Eaton: Latecomers Are on the Board

Those who have been following Eaton may have noticed that at the entrance of the Zhongguancun Station of the Beijing Subway Line 4 and the entrance of the new terminal building of Shanghai Hongqiao Airport, the billboard of Eaton UPS is very eye-catching. After completing the acquisition and integration of UPS brands such as Powerware, MGEPS, and Shante, Eaton UPS appeared in the public with a brand new unified brand image.

Recently, Thomas Gross, Vice Chairman of Eaton Corporation and Chief Operating Officer of Electrical Group accepted an exclusive interview with China Computer during his visit to China. He talked about the development and long-term planning of Eaton Electric Group in China, and stated that he invested in China and took root. China's determination.

Can not eat hot tofu Liu Baohua: At present, the Asia-Pacific region has become the focus of the global economy. For Eaton, the Asia-Pacific region is also a very important strategic region. In the past 10 years, Eaton has established more than 40 factories and 5 R&D centers in the Asia Pacific region. The headquarters of the Asia Pacific region has also moved to Shanghai, China. Compared with competitors, Eaton’s business entered the Chinese market relatively late. As a latecomer, how can Eaton come from behind? In the Chinese market, Eaton’s performance has been relatively low-key. In the future, what are the expansion plans for Eaton in China?

Thomas Gross: In contrast to competitors, Eaton did enter the Chinese market relatively late. Eaton has two groups, electrical groups and industrial groups. From the company's revenue, the two groups each accounted for 50%. The electrical group's business mainly covers power control, power transmission and distribution, emergency power systems and industrial automation products and services. The products that most users are familiar with are mainly uninterruptible power supplies (UPS) and power distribution products.

In June 2004, Eaton acquired Powerware, and in 2008 it acquired Fiberlink Co., Ltd. (which owns the Santak UPS brand) to establish a complete UPS product line. The Powerware-branded UPS has a place in the high-end market, while the Shante-branded UPS has been a leader in the market below 20kVA. Both Powerware and Shante have been deeply rooted in the Chinese market. Today, Eaton has gradually completed the integration of the UPS brand and products, with a unified image of the Eaton brand.

Although Eaton entered the Chinese market relatively late, it has a high starting point. In terms of market share, Eaton UPS ranks second in the world and first in China. The distribution product market is another important market that Eaton is concerned about. The market for distribution products has great potential and its market size is 30 times that of UPS. Not long ago, Eaton acquired a rack product manufacturer. As a diversified company, Eaton’s goal is to become a source of global business power.

Liu Baohua: In 2009, when the international financial crisis broke out, many high-tech companies suffered heavy losses. When the crisis appeared, many users first thought about reducing IT spending and stopping the upgrading of certain infrastructure. This is because the value that these shelved projects bring to the user is not indispensable. The key to measuring whether a company can achieve sustainable development is to see what kind of value the company can provide to its users and what kind of returns it brings to the users. Eaton has been emphasizing sustainable development, such as energy conservation, consumption reduction, and environmental protection. However, many companies' investment in environmental protection is not directly proportional to market returns. How do you see this problem?

Thomas Gross: What kind of value the company can bring to customers is a focus of Eaton’s concern. For a successful company, the most important thing is to be able to maintain its value at all stages of the economic cycle. Although there are occasional apparent value fluctuations, its intrinsic core value will never change. The Eaton Electric Group's values ​​are: Helping customers use products more transparently, making power more efficient. The pursuit of reliability and high energy efficiency is the main factor driving the continuous development of UPS products. In the data center room, UPS is the source of power, and its safety and reliability are crucial.

For example, although the price of the Eaton 9395 UPS is a little higher than that of other UPSs of the same type, it also has the highest energy efficiency, at least 96%, which can save energy and reduce cooling costs to the greatest extent. Most of the energy efficiency is only about 88%. Energy efficiency ranges from 88% to 96%. The difference is very large. The 9395 UPS uses Eaton’s patented HotSync thermal synchronization technology to improve the stackability of the system and to adapt to changing power requirements. In addition to balancing cost-effectiveness and sustainability, the Model 9395 UPS also has two UPMs that can be integrated with each other. Even if one of the modules fails, the other module can guarantee continuous power supply.

In the outbreak of the international financial crisis, the sales of the Type 9395 UPS continued to show an upward trend, indicating that customers recognized Eaton’s corporate core values. Another example is that users have high requirements on the safety of high and low voltage equipment. In order to relieve users of their worries, Eaton’s team of experts continuously communicates with customers and makes suggestions for enhancing product safety. Regardless of how the economic situation changes, the core values ​​of a company can never be changed.

Mergers and acquisitions are the icing on the cake Liu Baohua: Many large enterprises have adopted their own strategies of development and mergers and acquisitions on two legs in the process of expanding their business. For example, Cisco has made hundreds of acquisitions. However, these companies are facing the same issue, namely how to achieve better integration after mergers and acquisitions and establish a more competitive product system. Historically, Eaton has also successfully conducted multiple acquisitions. Excuse me, what specific strategy does Eaton have for integration, especially with regard to the integration of UPS product lines?

Thomas Gross: For the company's growth rate, Eaton has a clear indicator that the company's growth rate is higher than the average market growth rate of 50%. This achievement was not achieved solely through mergers and acquisitions. Eaton is fully capable of achieving this growth. Eaton does not want to use mergers and acquisitions as an alternative to its own development. Mergers and acquisitions are just another step forward for Eaton to establish a good self-development mechanism. At the beginning, Eaton acquired Feirui Co., Ltd., the premise is that Powerware has laid a good foundation in the high-end UPS market. The addition of Shante UPS has formed complementary advantages with Powerware on the product line, forming a complete UPS product line from low end to high end.

In today's increasingly fierce market competition, if only relying on the company's own efforts, the development rate will be relatively slow. M & A is a better choice for companies to quickly enter new business areas. In April 2008, Eaton’s acquisition of the Mill Group was a typical example. Muller Group is a leading supplier of commercial and residential building applications, industrial control and industrial equipment application accessories. Muller Group entered the Chinese market in 1993 and has maintained long-term cooperative relationships with more than 120 professional distributors in China. It can provide users with a series of integrated solutions such as product consulting, planning, sales, logistics, and after-sales services.

Eaton has adopted active and effective integration strategies for the acquired companies. Eaton does not blindly choose the goal of mergers and acquisitions. All acquired companies are engaged in Eaton-related businesses, mainly in the industrial and engineering fields. From a product line perspective, the acquired product lines are complementary to Eaton’s original product lines and complement each other.

Historically, Eaton has successfully conducted more than 60 acquisitions and has accumulated a wealth of experience in mergers and acquisitions and integration. Especially in the integration after the acquisition, Eaton has always insisted on the principle of equality, gradual progress, and guarantee of efficiency, trying to avoid some bad results and reducing brain drain. For example, in the process of integration, Eaton will send people into the acquired company. The two parties work together and negotiate, and various departments such as finance, personnel, and products are actively working to ensure the best M&A results. This has formed a corporate culture. It can be said that 80% of Eaton’s acquisitions are worth the money. Eaton can effectively improve business operations through a system called the Eaton business system, track and evaluate post-merger integration efforts to ensure smooth integration.

Liu Baohua: After the acquisition of APC, Schneider showed his people in a unified corporate image whether in a press conference or in various market activities. Schneider hopes to give users and partners an impression that it can provide total solutions including key power and cooling, power distribution, building intelligence, and industrial automation. If a company wants to succeed, good products are only one aspect. Effective marketing strategies and extensive sales channels are also very important. Does Eaton Electric also use the advantages of the group to launch a total solution?

Thomas Gross: Actually, we are already doing this work, but in different regions, we have different strategies. At first, although the development of Powerware's business was relatively good, we realized the limitations of the single product line, so we gradually improved the UPS product line through acquisition and vigorously promoted the construction of a unified brand. When Eaton Electric promotes the development of its business in China, it will learn from Eaton’s successful experience in the United States and Europe. However, this reference is not copied, but is based on the different circumstances of the Chinese market. Eaton is a total solution provider that provides users with total solutions for data centers, energy facilities, utilities, and even water treatment.

In the Chinese market, Eaton is in a better position, because Eaton UPS has achieved 100% of China's manufacturing, and the distribution products are not only made in China, but also designed in China. If Eaton wants to succeed in China, it must become a Chinese company and achieve full localization in R&D, manufacturing, sales, and service. In the next 2 to 3 years, people will see the effectiveness of Eaton's layout in China.

The key to energy efficiency Liu Baohua: In the UPS field has formed Schneider, Eaton, Emerson three stand-off trend. For Eaton, is it to maintain the status quo, or adopt a more active strategy to stand out from it?

Thomas Gross: We will continue to work hard, first of all to continuously make breakthroughs in the energy efficiency and reliability of UPS products, and seek product differentiation; Second, we must constantly expand the market share of products, especially to increase the market in the high-end UPS market. Occupation rate; Finally, efforts are made to expand sales channels, and while consolidating traditional sales channels, we are constantly looking for new business opportunities and partners. We noticed that some IT equipment suppliers started to provide complete room solutions with pre-integrated power supplies. This is a new business opportunity for Eaton. We hope to develop new channels and markets through cooperation with these IT vendors.

Liu Baohua: In the past two years, users in China are very interested in the topic of next-generation data centers. Many people think that for the next generation of data centers, green and energy saving are key points. Green is the basic sign of the next generation of data centers. However, the industry has not had a unified concept of what is a green data center. Many vendors are claiming to be able to provide green data center solutions, which is confusing to users. How does Eaton understand the concept of a green data center?

Thomas Gross: To measure the energy efficiency of data centers, there is a globally recognized method of calculation, which is the PUE indicator. PUE embodies the relationship between the total power input from the data center room and the power that is ultimately fed to IT equipment (mainly servers, storage, networks). From the definition point of view, the PUE value of the data center is equal to the ratio of the total power consumption of the data center to the total power consumption of the IT equipment. The PUE value can range from 1.0 to infinity. In the ideal case, the PUE value is close to 1.0, which means 100% usage efficiency. A typical data center that has been built for 3 to 4 years has a PUE value of around 2.4, and the globally accepted optimal PUE value is around 1.4. A data center that meets the above index requirements can be regarded as a green data center.

The data center room includes three major types of products, namely hardware devices such as servers and storage, UPS, and cooling systems. In terms of energy saving for servers and storage devices, related equipment providers have their own energy-saving technologies and solutions, such as virtualization technology and automatic hibernation of devices. Eaton's business scope covers UPS and cooling. In the data center room, all electricity passes through the UPS, so the UPS efficiency directly determines the level of energy consumption. In the cooling section, Eaton acquired a cooling system company to provide users with integrated solutions for UPS and cooling systems.

Liu Baohua: Today, people are very concerned about the application of new energy sources, including solar energy and wind energy. What is Eaton's specific plan for new energy products?

Thomas Gross: Eaton attaches great importance to the development and application of various types of new energy products, of which solar energy products are Eaton’s most concerned. Eaton’s solar business in China is growing rapidly. Two years ago, Eaton began research and development of solar products. Currently, Eaton’s headquarters has a 200-member team of engineers focused on the development of solar products. Some of the technicians of Eaton acquired by Eaton are also specialized in the research and development of solar energy products. In solar energy products, Eaton still emphasizes the high energy efficiency of products and ensures that the energy efficiency of products exceeds 90%. Eaton’s solar products have been widely used in commercial and residential residential projects, and are still expanding their applications.

Eaton launched a series of new solar inverters based on Eaton’s existing technology that convert DC power into AC for commercial and utility applications. In the future, Eaton hopes to provide users with large-scale one-stop solar energy solutions, including solar panels, Eaton UPS and power distribution products produced in China, and can be applied to utility-scale grid-level solar power generation systems.

China has become the world’s fourth largest wind power generation market. Eaton provides power, hydraulics, and electrical components that keep wind turbines working in harsh environments. In 2009, Eaton won several important contracts in the wind power market, such as providing 480 hydraulic power components for Guangdong Mingyang Wind Power Technology Co., Ltd.

The journalist's notes on building a sustainable, century-old store in 2011 will mark the 100th anniversary of the establishment of Eaton Corporation. From a company that specializes in the production and sale of vehicle parts and components, it gradually developed into a group company with an annual revenue of approximately US$12 billion (2009), and Eaton has unique characteristics in achieving diversified operations and sustainable development.

Unlike many multinational corporations from the United States, Eaton’s body was less publicized and more than a minute quiet and pragmatic. Many people may not know that Eaton entered the Chinese market in 1993 by establishing a joint venture with the hydraulic company in Jining, Shandong Province. After that, Eaton rapidly expanded its business in China through mergers, acquisitions, joint ventures, and sole proprietorships. Thomas Gross, Eaton’s deputy chairman and chief operating officer of the Electric Group, told reporters proudly that today, all of Eaton’s businesses have been manufactured in China, including uninterrupted power supplies, medium voltage switch panels, switchgears, and assemblers. Automotive air conditioners, hydraulic presses, transmissions, vane pumps, power systems, etc. In 2010, Eaton’s goal was to achieve sales of US$1 billion in China. This will be a new record.

During more than 10 years of development in China, Eaton has established 27 factories and has two R&D centers with more than 10,000 employees. Thomas Gross said: “Eaton’s business revenue is almost half from outside the United States. A pragmatic localization strategy is one of the key factors for Eaton’s success. In China, Eaton has truly achieved localized design, manufacturing, and sales. And services. In this regard, the UPS business is particularly prominent."

Not long ago, the reporter visited Eton’s Asia Pacific headquarters in Shanghai. The office building where the headquarters is located has been awarded the LEED Gold Certification by the US Green Building Council. This is by far China's largest LEED-certified business interior design project and the first Eaton global building to receive LEED Gold certification. Many details of the interior decoration of the office building embodies the principles of energy conservation and environmental protection. Even the furniture placed in the office of Zhou Tao, the president of Eaton China, is the old furniture moved from the original office.

In 2010, sustainable development is no longer just a choice for companies, but an indispensable requirement for business development. Eaton has integrated sustainable development into its business methods and cutting-edge technologies, products and services for its customers. This will not only meet actual needs but also take into account long-term development. As Mr. Ke Renjie, Eaton’s chairman and chief executive officer, said, only those companies that can achieve sustainable development and turn them into advantages will be able to stand out from the competition in the next 10 years.