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Honeywell: Growth can be faster in China
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Honeywell International Inc is a US-based multinational conglomerate that makes a variety of commercial and consumer products and provides engineering and aerospace services. The company was founded in 1885.
Its operations in China began in 1935. In 2013, China became Honeywell’s largest market outside of the US.
Last year, the company reported net income of US$1.65 billion on revenue of US$40.5 billion.
William Yu, president of Honeywell China and vice president and general manager of Asia Pacific Honeywell Performance Materials and Technologies, talked about the company’s operations in China in an interview with Shanghai Daily.
Q: What does Honeywell consider its milestones since entering the Chinese market in 1935?
A: I will start with the recent China International Import Expo, which is a milestone for Honeywell. At the expo, Honeywell signed dozens of contracts, and among them, two are related to our management rather than just products and technologies. That’s historical for us and Chinese companies.
In March 2017, Honeywell invested US$100 million and bought our headquarters in Zhangjiang. It is not common for foreign companies, especially US companies, to buy land or buildings in China. However, Honeywell bought its headquarters to show our faith in and commitment to China.
Also, in 2017, the C919 aircraft of Commercial Aircraft Corporation of China Ltd, a state-owned enterprise that manufactures large civil aircraft, made its first flight. The aircraft was equipped with four key technologies of Honeywell’s. Our participation in the manufacture of the C919 aircraft began in 2008.
In 2004, Honeywell Technology Solutions China, our global research and development center, was established in Shanghai to better implement Honeywell’s “East for East” strategy. From 2004 to 2017, our revenue increased sixfold.
In 2003, Honeywell’s Asia-Pacific headquarters moved to China. In 1972, at the invitation of the Chinese government, then US President Nixon chose 10 US companies to help China. Honeywell Universal Oil Products was the only one chosen to advise Chinese enterprises on petrochemical technologies. In 1935, Honeywell’s first franchise entered the Chinese market.
Q: What are the most impressive changes you have seen in China from Honeywell’s perspective?
A: At the beginning of China’s reform and opening-up policies, the nation was in urgent need of products and technologies that weren’t particularly the most advanced in the world. However, today China needs the most advanced ones.
In fact, Chinese enterprises now want more than just technologies, but also technical cooperation. We have some technical cooperation projects. Also, more and more Chinese enterprises are willing to pay high prices to buy management expertise, which was inconceivable in the past.
A second big change is the growth of Chinese talent. Three decades ago, it was rare for senior foreign executives to speak Chinese. But now, more senior executives and even CEOs in the Asia-Pacific region are Chinese, like me for example. This is a heartening change.
Besides, every year, millions of engineers graduate in China, which is not seen in any other part of the world.
A third change is that the Chinese people need more petrochemical and chemical products. As living standards improve, houses get bigger, and building and decoration materials require high-end chemicals that emit fewer or no pollutants.
Last year, Honeywell’s Performance Materials and Technologies grew by high double digits, even with China’s GDP slowing.
Q: What are Honeywell’s development priorities in China?
A:We have three priorities. First, we will enhance cross-business cooperation, which will bring more business opportunities. In the future, we will operate as a whole.
Secondly, we will search for new business, like connectivity and key accounts. China is now upgrading its growth momentum. We will keep up with that.
Apart from enhancing core clients, we will focus on mid-segment clients as the middle class in China approaches 300 million, amounting to the total US population. That’s an enormous opportunity.
And third, we will foster new talent, using our management and innovation knowledge.
Q: What’s the toughest challenge facing Honeywell and how will you tackle it?
A: Our growth can be faster. Honeywell has over 110,000 employees worldwide and over 11,000 in China. That somtimes runs the risk of slowing decision-making and reaction time. I will implement what is called the “SPEED” strategy in China. “S” is for selection, meaning choosing which industry to enter, which team to use and which way to take. “P” is for preparation. The two “Es” are for experiment and execution. Finally, “D” is for delivery.
I have my WeChat number posted on my office door, so employees can find me and are encouraged to report problems to me as soon as possible.
Q: How do you see China’s business climate and what suggestions do you have for improvements?
A: There is more fair competition now. The Chinese government cares about foreign companies.
For example, the Chinese government hosts more business symposia to learn about the needs of foreign companies. The attention paid to us exists not only in the investment phase. The Shanghai government is a role model in looking out for our needs going forward.
However, I am a man constantly pursuing perfection. There can be a better business climate. If governments at all levels — every department and every leader in charge — find and solve problems, the business climate will greatly improve. That is my hope.
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