Shanghai SK Transformer Co., Ltd. was a foreign-capital enterprise established in early 90s in the 20^th century co-invested by seven enterprises: Japanese Shanghai International Co, Ltd; Kitamura Mechanic and Electric co. Ltd which was a Japanese company specialized in manufacturing transformer R, Shanghai Industrial Investment Company, and Shanghai Automatic Instrument Stock Co., Ltd. This foreign-capital enterprise has changed from sole transformer production to an integrated manufacture enterprise with electric facility and a complete set of relevant products in the short period of ten years. The annual turnover has risen from several million RMB to almost a hundred million dollars, and the annual profit has risen from several ten thousand RMB to almost ten million RMB. As the leader of Shanghai International Co., Ltd., Mr. Lu Bingsun drew in the foreign capital to engraft the state-owned enterprise ten years ago. In the ten years time, the company takes root and prospers. It has successfully purchased and merged four other companies in the same field and became a star in this field. 

To establish a brave strategy

For a mechanic and electric company specialized in components production to stand in the world market, multinational companies must be its target customers. The Chinese General Manager Gu Zhigang and the Japanese General Manager, Katsuhiko Kodaira (Japanese Name) realized in the very beginning that the enterprise needed a brave and right strategy-- that was to make the enterprise a supplier for multinational companies in their international stock. Not long after the establishment of the company, a multinational company gave us an order of a product for acoustics—a small transformer at the price of 1 dollar per each. We would lose more than gain from the business, but the leaders believed that that was the expense we had to pay for the entrance. If we refused, we would have no chance in future; and if we entered the entrance, there could be hope. It proved that after a long-term cooperation, the order grew larger and larger and became the major business for us. For any order, no matter it is big or small, no matter it is expensive or cheap, all the staff in the company-- the managers as well as the workers will take it seriously and meticulously as a big order.

It is not easy to be a supplier for multi-national companies. Some big companies have high requirements for the quality, price and delivery deadline, sometimes, they are almost rigorous. Therefore, the company has to be patient and persistent to set a series of guarantee systems of design, production and manufacture according to their requirements. SK became the first to get the ISO9002 quality recognition among all the transformer producers in 1998, when many enterprises had not yet realized that the quality recognition was the entrance passport to become supplier for international stock. The quality recognition has brought the company many new oversea customers. In 2000, the company got the recognition of ISO9001, quality control 2000. In 2001, we get the recognition of the ISO14000 management system of environmental quality control. In 2002, we got the recognition of ISO18000 system of vocational security for health. In the field of transformers, SK is the only company with all the three recognition. SK is called "Green Partner" by the fellow companies.

It is because of the detailed and profound fundamental management of SK that they were likely to become the trustworthy cooperation partner for multinational companies.

To take a initiative into play

The development is not as smooth as in the imagination, any risk of the market change is likely to result in immeasurable loss, or even the worst consequence of bankruptcy. SK met several big twists and turns and once almost failed. In 1997, a major customer terminated an order of several ten thousand RMB as they changed their business; and during the recent two years, SARS in China and Iraq war abroad made the European market shrink abruptly. SK successfully overcame all those obstacles. Some people are envious of our luck, we can always turn the danger, and when we lost one market, another market came; when we lost a big order, another major customer came. The leaders of the company understood that it owed to the strategy that the company was persistent to develop new products and new markets. The start line of SK was not low, the key product Transformer R was an international patent product and had a steady group of customers. The leaders of the company had a clear idea that the market was cruel, and it was changing all the time—the only way out is to develop new products and new markets constantly to deal with any change that may come by. Therefore, we did not stop at the advanced technology of Transformer R, we began from the easy OEM production to self design; from transformer R to transformer E, transformers of annulus and high rate; from design all by ourselves to design together with our customers; from transformer production to production of all sorts of components for electric machine. In this way, we are well prepared with products and technology for potential customers, as a result, the ability to resist the risk is enhanced. SK people are proud that the OEM products take 80% of all the products, and now the product designed all the SK itself has taken 80%. The change of 80% has greatly changed the fate of the enterprise.

Service is also a management idea

In the supply chain of the international companies, suppliers have to change with the change of product and technology. How to become a firm and steady part in the chain is what SK is searching. They trace the product and provide multi-dimensional service in order to make the company service ideal from sole product to product set, from self-developed technology to cooperative technology. For example, our set of mechanic and electric product are based on the research in cooperation with our customers and the market risk is shared with them. The annual turnover of this product has increased from several ten thousand dollars to the currently almost ten million dollars. It has become our major transformer business. At the same time, the gradual change of the major business also brings prosperity of other product sets.

The aim of providing the multinational company with service to go together with the product is not only aiming at making money, not for a small but complete business, but for real improvement of the whole company and our technology and quality. In these recent years, in order to improve the service percentage of every product, they change from producing transformer R to producing electric distribution machine. We have now become an enterprise of providing electric distribution machine. In our extension of service, with the development of the company, the company begins to improve the product with merge, share-control, invest and several other means to improve the service. A good example is to buy Shanghai Wen'an Computer technology Company by buying shares: Wen'an Computer company is a company specialized in manufacturing circuit board, and is running smoothly when purchased. In order to complete the product variety and provide our customers multi-dimensional service, the company did not choose to set up a new computer company, but to merge and buy one then adapt it to make it a compatible part of the whole computer design system.

Brand is vitality

Why is a small-and-medium sized enterprise keeping on developing fast and prosperous for a long period of time? The brand of Shanghai SK is a central and significant element for its development. SK believes that brand is not only part of the product, what's more important, it represents the enterprise—brand means the vitality of the enterprise.

There are not few top 500 enterprises in the customer list of SK. Why do these world famous companies choose Shanghai SK? It is because of the brand that SK has set up in the decade. Different ideals such as high quality product, excellent technology, excellent service, strict management, and free working environment, human-oriented culture amount day after day and nurture the brand SK. For example, some important customers of SK will mention Shanghai SK when they are talking with other customers about transformers business or investment in Shanghai. Sometimes they even take other customers to visit SK or ask SK to help them invest in Shanghai. The REO Company from German set their own foreign-capital enterprise in Shanghai with the help of SK. REO becomes a strategic partner for Shanghai SK transformer Co. Ltd. From this example, we can see what our customers think of SK.

The determining factor in the competition is human resources. Human-oriented enterprise culture is an important measure SK takes to attract persons with ability from outside and to discover and cultivate persons with ability from inside. SK treats its employees well and gives them opportunity to make the most of their advantage, and absorb them in to the SK community.60% of the middle class managers come out from workers with several years experience in the company. They are familiar with the business, and they are specialized in management, working in all departments of the company. There are five reward systems in SK to reward the employees who have made special contributions in the management of the company. For example, the cost deduction reward is to reward the buyer of raw materials who have reduced the price without impairing the quality. The reward is 10% of the money saved. That has greatly motivated the buyers to actively reduce the cost of raw material. Besides, there are reward for market development and project reward. The reward system is well combined with the strict management of the company, pushing the company to change all the time for better performance. The reward system based on achievement has motivated employers to work harder and sharpen the competitive edge of the company.

There are many examples like this tiny one. Tens of thousands of sand makes a mountain, in this way, Shanghai SK developed its brand and the aura.

The development of Shanghai SK transformer Co. Ltd is a track of the development of a small-and-medium sized enterprise. We are looking forward to company’s further development in future which will add much more brilliant color to the beautiful future of Shanghai.