15 Oct 2015
Bohai "Going Out" Case Studies (3): High-tech Firms Seek Offshore Financing and Overseas Technology
Shandong has a large number of new high-technology enterprises. These are engaged in such sectors as new energy generation and advanced medical equipment manufacturing. Aside from conducting R&D and high-tech manufacturing, these enterprises have also taken to heart the mainland’s “going out” policy. Recent years have seen many of them expanding into foreign markets, seeking foreign co-operation and raising funds offshore. Hong Kong, as a global trading and financial hub, is the ideal platform for these mainland high-tech enterprises as they look to fulfill their global ambitions.
“Going Global” to Raise Funds in the Solar Energy Sector
One of the most successful Shandong companies when it comes to global expansion is the Linuo Group, with its core focus on “solar economy” business. With annual sales exceeding Rmb10 billion, the group is one of China’s leaders in the field of solar energy applications, particularly with regard to water heating systems, power generation and photovoltaics. Given its leading position, Linuo has extensive experience in co-operating with foreign partners.
Several years ago, the group, in partnership with Germany’s Paradigma, set up Linuo Ritter International. This Chinese-German joint venture integrates a number of cutting-edge technologies, such as solar thermal and light energy, photo-electricity, and air thermal energy pumps. It has now become one of the largest new energy enterprises in Asia. At present, the group has R&D and production bases in Jinan and Shanghai. It also operates production lines in Cuba and South Korea, all of which manufacture solar energy heating and power generation systems for domestic and commercial use on the mainland and in foreign markets.
Since late 2014, the group has seconded mainland staff to its Hong Kong office in order to oversee its increasingly busy international trade and foreign operations. Part of their brief is to raise funds for outbound investment. According to a Linuo spokesman, the group plans to use its Hong Kong presence to strengthen its knowledge of foreign markets and investment, including foreign markets’ technical requirements for products as well as their investment regulations. Offshore listing opportunities are also being sought through the Hong Kong office. This is in order to raise funds to further expand its overseas investment and to grow its sales networks in a number of foreign markets.
Reducing Outbound Investment Risks Through the Hong Kong Service Sector
Shinva Medical Instruments is another Shandong success story. This Shanghai stock exchange-listed company is a specialist in the development of medical equipment and devices, pharmaceutical equipment and medical services. With technological innovation as its core aspiration, the company provides clients with a variety of integrated solutions. These range from infection control supplies and pharmaceutical equipment to radiotherapy equipment and digital operating theatres. In certain sectors, it ranks number one in the mainland market. The company has been awarded China’s Well-known Trademark and holds the title of the first “national-class enterprise technology centre” in China’s medical equipment sector.
To enhance its R&D capability and expand its production and sales network, Shinva has acquired a number of complementary medical firms over recent years. One such deal saw it acquire Vastec Medical, a Hong Kong-based diagnostic instruments manufacturer. Speaking to HKTDC Research, a Shinva representative said that, apart from integrating Vastec’s clinical examination equipment with its own diagnostic reagents R&D team, Shinva has also made use of its international network in order to introduce advanced foreign examination technology and products to the mainland market.
Looking ahead, Shinva’s future plans include utilising its Hong Kong network to accelerate the development of its international trade and expand its sales in foreign markets. It is also seeking cost-effective funding sources with a view to lowering the financing costs of its projects in the mainland and overseas markets.