——Interview with Mr. Cao Yong, Managing Director of Shanghai Radk-Tech Hydraulic Control System Co., Ltd.

Wan Lei, Editorial Department

This is a very young Chinese hydraulic enterprise, bravely and persistently tackling the weakness of Chinese hydraulic technology—"hydraulic servo-proportional technology"—and aiming to share the Chinese and global market with world-renowned brands. Chinese hydraulics needs new blood, needs such enterprises with a "martyr" spirit, and even more needs entrepreneurs who are "determined to persevere." Let's get to know Shanghai Radk-Tech Hydraulic Control System Co., Ltd., and its founder

——Mr. Cao Yong.

Reporter: Could you tell us the story of how you became involved in hydraulics?

Cao Yong: My university major was mechanical engineering, but after graduation I didn't pursue it and was truly a layman in hydraulics. My involvement began in 2001. By chance, I came into contact with the world-renowned electro-hydraulic servo valve manufacturer, American company Moog, which had recently entered China. At that time, China's equipment manufacturing industry was rapidly recovering and developing strongly, and hydraulic servo technology, representing high-tech, began to be widely recognized and applied in various industrial fields in China. Through the introduction of this expert, I became a distributor for Moog's China sales company and established Shanghai Radk-Tech Transmissions Technology Co., Ltd. (the predecessor of Shanghai Radk-Tech) in the same year.

　　During the four years accompanying the promotion of Moog products in China, I gained a preliminary understanding of the Chinese hydraulic market, hydraulic technology, and industry conditions. At the same time, I accumulated certain market resources through arduous market promotion and marketing, and had the good fortune to meet many seniors and technical elites in this application field. This laid the foundation for the later founding of Shanghai Radk-Tech. It was also with their support and encouragement that, in early 2005, Shanghai Radk-Tech Hydraulic Control System Co., Ltd. was born, and the Radk-Tech brand was established, aiming to develop domestic electro-hydraulic servo components to change the situation where China's industrial applications completely relied on imports. Although at that time my understanding of hydraulic component R&D, manufacturing, processes, equipment, human resources, and mass production was almost blank, my passion came from people's general admiration for this technology and fear of its difficulty. I felt that I could use my passion to inspire this group of technical elites, stimulate the courage to create; at the same time, I foresaw that this vast country and its booming economic development must contain potential needs—this was the confidence given to me by the market.

Reporter: The research and development of electro-hydraulic servo-proportional components requires a large amount of research and development funds, which we usually call "burning money." Radk-Tech is still in the start-up phase; it must have its own survival experience, right?

Cao Yong: When I first founded Radk-Tech, I thought that investing a few million in my own name would be enough. This was a very naive and ridiculous idea. The demand for R&D funds at Shanghai Radk-Tech far exceeded my expectations. From investing more than 10 million in the first year to investing another 10 million in the second year, I completely understood the difficulty of operating a hydraulic servo manufacturing enterprise in China. However, thinking of these comrades-in-arms who gathered in the company with their dreams, and thinking that if we abandoned this fine equipment, it might become scrap metal, I finally chose to persevere. Looking back on this period, it was quite painful. A colleague once told me, "Don't do it unless you have 100 million." At that time, I thought 50 million would be enough. As a result, the total investment in the fourth year exceeded 50 million, and I realized that it really takes hundreds of millions of yuan to make a hydraulic servo manufacturing enterprise successful.

　　Due to the shortage of funds, every step we took was very difficult. There were two occasions when we could only pay our employees 70% of their salaries. In 2008, a turning point appeared, and the capital increase from SSTIC gave the company a breather. Perhaps it was divine favor, in 2009, the factory received certain compensation during the municipal relocation, enabling the implementation of the new factory relocation project. However, because the company's products were not mass-produced or sold, funds were still lacking, and the company did not escape the predicament. In 2010, with the strong support of the local government, the second capital increase and share expansion was completed, and Shanghai Radk-Tech saw the spring. Recently, the company is about to introduce larger-scale strategic investment, carry out a third round of capital increase and share expansion, rapidly expand the market, achieve large-scale sales, and truly enter a period of rapid development. The company strives to complete its shareholding reform by mid-2012.

　　Although the hydraulic industry accounts for a very small proportion of the equipment manufacturing industry, it plays a crucial role in the equipment manufacturing industry. It is a key basic component that affects the overall level of manufacturing. The first ten years of the 21st century have passed. This industry needs to accelerate its development speed and rapidly improve product quality and technological level. It can no longer accumulate capital with low-end products as before, and gradually increase investment in equipment, personnel, and other aspects. Currently, China is in a period of great development. From the perspective of market opportunities, I personally believe that this development model is clearly unsuitable for the needs of this era. To develop rapidly, we must have the concept of risk, that is, introducing risk investment. Of course, the introduction of funds is carried out in a cyclical manner after comprehensively considering the enterprise's development needs, and the ultimate goal is to allow the enterprise to enter a virtuous cycle. After the enterprise reaches a certain scale through a virtuous cycle, it can be listed on the growth enterprise market and raise funds through IPOs.

　　Economically entering a virtuous cycle. We position Shanghai Radk-Tech's market as industrial applications. Currently, many of Radk-Tech's products have begun to be fully applied in industries such as metallurgy, power, railways, plastics machinery, and especially in the engineering machinery industry. Today, I can confidently say that Radk-Tech has seen the dawn, and we are getting closer to the harvest season.

Reporter: When do you expect China's electro-hydraulic servo valves and proportional valves to be able to largely replace imports?

Cao Yong: I believe that it will take about 2-4 years for Radk-Tech's electro-hydraulic servo valves and proportional valves to truly share the market with foreign and imported products. I think the word "share" is more appropriate than "replace".

Reporter: Does sufficient funding mean that we can invest heavily in the R&D of high-end products and expand the scale of the enterprise? After six years, I predict that in the next 2-4 years, Radk-Tech will share part of the domestic market with foreign brands.

　　For the market, I adhere to the concept of "coexistence." Using low prices to eliminate competitors is a despicable tactic. Enterprises must leave themselves sufficient profit margins so that they can continuously invest in R&D, continuously innovate, and continuously improve product quality. Product quality is the root of the sustainable development of an enterprise.

　　American Moog has been around for more than sixty years, and German Rexroth has a history of more than one hundred years. The global status of these companies' products has deeply touched me and is the driving force behind my continuous progress.

Cao Yong: Shanghai Radk-Tech is currently transitioning from the product R&D phase to mass production, a period of rapid growth for the company. This stage, however, presents a significant challenge for both myself and the company. I initially believed that simply creating a prototype would lead to sales; this notion was incredibly naive and laughable. A high-quality prototype doesn't guarantee the same quality in a batch of one thousand units. Ensuring consistent quality across all units requires a larger workforce of skilled technicians, advanced equipment, standardized production processes, and substantial working capital. Frankly, I'm a novice when it comes to factory management; comprehensive leadership is essential for large-scale production. Furthermore, this stage is a significant test of team cohesion. Only a strong team spirit can support the company's rapid development.

Reporter: As a company specializing in electro-hydraulic servo proportional products, you must have highly skilled technical personnel. What is Radk-Tech's talent strategy?

Cao Yong: From its inception, Radk-Tech has brought together a large number of industry elites. In addition to recruiting domestic professionals, Radk-Tech also needs international experts. Therefore, after the company achieves stable economic conditions, we will strive to recruit more international technical professionals. Of course, attracting elite talent requires substantial financial support; 60% of Radk-Tech's funding is dedicated to human resources. Currently, the Chinese hydraulics industry is facing a shortage of skilled professionals, especially in technical applications. There's a lack of passionate and hardworking young people to take over; this is a serious problem. Therefore, I plan to apply for a municipal-level Shanghai Electro-hydraulic Servo Engineering Research and Development Center in 2012. I have discussed this idea with industry leaders and experts, and they were very enthusiastic, recognizing its potential to significantly advance the industry. The research center will receive government funding, enabling it to achieve a high professional standard and attract passionate and experienced hydraulic technology leaders from home and abroad through competitive compensation.

　　A company's responsibility is to integrate into society, create wealth, and give back. This sense of gratitude comes from many hardships. Once the company is profitable, the priority is to reward the employees who have worked tirelessly for Radk-Tech's growth, and to give back to society and those who have supported and helped us along the way. Perseverance requires several conditions, primarily patience. A key attribute for entrepreneurs in high-end manufacturing is a steadfast, down-to-earth approach; only through patience and diligence can high-end products like electro-hydraulic servo proportional valves be successfully developed.

Reporter: Those who know you describe you as a passionate entrepreneur with a strong belief in perseverance. What are your thoughts on entering the manufacturing industry? A pessimistic mindset prevents success.

Cao Yong: "It's been incredibly tough." I often joke with friends that someone as passionate as me should be in the entertainment industry, but fate led me to this field.

Reporter: What are your dreams?

Cao Yong: In the short term (1-2 years), it's to achieve large-scale production of electro-hydraulic servo products while maintaining quality, to have domestic industries gradually adopt Radk-Tech products, and to achieve large-scale sales. In 3-5 years, I aim to build Radk-Tech into a world-class hydraulic servo component manufacturing facility. Beyond that, I haven't dreamed further; "doing well in the present" is my life philosophy.

Reporter: Please introduce your personal background.

　　As our industry association council member, Mr. Sha Baosen, said, "one must endure loneliness," which means perseverance. So, we've created a slogan: "Perseverance will transform Chinese hydraulics."

Cao Yong: I have limited experience and haven't reached any great heights. I haven't had a specific life plan or career path, just an ordinary person trying to do my best in the present.

　　Initially, I worked for three years at Emerson Electric, a wholly-owned US company, in factory floor management (IE). Fortunately, my supervisor was a very meticulous American Jew. His rigorous approach deeply influenced my pursuit of detail, leading to my "spending lavishly" style, even when the company wasn't very profitable. I still invested heavily in pursuing detail. Details are critical to product success and company success.

　　Later, I joined a Hong Kong investment company, which broadened my understanding of business and its relationship with society— invaluable experience. A successful entrepreneur must possess diverse social skills, including how to rationally utilize social resources. Postscript: The interview with Mr. Cao Yong took place in 2010 at the Shanghai Radk-Tech booth at PTC ASIA.

　　Shanghai Radk-Tech's booth was not large or prominently located, but a closer look revealed meticulous attention to detail in the layout, materials, and design. Even without meeting him, I concluded he must be someone who values detail greatly.

　　 The interview revealed that Mr. Cao Yong sacrificed a great deal to establish Shanghai Radk-Tech, even foregoing much of his personal life. Throughout the interview, he frequently used the phrase, "It was a painful process." It's easy to imagine the intense struggle, moments of doubt, and self-questioning he experienced during the six years of building and running Shanghai Radk-Tech. However, regardless of the pain, he persisted with passion, driven by his innate fighting spirit and unwavering belief in the potential of Chinese hydraulics.

　　We've seen the emergence of many entrepreneurs like Cao Yong and hydraulic component manufacturers like Shanghai Radk-Tech in the Chinese hydraulics industry. During this critical period of significant development, we should feel proud. We should appreciate their courage and perseverance. We sincerely wish Shanghai Radk-Tech continued success, hoping it will one day share the market with leading global brands and achieve true greatness.

400-997-5058
Telephone: 021-54832120
Address: 3229 Jindu Road, Minhang District, Shanghai
WeChat ID: RADK-TECH
Email: info@radk-tech.com