the occupier, winner posture, but with a more relaxed, integration, inclusive posture, which is very important; Third, transnational operation adheres to the principle of localization. When using cadres, try to use local people and local general managers, which can alleviate many conflicts. Whenever I come across some misunderstanding of our Chinese acquisitions by overseas media, government departments and parliament, I always think that there are their problems and we need to make improvements. In the future, we should stick to the market-oriented approach in overseas m&a and not politicize it. I think it is better this way.

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