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【Tsinghua MBA Enterprise Mobile Classroom】 At Highlander——MBA Alumnus’ Non-typical Start-up Story
On the afternoon of December 14, 2018, as the second event of Tsinghua MBA Enterprise Mobile Classroom for this semester started, Tsinghua MBA students and alumni came to Beijing Highlander Digital Technology Co. Ltd. for field study and were warmly received by Mr. Wei Fajun, President of Highlander as well as Tsinghua MBA alumnus of 1998. Ms. Zhu Yidan, Senior Manager for Alumni Development and Corporate Cooperation of MBA Programs also participated in the event.
With the desire for knowledge driving away the coldness of winter, students and alumni entered the Eco-friendly Science and Technology Park in Haidian District in Beijing suburbs and visited Highlander’s exhibition center in the hall of first floor. After a detailed introduction by Chen Dong, Manager for Operations Department of Highlander Digital Technology Co., students and alumni obtained a basic understanding of Highlander’s two major businesses: intelligent navigation and marine information.
A super collection of series products based on the two major businesses, such as integrated navigation system products, electronic chart display and information system, national offshore radar network, intelligent unmanned maneuvering platform, marine dimensional monitoring network, were displayed in the form of real product, sand table, model, and electronic monitoring chart, and aroused students and alumni’s great interest.
Tsinghua MBA alumni visiting the exhibition center of Highlander Digital Technology Co.
In the discussion with students and alumni, Wei Fajun talked about “Highlander’s Start-up Path”. The discussion, mainly focusing on how Highlander was created, was composed of four parts: brief introduction to the company, sharing experiences on starting up a company, message from the alumnus, and symposium on robotics. Based on Wei Fajun’s introduction and explanation, the growth of a high-tech private company striving for constant improvement was vividly presented in front of students and alumni.
The Key to Innovative Development Lies in Persistence
According to Wei Fajun, in 2001 when Highlander was founded, the company decided to focus on developing shipping black box, and in the same year, succeeded in making black box of international standard independently. However, the starting up process would never be smooth all the time. He remembers how he was let down when he knew that what he thought would be a regulation by Maritime Safety Administration of Ministry of Transport was merely a guidance document. There were only 76 ships between Qiongzhou Strait and Dalian that needed to install black box. The previous prospect that “ships of over 500 tonnage need to install black box” and “200,000 to 300,000 ships meet the criteria and every black box costs 100,000 RMB” became a bubble. Under these circumstances, Highlander turns to international market decisively and insists on innovative research and development for 3 years continuously. During this period, the company encountered great difficulties. From 2001 to the first half of 2003, Highlander was in the dilemma of “contract signed but with no delivery and investment made with no market”, and the company was subsisting on financing support. All electronics business in the ocean industry during that time was monopolized by foreign companies.
Some student asked sharply that “as a start-up company, Highlander tested the water in the international ‘depth of sea’ with business covering dozens of countries. What the company focused was a blank area during the time. So where did highlander get the support to proceed without hesitation in a chessboard it could hardly win? ” Wei Fajun pointed out that opportunities were born from challenges and brightness came after darkness. A good turn always favors people with foresight, preparedness and persistence. In April 2003, as China’s Navy submarine 361 encountered an emergent accident, to install shipping black box was therefore put on the agenda. With profound civil base, abundant experience and enthusiasm for advancement and innovation, Highlander succeeded in the bidding among 16 enterprise candidates. Through public bidding, Highlander achieves a successful transition from the civil to defense industry, and maintains at forefront position. After that, Highlander takes the opportunity to realize civil-defense integration. Starting as a start-up company that “knows nothing”, Highlander goes through a challenging process of innovative upgrading, self-correcting and independent research and development, and finally becomes a rule-maker in the industry, laying a solid foundation for the company to sail towards the deep ocean.
Wei Fajun, President of Highlander Digital Technology Co. as well as Tsinghua MBA alumnus of 1998, shares the start-up story with MBA students and alumni
Taking the Strategic Opportunity and Taking the Initiative to Seek Resources
As Wei Fajun mentioned, at the beginning of the start-up, the key and difficulty to Highlander is financing. Shen Wanqiu, Highlander’s Chairman of the Board as well as Tsinghua MBA alumnus of 1998, was responsible for financing. However, without any source of finance, the company fell into distress. At the moment with no way out, China Ocean Shipping Corporation (COSCO) was planning to install black box for its own fleets, with a fund totaling 1 million RMB. COSCO and Tsinghua SEM have maintained sound cooperation with each other. Shen Wanqiu quickly grasped this strategic opportunity and reached a cooperation agreement with COSCO, offering 10% shares from Highlander. COSCO becomes an important shareholder to Highlander. With the support from Tsinghua and COSCO, Highlander takes the first black box order of international standard from COSCO. He emphasized that to Highlander, this is a non-typical investment, which facilitates the initial step of the company and is of milestone significance for the company. “The key of starting up a business lies in taking the initiative to seek and explore for resources and Highlander has taken the strategic opportunity”, he said.
The fact that developed countries have long monopolized ocean electronic products requires not only the stability and reliability of product quality but also the establishment of service network even more. To enter the international market, Highlander’s top priority is to increase service capability, and to solve two major problems of “mass production and service network establishment”, which also needs to grasp opportunity and seek for resources. In 2004, Highlander partnered with Consilium Co. of Switzerland for international cooperation. Both companies work together to make investment, develop product and export capital. In the process of making profits from the cooperation, they also put the strategy of “localization driven by internationalization” into practice.
“Highlander’s Start-up Path” Discussion
Tsinghua Brand Plays a Key Role throughout the Start-up Process
In the non-typical development for Highlander, Tsinghua brand always plays a key role throughout the start-up process, emphasized by Wei Fajun. When he mentioned Tsinghua in Highlander’s start-up story, students deeply felt the power of Tsinghua brand.
Take recruitment for example. At the beginning of start-up, with only one million RMB as registered capital, Highlander rented a small office in Sancaitang outside the south gate of Tsinghua University and began to recruit new staff. The first technician recruited is a postgraduate of automobile electronics from Beijing Institute of Technology. After the recruitment, the young man came back home and told his wife that the company he had been interviewed with had nothing, but was founded by Tsinghua graduates. His wife believes that the company started up by Tsinghua people will not be bad. Because of this, the young man determined to join Highlander (now he has become the Vice President of the company). Obviously, the brand value of Tsinghua plays its role in the beginning stage of start-up.
Another example showing the power of Tsinghua brand is Highlander’s financing. In its development, Highlander’s capital flow was once almost dried up. At that time, the investment department of a listed company Baoan Group was seeking suitable projects and was taking the peripheral investors for follow-up financing. One of the investors offered to invest 2.8 million RMB on the condition that Baoan Group took the lead in the investment. However, Baoan Group rejected the investment proposal at last and the investor’s first response was divestment, but when he came back home, his wife told him that the start-up company by Tsinghua people would be reliable. As a result, the investor didn’t divest, and later obtained abundant repayment of over 100 million RMB. When Shougang Group’s metallurgical machinery plant was restructured, it decided to invest in Highlander as it would like to find a Tsinghua project. Although Highlander faltered in its initial steps, with the support of important shareholders like Tsinghua Beifang and COSCO as well as the technical assistance from Tsinghua’s Electronics Department and Precision Instrument Department, the company finally develops fast and sails the ocean.
Group Photo of Tsinghua SEM MBA alumni at Highlander
At last, Wei Fajun summarized the experience in the non-typical start-up of Highlander. The first is to focus on inelastic demand. He believes that the shipping black box market is a market of inelastic demand which develops from scratch and is driven by policy. The shipping industry originating from northern Europe and Japan, gradually develops and becomes the trend of times, but the real mass inelastic demand is developing even beyond that trend. Highlander catches up and leads the trend as it innovates itself fast enough to adjust to the inelastic demand. Therefore, the essence of starting-up a business is to focus on inelastic demand. The second is to focus on the main business and accumulation of resources. He also talked about experience such as creating core team and corporate culture, insisting on constant innovation, strategic leadership and prime execution, which reflects the idea of “small core with big coordination”.
At the question and answer session during the discussion, students raised questions one after another about equity incentives, competition advantage, risk control, damage management and etc. Through communication and sharing at the discussion, students truly felt that with the design of two MBA alumni entrepreneurs and throughout 17 years of start-up process, Highlander, starting from scratch and growing from small to large, has taken the initiative for strategic transition for five times consecutively. Advancing steadily at every step, the company finally sails into the deep ocean. Currently, Highlander takes “devotion to the ocean and dedication to the national defense” as its holy mission, insists on the core value of “customer as top priority and striving as orientation”, and aims to build the company as the leader of global intelligent navigation, the builder of China’s wisdom marine, and the practitioner of civil-military integration. After the visit, with the voice of senior school fellow Wei Fajun still around, students and alumni believe they have gained a lot from this abundant and rewarding trip, and they all look forward that Highlander finally achieve its original ambitions made at its start-up.
Written by: Wan Jun, Ma Jia
Highlander Digital Technology Co. Ltd., set up in 2001 by Tsinghua team, became equipment supplier of China’s Navy in 2004, and was listed on the Shenzen Stock Exchange in 2010. The company focuses on intelligent navigation and marine informatization, and provides product for the civil and defense market, with business covering merchant ships, marine special ships, official ships, fishing boats, naval ships in the navigation area, and physical marine, marine surveying and mapping, underwater project, seafloor observation, maritime unmanned system, and sea management in the marine informatization area. The company has launched branches in Hainan, Guangdong and Shanghai in China, and branches as well as R&D centers in Germany, Singapore, Russia and Canada, with over 80 service centers in over 40 countries and regions all over the world. The company insists on the development model of “localization driven by internationalization, industry driven by capital, in-depth and mutually driven civil-military integration ”. Through building ocean big data eco-industry platform, Highlander strives to become the leader of global intelligent navigation and builder of China’s wisdom ocean, with the aim to make outstanding contributions to building China as a maritime power and the developing naval equipment.
【Tsinghua MBA Enterprise Mobile Classroom】
Hosted by Tsinghua SEM MBA Programs, it is a practice program for MBA students’ close contact with enterprises for in-depth study, and is also an effective platform for exchanges and communication between Tsinghua MBA and enterprises (including alumni’s enterprises). At this session of the Enterprise Mobile Classroom, students go to Beijing Highlander Digital Technology Co. Ltd. to explore the secret to development and success of Highlander.