Americans like to celebrate successful entrepreneurs who started out with little more than the shirt on their back. But most of us have never heard of Liping Wong. Like a Steve Jobs of the fluid-power world, Mr. Wong started out making pneumatic cylinders in his garage near Shanghai with just two employees. Twenty-five years later his company, Hengli (www.hengli-js.com) is a $2 billion powerhouse in China and reportedly the world’s largest producer of hydraulic cylinders.
They’ve rode the Chinese economic boom building products for construction, mining, marine and metalworking industries. Customers range from domestic Chinese companies like Liugong and Sany to international ones like Caterpillar and Kobelco.
In 2009, Hengli built what’s considered the largest hydraulic cylinder production facility in the world, with an annual capacity of 500,000 pieces. More recently it acquired Shanghai Lixin Hydraulic Co., a well-established hydraulics manufacturer capable of turning out 1.5 million valves per year, and it developed a line of piston pumps. That opened the door to complete systems capabilities.
It’s part of Mr. Wong’s vision to make Hengli a worldwide brand, explained Justin Fluegel, general manager of Hengli America. Today, there is no Chinese equivalent of a Rexroth, Parker or Eaton recognized across the globe as a source of high-quality hydraulics. His goal is to change that. With sights on international expansion, three years ago they opened a Chicago office to focus directly on the U.S market.
Surprisingly, its major challenge so far isn’t obstacles like time differences, logistics, import duties or protectionism. It happens to be America’s view of China, said Fluegel.
“There’s a perception of China being a low-quality, high-quantity supplier,” he said. He related that in the 1950s, Japanese products were viewed as mass produced and cheap, but inferior. Thirty years later they became known for quality, delivery and efficiency. China is undergoing that same transition, with companies like Hengli developing and delivering high-quality, highly engineered products.
“We focused from the get-go on quality. We’re ISO registered and vertically integrated, so we can control quality along the entire process” from vetting incoming raw material to part production, assembly and testing,” he said. Hengli’s world-class, ductile-iron foundry supplies its castings, and hundreds of precision machine tools from Europe, Japan and the U.S. turn out the parts. State-of-the-art labs monitor product quality and conduct research in areas like sealing, heat-treating, welding, and plating.
Being vertically integrated also helps streamline processes and logistics that bring benefits to American customers in terms of cost and delivery, said Fluegel. For instance, while most cylinder manufacturers outsource plating (typically with a three-week turnaround) Hengli controls it in-house. As a result, normal lead times for cylinder delivery are about on par with U.S. suppliers, around 10 to 12 weeks – although rush orders are met in half that.
“Once potential customers understand our value proposition—first and foremost it is quality—then it opens the door to new opportunities,” said Fluegel. The company continues to grow each year with existing customers and is gaining new clients, often because of cost or quality concerns with previous suppliers. Hengli’s engineers offer capabilities ranging from routine FE analysis to advanced simulation modeling, invaluable when redesigning problematic cylinders that need customization, better performance, part consolidation or longer life in demanding applications.
Another hurdle for Hengli America is building a distribution network, Fluegel admitted. Most major suppliers have well-established distributor networks with exclusive and favored relationships. Especially with the ongoing consolidation within distribution circles—larger national groups acquiring smaller chains—they’re seeking out partners willing to grow with the opportunity.
“But the biggest challenge remains overcoming the perception of China and building the brand. Some OEMs hesitate to display Hengli’s logo on their equipment or disclose that they’re collaborating with us. As machine users learn quality and performance has improved due to a new supplier, they’ll come to understand that a new level of quality is coming out of China,” stressed Fluegel.