Innovative firms in Ningbo navigate the choppy waters of the trade war
Ningbo, a coastal city in eastern Zhejiang Province, has come under the spotlight for hosting a cluster of manufacturing firms that can skillfully navigate the ongoing trade fight with the US.
Each grasping cutting-edge technology in the production of key basic materials and core components, these companies have persevered in making technical innovations, staying focused on their primary business and aiming to be globally competitive from the first day they were established.
Known as “champion enterprises” for having won first prizes in national manufacturing technology contests run by the Ministry of Industry and Information Technology, the 28 manufacturing firms stand out for having retained either strong pricing power or steady market share despite the worsening global trade environment harmed by the tariff hikes of the US government.
Currently, nearly 60 percent see their primary products holding the biggest market share across the world and nearly 93 percent rank among the top firms on the domestic stage.
Tong Honggen, deputy director of the Ningbo Municipal Bureau of Economy and Information Technology, called these companies “the backbone of ‘Made in China’ and an important carrier of core competitiveness.”
“With an ever-expanding presence, China will be able to hasten its transformation toward being an innovative manufacturer of quality,” he said.
Kernel of manufacturing
If the ongoing trade war with the US has taught China anything, it is the rising significance of technical prowess.
In Ningbo, innovation has long been viewed as the soul of manufacturing.
For many years, local business circles have taken an alternative approach to their operation: manufacturers compete not for higher output and production value but having more research and development personnel and spending more of their sales revenue on R&D.
Official statistics show that about 90 percent of the city’s corporate R&D expenses come from private firms. About 95 percent of technical centers above the city level are established in the city’s private firms. Local private firms own 82 percent of the city’s patents for inventions.
Optical reflective film is essential for flat panel display, but its production technology has long been monopolized by foreign countries. The game-changer did not appear until nine years ago when Solartron Technology was established in Ningbo with a goal to break the foreign monopoly.
“Many people thought we were kidding. How could a startup dare to compete with foreign heavyweights? But our objective is to break down the barriers of technological monopoly,” said company chairman Jin Yadong.
The company now is an industrial leader and has solid collaboration with established firms such as BOE Technology Group and Foxconn.
Likewise, without its enduring commitment to innovation, Ningbo Cixing could never have evolved into a major global supplier of intelligent knitting machinery with the highest annual output and sales across the world.
How long does it take to knit a garment? With the signature product of Cixing, a computerized flat knitting machine, the answer is 45 minutes.
To improve this efficiency, however, company president Sun Pingfan said he had used 15 years of hard-earned savings to buy the machine and make technical breakthroughs.
Riding the waves
Over 1,200 years ago, Ningbo was at the forefront of the ancient maritime Silk Road. Now it has reinvented itself to become a gateway of China’s foreign trade thanks to its rising manufacturing strength.
With 120,000 private firms, including more than 20,000 export and import firms, Ningbo has trade ties with over 220 countries and regions and posts the world’s highest annual sales in more than 160 kinds of products.
As the Us-provoked trade war against China is harming business sentiment and slowing down the global economy, Ningbo is making efforts to buck the trade headwinds and hold its own.
Notable results have been secured so far. For instance, at the first China-central and Eastern European Countries Expo which opened in Ningbo on June 8, 16 foreigninvested projects worth 33.59 billion yuan ($4.77 billion) were clinched involving smart manufacturing, new energy, new material and other sectors.
Regarding manufacturing as being the advantages and foundation for development of an economy, a city official said no matter how the external situations change, it is necessary for the city to maintain strategic focus and handle its own affairs well.
The city government of Ningbo knows it cannot sit idly by. One helping hand it offers is to boost administrative reform to cut red tape, optimize the business environment and ease corporate burdens as the central government has required.
In 2018 alone, local companies saw their tax burden eased by a total of 86.23 billion yuan. The savings in taxes and fees can be plowed back into R&D and achieving technical upgrading.
Zhang Jingzhang, chairman of the board of Haitian International, the world’s leading manufacturer of injection molding machines, routinely studies the economic situation and offers regular training to his employees.
Since last June, Zhang has begun to feel the changes in the global market. By last September, market orders started to drop.
But this challenge is “nothing stormy at all” for the 83-year-old. “We have run our business for 50 years and overcome a lot of turbulent times,” he said.
“Stay focused, improve our strength and make more innovations. Next we will export more to Africa, South America and continue to run factories in Mexico, Vietnam and Russia,” Zhang said when giving instructions to his employees.
A production line at Ningbo Cixing Co is working in Ningbo, East China’s Zhejiang Province, June 13, 2019.