Let Chinese equipment companies have more confidence in handing out business cards.

Pinggao Group has climbed the product value chain from low-end to high-end.

        "In multiple countries and regions, we have undertaken many overseas projects, directly driving the output of power equipment. At the same time, China's power equipment is reliable, stable, and has a significant price advantage, which has overall formed its competitiveness in the international market," said Xu Xiaofei, deputy general manager of Pinggao Group International Engineering Company, in an interview with China Electric Power News. In recent years, the development of China's electricity has driven the booming of the power equipment industry, and the situation for Chinese power equipment companies to 'go out' is good, giving domestic power equipment companies more confidence in exploring international markets.

From 'selling products' to 'contracting projects'

"Pinggao Group was originally a single equipment supplier. In the process of entering overseas markets, it transformed into a general contractor, changing from earning a little 'hard money' to becoming a 'turnkey' contractor. This change in business model is more suitable for international business practices, and the shift from 'selling products' to 'contracting projects' has greatly enhanced the status of 'Made in China' in overseas markets," Xu Xiaofei told China Electric Power News. In recent years, the extension from simply providing equipment to general contracting has become a killer feature for Pinggao Group in overseas engineering competition.

In fact, from the late 1980s to the 1990s, due to policy influences, Pinggao Group could only rely on domestic general contracting companies to act as agents for export and supply supporting equipment. Since these were all low value-added output products, the total profit was limited. Therefore, Pinggao Group timely adjusted its international market strategy, focusing on the more significant economic benefits of general contracting (EPC) business, achieving the climb of the product value chain from low-end to high-end.

"There is no mature and fixed model for domestic power equipment companies to enter international markets. Entering overseas markets is completely 'feeling the way across the river,'" Xu Xiaofei recalled when Pinggao Group first entered the international market, saying that the shift from 'selling products' to 'general contracting' was entirely forced by the international market.

As early as 2006, Pinggao Group attempted to participate in general contracting (EPC) in the international market, and this goal quickly became a reality. In 2007, Pinggao Group won the bid for a total of 12 66 kV GIS substation projects from the Syrian National Electricity Transmission and Distribution Company, and all substations were completed on time and with quality.

After the political situation in Syria deteriorated, Pinggao Group's project personnel still adhered to completing the project and successfully delivered power, receiving high praise from the owner. Due to Pinggao Group's outstanding performance in this project, the Syrian government clearly expressed its hope for Pinggao Group to continue participating in Syria's power station projects and provided maximum policy support.

In the past, when Chinese companies participated in bidding in Europe, they often hoped to win bids at low prices, but this behavior was not well received in the industry. "Polish owners have very strict requirements; the bid documents and materials must be in Polish, and the technical requirements for products are also very high. All equipment must be certified by authoritative EU institutions, and the difficulty is imaginable," Xu Xiaofei admitted. Pinggao Group views the Polish market as a stepping stone to enter the European market, which has strategic significance, and no matter how difficult it is, it must be conquered.

In 2013, Pinggao Group successfully won the bid for the general contracting contract for the 400 kV substation and line in Poland, with a contract amount of 850 million yuan, achieving a breakthrough of zero in the State Grid Corporation's general contracting (EPC) projects in Europe. In 2013, Pinggao Group achieved new international contracts worth 1.662 billion yuan, exceeding the historical total and growing by 307%.

The hard work and success at the beginning have won Pinggao a broad market prospect. Pinggao Group's third EPC contract in Poland was signed on May 9 of this year. As of now, Pinggao Group has signed and is executing EPC project contracts worth over 1.2 billion yuan in Poland.

As a "flagship product" produced by Pinggao Group, its GIS equipment has been operating well in more than 30 countries around the world for decades. Thanks to the outstanding performance of core products in the international market, Pinggao Group successfully won the bid for the general contracting (EPC) project of the 800 kV GIS substation in India.

In recent years, the rapid development of China's power industry has driven domestic power equipment manufacturing companies to continuously grow, allowing them to participate in international market competition in broader fields, higher levels, and more specialized projects. The significant achievements and standard internationalization of Pinggao Group in the ultra-high voltage field have added strong confidence for domestic power equipment products to 'go out'.

Companies 'going out' must avoid vicious competition.

"Relevant industry associations should strengthen coordination and control over domestic enterprises to avoid vicious and disorderly competition when domestic enterprises 'go out.'" Xu Xiaofei offered his advice to power equipment companies preparing to explore international markets, stating that seeking quick success and cutting corners not only loses the market but also the reputation of 'Made in China.' Therefore, what domestic power equipment companies need most now is to integrate advantageous resources from all aspects, form a joint force, and go to the world together. In fact, the world's power equipment giants such as ABB, Siemens, and Alstom have long transitioned from fragmented competition to oligopoly after more than a hundred years of market competition. Whether in terms of product variety, level, design capability, engineering management capability, or construction capability, they are all comprehensive and high-level, while we can hardly find any domestic company or unit with even similar comprehensive functions.

Experts analyze that when many Chinese companies go 'out' individually, the market development methods they can adopt can only be disordered competition and price wars. In this case, whichever market Chinese companies swarm into will quickly decay due to profit depletion. The international market is a field where opportunities and risks coexist. In the process of 'going out,' we have both successes and failures. The reasons for failure are both external and internal.

Of course, the shortcomings are that compared with first-class international companies, the existing structure of our country's equipment enterprises is not suitable for the global competition pattern, with insufficient forward-looking technology research and relatively inadequate overseas general contracting and equipment matching capabilities. This means that our power equipment companies face significant export risks, which is not conducive to further 'going out.'

"In the future, companies will inevitably continue to expand overseas markets and go out at the right time. However, in the eyes of most entrepreneurs, the road for our companies to go out is not smooth. In addition to funding and technology, factors such as investment decisions, market changes, legal obstacles, cultural differences, and political instability make it exceptionally difficult for companies to go out," Xu Xiaofei analyzed in light of the current international situation, believing that finding a suitable business model and new points of profit growth, and going out with purpose is the issue facing companies.

"Good wine fears a deep alley." In fact, the insufficient brand awareness of our equipment manufacturing companies has long troubled equipment companies' exports. Although some of our power equipment has begun to form brand effects in some developing countries, overall, the international influence of our equipment is still insufficient, and in the future, we need to increase efforts to promote our independent brands. "All along, some domestic equipment manufacturing companies have neglected international publicity, lacking a complete, systematic, and long-term feasible market promotion plan, and have not established sufficient visibility in the international market," Xu Xiaofei analyzed.