CHINT Group (A): Growing CHINT, growing challenges

CHINT started in the switchgear business in 1984 with an initial investment of RMB30,000 in a poor region at that time. As of 2006, it was generating sales of over €2 billion. What led to this transformation? CHINT achieved profitable growth via quality control and R&D investment. Through brand licensing and share exchange, Mr. Nan, the founder, owner, and chairman of the CHINT Group, controlled a large production base comprised of many local producers. Nan’s products were sold through an extensive distribution network that reached cities and countryside and successfully won CHINT the top position in China’s low voltage market. CHINT served China’s mid-tier segment, providing a wide range of quality low-voltage products. However, MNCs, such as ABB, Siemens and Schneider Electric, were now starting to move into the mid-tier segment. Given their technology, know-how and resources, Nan had good reason to be worried. In addition to MNCs, other local competitors were catching up. In Wenzhou alone, CHINT faced competition from Tengen and People Electrical Apparatus Group and from many niche players across China. These companies were also improving their product quality while remaining price competitive. How could CHINT respond to the competitive pressures from both sides and remain the leader in China’s low-voltage business?