How did a Chinese manufacturer overcome slowing economy and the trade barrier?
By Zhang Xinyuan
Founded 55 years ago, and moving up the industrial chain from hemp rope, to steel wire, and optical communication fiber during the process, Fasten Group from China's eastern Jiangsu Province, is one of China's largest manufacturer of high-quality steel wires (used in some of the world's largest bridges) and optical communication wires and bars that are critical in the rolling out of 5G.
As the Chinese economy faces downward pressure from the sputtering global demand and trade frictions, Chinese manufacturers like Fasten are facing even bigger pressure, since the industry is linked to the macro economic environment and trade demand, yet Fasten is weathering through the tough economy through industrial chain upgrading and launching international standards in the global market.
As a steel product and optical fiber manufacturer, Fasten is subject to the influence of upstream, downstream, and macroeconomic influence, but the company's business has been steadily increasing in recent years mainly through two endeavors, according to Zhu Weijun, chief quality officer at Fasten.
"We have been targeting the top five percent of the market that have not had their needs met," Zhu said. The top five percent of the market demands high-quality products. "Our strategy is to set high standards, and use that standard to push for high-quality development.”
Fasten has contributed to seven of the world top 10 suspension bridges, and six of top 10 world cable-stayed bridges.
"The other one is to achieve breakthroughs by innovation, create new territories, and try to lead the market," said Zhu.
"We are now trying to use carbon fibers that are lighter, stronger and have longer durability to replace steel," he said.
There are three levels of R&D at Fasten, Zhu introduced. The first is like the development of new carbon fiber material, which is a vision, and may never be any actual result, this kind of R&D is done at the headquarters.
The second level of innovation is market-oriented, which is done within different divisions.
The third level is innovation from Fasten's more 10,000 grass-roots staff, as frontline workers they actually discover the most technical and quality-related problems. When they submit a suggestion, the company rewards them with 100-500 yuan.
"This is how we mobilize our staff to bring in innovation from the ground-up," he said.
Fasten has been holding innovation conferences every May for the past 20 years, where they can consolidate the experiences from past years and plan for future innovation, and reward the R&D teams according to their industrialization gains.
Jump over the trade barrier
Tariffs imposed by the U.S. have been a big hurdle for Chinese export businesses since the trade frictions between China and the U.S. escalated. Fasten also faced the anti-dumping laws from the U.S. back in 1998 and the company's experience can shed some light to other Chinese companies.
When faced with anti-dumping, most Chinese companies would choose to leave the country, but Fasten didn't take it lying down, they hired the best lawyer in the U.S. and chose to fight, according to Zhu.
"Now the U.S. is our largest market, they charge tax of 0.2 percent, which is next to nothing," Zhu said.
There are two barriers in trade: one is a non-technical barrier, like anti-dumping and subsidies; the other is a technical barrier, which can be overcome by launching technology standards.
"To overcome the technical barrier in trade, there are two ways, first is to adopt other countries' and international standards,” Zhu said. "If that doesn't work, then you create your international standard, which the world follows. Fasten launched two international standards.”
"The export of standards and technology are the prerequisites of the products export," Zhu stressed.
"The bottom line is that the world needs to recognize your standard and technology."