Liu Sheng, President Of Zhongji Xuchuang: Adhering To The Innovation Of Corporate Culture, Choosing Products And Choosing Markets Will Succeed

      "There are quite a lot of important moments along the way, some are product technology, some are market, some are capital. At least there are two or three nodes that are crucial to us."

Liu Sheng, President of Zhongji xuchuang Co., Ltd., founder and CEO of Suzhou xuchuang Technology Co., Ltd., sat in front of the camera to unfold the entrepreneurial picture of a technological innovation enterprise in Suzhou Industrial Park.

Suzhou xuchuang Chuang was established in 2008 and officially landed in the capital market through major asset restructuring in 2017. In the same year, the company was renamed as Zhongji xuchuang. At present, Zhongji xuchuang wholly owns Suzhou xuchuang and Zhongji intelligent, and strategically controls Chuhan technology. The listed companies play their functions of holding platform and operating headquarters, forming a business model of "optical module + intelligent equipment" with independent operation and coordinated development.

According to the 2020 annual performance report released in April this year, the company achieved a total operating revenue of 7.05 billion yuan, a year-on-year increase of 48.17%, and a net profit of 865 million yuan, a year-on-year increase of 68.55%. In terms of R & D, Zhongji xuchuang 800g digital communication products and 400g Zr coherent optical modules have been sent to customers for testing and new products have been released.

In the list of optical module manufacturers released by lightcounting this year, Zhongji xuchuang ranks second in the world. At the same time, the top 10 Chinese enterprises in the world also include Huawei (No. 3), Hisense broadband (No. 4), Lucent Technology (No. 8), eoptolink new Eason (No. 9) and HGG Huagong Zhengyuan (No. 10).

Liu Sheng said that there are many successful large enterprises in front of them, so it is very difficult to subvert them. As a start-up enterprise, only by adopting innovative corporate culture and choosing products and markets can they have a chance to succeed.

10 years in the United States

In 2007, opnext, a silicon valley optical device company, completed the process from its establishment to IPO in only seven years. Liu Sheng, who works in the R & D Department of the company, intends to bring the Silicon Valley style innovation speed back to China.

Liu Sheng studied and worked in the United States for ten years. Earlier, he worked for lucent, pine photonics communication and other world-class optical communication companies.

Whether to return home to start a business or not is an eternal topic in the gathering and chatting of overseas Chinese. However, at that time, it was still very rare to dare to take this step.

Liu Sheng saw the general trend of industrial transfer to Asia, and his idea of starting a business soon attracted the attention of investors. In Silicon Valley on the east coast of the ocean, acorn venture capital, an old Chinese fund, decided to take a move; The Suzhou Industrial Park on the east coast of the ocean also sold olive branches to Yuanhe holding company (Suzhou Venture Capital Group Co., Ltd.) in the "from 0 to 1" stage.

In the first half of 2008, the banking crisis and credit crisis in the United States have been intensifying, and the existing capital has quietly "closed" their pockets. Recalling that round of angel financing, Liu Sheng said: "if the investment is two months later, I may still be working in the United States today."

Some industry insiders commented that xuchuang is the first optical device enterprise to completely transplant the entrepreneurial model of Silicon Valley in the United States to China. Moreover, "xuchuang is still the first one with such a thorough Silicon Valley style."

From Liu Sheng's point of view, more than ten years ago, he came to Suzhou Industrial Park without hesitation, because "this place is very similar to Silicon Valley".

Qi Bin, deputy general manager and deputy chief investment officer of CIC, pointed out many times in his early speech that the key to economic transformation is scientific and technological talents, entrepreneurship, capital and mechanism. Some analysts believe that these four elements are also needed to build a "New Silicon Valley" of science and technology.

Liu Sheng was deeply impressed by what he saw and heard in Suzhou during his short trip back home.

He still remembers the first time he walked into Suzhou International Science and Technology Park: "I didn't expect that there was such a good place in China. The sign of" Overseas Students Pioneer Park "was hung high beside the intersection. The enterprises in the park were all immersed in their own business, and the entrepreneurial atmosphere was very strong."

Back in the past, Suzhou at that time not only had a well-known cultural environment at home and abroad, but also had a certain foundation of optical communication industry. What's more, Liu Sheng has been determined to build a world-class high-end optical module company based in China since the beginning of his business. The export-oriented economy of Suzhou Industrial Park can provide this fertile land.

Pathfinding next generation optical module products

At the beginning of starting a business, the first task is to plan the company's technical route and product direction.

At that time, Internet service providers such as Google, Amazon and Yahoo, and it manufacturers such as IBM and Microsoft all put forward their own cloud computing strategies.

Cloud computing data center manufacturers began to invest heavily in the construction of data center, the market put forward the demand for higher speed 40g optical module products. However, looking at the global optical module market at that time, the industry leading enterprises still mainly produced 10g and 20g optical module products.

"We hope to be the next generation of products that can bring innovation and create new value for the industry." Liu Sheng decided to devote the whole company's energy to the research and development of 40g optical module project.

It is worth mentioning that Zhongji xuchuang has invested heavily in the research and development of the next generation of products since the beginning of its business. However, under the capital market environment at that time, few investment institutions were willing to take the lead. This is related to the future node, Yuanhe holdings once again timely help.

The new round of financing has accelerated the progress of China International xuchuang's research and development of 40g products. Around 2011, the company successfully developed 40g products and became the first supplier certified by Google.

Taking 2011 as a new starting point, Zhongji xuchuang has established a firm foothold in the market, and the company's sales volume has jumped from several hundred million to several hundred million. At the same time, xuchuang also started to contact customers such as Amazon and Huawei with the success of Google's cooperation case.

"It's not to say that our team's ability at that time was much better than that of our peers. The key is to choose a better track at a more important time." Liu Sheng is as modest as ever, and persistent in innovation.

Adhering to the concept of innovation, xuchuang invested most of its financing into R & D during the start-up period. Today, the company's annual revenue scale has reached several billion yuan, and the proportion of R & D remains nearly 10%.

According to the performance report of xuchuang, the company incurred 506 million yuan of R & D expenses in 2020, a year-on-year increase of 39.76%.

By the end of 2020, Zhongji xuchuang has made new progress in the next generation rate data communication products (800g), silicon optical and coherent optical modules. Also in this year, the company set up xuchuang Research Institute to introduce high-end technical talents from overseas, freely explore optical communication and other photoelectric industry chain subdivision fields, and enhance the company's new technology reserve capacity and leading R & D technology advantages.

Investment extension industry antenna

In recent years, with the rapid development of optical communication industry, the competition pattern of optical communication module industry has undergone profound changes, which mainly presents two characteristics.

From the perspective of industrial chain, optical communication module enterprises continue to carry out mergers and acquisitions, vertically integrate the industrial chain, and further improve the industry concentration.

From the perspective of regional development, with the economic globalization and the rapid development of optical communication industry in China and other developing countries, the R & D ability of Chinese enterprises in optical communication module has also been rapidly improved, and has become an important force in international competition.

In the face of the two major trends, Zhongji xuchuang not only continued to optimize the product structure and accelerate the industrialization of R & D achievements, but also accelerated the layout of industrial chain through investment, M & A, etc.

China International xuchuang's foreign investment is carried out through leading and participating in the establishment of investment funds.

On the one hand, Zhongji xuchuang has completed the investment in Shaanxi leading optoelectronic integrated technology investment partnership (limited partnership) and Zhejiang Rongteng venture capital partnership (limited partnership), providing platform support for the company's equity investment in new fields such as optoelectronic chips and 5g industrial chain.

On the other hand, hechuang Zhiyuan (Suzhou) Enterprise Management Co., Ltd. was newly established, and co sponsored with other partners to establish hechuang Zhiyuan digital technology venture capital partnership (limited partnership) in Suzhou Industrial Park to strengthen the company's layout in the optoelectronic industry chain and its subdivision fields.

"Not only are they developing well and their valuation level is getting higher and higher, but more importantly, we have some cooperation in the industry." in his opinion, some invested enterprises become suppliers of the company, which is a longer-term value for the company.

In terms of M & A, Zhongji xuchuang acquired Chengdu Chuhan technology in June last year, which has formed synergy effect in technology progress, customer resource sharing, scale delivery capacity, cost control, market share and supply chain integration.

More than ten years after its establishment, Zhongji xuchuang has ranked second among optical module suppliers. Suzhou, which gave birth to Zhongji xuchuang, plays the prelude to building a global optical communication capital.

According to the white paper on the development of optical communication industry in Suzhou, led by Suzhou industry and Information Technology Bureau, in 2020, the output value of optical communication industry in Suzhou will exceed 160 billion yuan, and a considerable number of products will fill the domestic gap or break the monopoly. The export volume of high-speed optical modules (above 100g) will account for more than 95% of the export value of similar products of optical module enterprises in China, The overall sales volume of high-end products above 100g accounts for more than 60% of China's peers.

In the first half of 2021, Zhongji xuchuang acquired all shares of Jiansheng Industrial Park Development Co., Ltd. According to the plan, this industrial park, covering an area of about 90000 square meters, will become the business headquarters, production and R & D center of Zhongji xuchuang light module.

"If enterprises invest too little in R & D, they will be revolutionized in the future." Liu Sheng said that every generation of product iterations, new enterprises will rise and old companies will leave. "What we can do is to ensure that the next iteration, we will still be in."