(Source: Xueqiu.com; By: Touziguanchajie)

Thanks to globalization, China’s economy grew substantially faster in the past 20 years. However, globalization is at a crossroads. In recent years, globalization has been regressing in terms of international trade and development index and cross-border investment index, while anti-globalization movements have been emerging from various countries. In fact, this “deglobalization” concern appeared as early as after the financial crisis in 2008, but at that time it was basically marginalized. Moreover, the COVID-19 pandemic has objectively brought the “deglobalization” into a new stage of being “generally recognized”.

Although globalization remains to be the trend, China as the current manufacturing hub cannot handle the “anti-globalization” movement alone. In particular, when China, the world’s factory, cannot maintain a high rate of output as in the past, its important position in the global supply chain stood out immediately. European and American countries, on the other hand, strongly experience the vulnerability of global industrial chain. To deal with the substantial impact, the conservative trend of economic nationalism has almost become the instinctive response of Western economies, and the call for ensuring “industrial chain security” with strong nationalism and protectionism has been heard continuously in Western Europe and America, increasingly building a “city-state protection” system.

However, even so, the “deglobalization” trend has not been able to change the mainstream of China’s globalization. As the most successful country in the fight against the pandemic, China’s economy grew 8.1% in 2021 compared to a year ago, the biggest one in a decade. The trade surplus reached USD676.43 billion, the highest since records since 1950. We believe that “deglobalization” poses formidable challenges for Chinese enterprises, but it is also a significant opportunity brought by “profound changes unseen in a century”. It has been proved that under such a “deglobalization” trend and protectionism prevailing in the international situation, a few outstanding Chinese enterprises made unremitting efforts to respond to challenges, gaining fruitful results in the world.

At the end of this March, Shanghai was hit by an ‘explosive’ COVID outbreak, and launched a phased lockdown. Under such extreme conditions, Morimatsu did its best to complete the largest vaccine module factory in China for export to Africa. On May 8, the world’s largest multipurpose heavy lift vessel, the Pilecki, debuted, transporting Modular Vaccine Plant Project in Morocco built by Pharmadule Morimatsu AB. This project helps address production gaps for vaccines in African countries, realizing aseptic filling of more than 20 kinds of vaccines and other products including COVID-19 vaccine, which can meet more than 70% of the demand of Morocco and more than 60% of the demand of African continent in the future, contributing to the global fight against the pandemic, building the Belt and Road together, and guaranteeing a stable and smooth international supply chain.

It is reported that Morimatsu International Holdings Co., Ltd. (2155:Hong Kong) is the world’s leading critical pressure equipment manufacturer and integrated engineering solutions provider. With more than 30 years of deep cultivation in the industry, the Company has been committed to providing core equipment and integrated solutions as well as value-added services in the fields of biopharmaceuticals, raw materials of power batteries, oil and gas chemicals, electronic chemicals, etc., especially in the modular complete sets of equipment.

Generally speaking, the construction cycle of large equipment delivery is longer, and even for sticky customers with long-term strategic cooperation, the procurement may be impulsive, and the delivery normally takes 9~12 months. However, Morimatsu created a “miracle” again in the building of the Moroccan vaccine plant, which took only 6 months. Wining such tough project demonstrated the company’s strength, but it is even more amazing that the company can continuously make “miracles” under extreme circumstances.

According to Morimatsu’s 2021 Annual Report released in this April, the company’s revenue for its annual results for the year ended December 31, 2021 was about RMB4.279 billion, a YoY increase of about 43.7%, and the profit for the year was about RMB380.6 million, an increase of about 31.5%.

It is not easy for an ordinary company to maintain stability in such an environment, but Morimatsu is bucking the trend under changes, showing its high quality. How could it achieve remarkable results in such an international situation? How to sustain such results? What are the qualities of such a wonderful company? Let’s understand the representative enterprises that “buck the trend” under the “counter trend” through following points:

1、Market conditions

From the international point of view, “deglobalization” in the history has its own cycle. It may be subject to short-term constraints, but in the long term, this single “trade protection” are difficult to last in terms of resources, labor, market size, etc. It is very costly to change the global industrial division that has been formed.

For instance, the deglobalization has brought about the duplication of global projects, such as vaccines and other biopharmaceuticals, as many countries are building their own factories to ensure localized production and supply of strategic drugs. Thanks to Morimatsu’s years of experience in export projects and overseas affiliated executing agencies, the company is able to meet the legal and regulatory requirements of different countries, while the modular projects enable global deliveries.

In fact, Morimatsu, as one of the first companies in China to realize the export of high-end industrial products to developed countries, has started the international market deployment since the beginning of the 21st century. In addition to covering the mainland market, 50% of the orders are signed through international channels, and the products are exported to over 45 countries. Furthermore, the company has established affiliates in Sweden, Italy, Japan, the United States and India, to recruit local talents and technologies, so as to provide itself and its customers with the most cutting-edge professional information from the industry and messages related to industry development trend.

From a domestic perspective, Morimatsu has been a provider of core process equipment, process systems and digital intelligence solutions in many industries for more than 30 years. Meanwhile, it has long been running with leading enterprises from different fields, keeping close to the downstream development and empowering customers to continuously achieve product iteration and technological innovation. At present, it is rare to see a company like Morimatsu in China, which can continuously serve the leading companies from different industries, and in the meantime, it has always ensured diversified products and services and kept up with the times.

To sum up, the whole market high growth potential in the long run, and Morimatsu, in the face of the complicated situation, implements “dual loops” strategy of international and domestic cycle, allowing the two markets to work together.

2、Industry layout

The development of each industry is accompanied by natural cycles based on market supply and demand; for example, the emergence of vaccines in response to a large-scale disease outbreak; and the boom of low-fat and low-oil food to meet people’s higher pursuit of health. Each industry cycle varies and echoes with the changing environment and demand. If a company is overly dependent on a single industry, the cycle downturn of an industry will be a crushing blow to it.

As one of the few advanced manufacturing companies in the industry that can provide cross-industry core process equipment and integrated solutions, Morimatsu, unlike other players that focus on a single industry, has developed businesses in fields of biopharmaceuticals, hydrometallurgy, electronic chemicals and other downstream industries, with large market shares and higher growth rates. At present, it is known that oil and gas energy, new chemical materials, pharmaceuticals, raw materials for power batteries, biological synthesis, cosmetics, daily household chemicals, electronic chemicals, food and other industries are the downstream fields that Morimatsu has been serving for a long time.

Internationally, the technology center in Europe and the Japan Engineering Center are also important points that Morimatsu has to mention. In 2011, Morimatsu successfully acquired Pharmadule in Sweden, entering the first tier of the international upstream bio-pharmaceutical supply chain. By absorbing the expertise, advanced technologies and high-end customer base of Pharmadule, Morimatsu’s pharmaceutical and biopharmaceutical business has been further complemented. At the same time, as Morimatsu’s Asian technology hub, Yokohama, Japan, also provides Morimatsu with a wealth of human resources and advanced technology concepts. These two important advanced technology centers enable Morimatsu to stay on top of the latest technological developments in the downstream industry, thereby strengthening its competitive advantage and making processes.

It can be said that Morimatsu’s innovation gene applies industry tentacles to continuously acquiring opportunities and capturing new industry growth points. As industry cycles vary from regions and fields, the company ensures sustainable development by integrating corporate development patterns and reasonable resource planning.

In sum, cyclicality is negative for companies that rely on a single industry, and is a “spell” that can be effective from time to time. For Morimatsu, on the other hand, cyclicality is a development tool and growth space that can be used.

3、Core competency

Looking back, Morimatsu has experienced some critical courses, such as “single equipment - core equipment - process module - ultimate modularity (modular factory) - service-oriented manufacturing (front-end services - specific products - back-end services)”, and has now developed into a diversified multinational company with rich experience in the field of process core equipment and modular engineering. After years of engagement in the industry, Morimatsu’s businesses are diversified from the surface, but on its substance reflect the mastery and innovation of reaction technologies (including chemical reactions, biological reactions and other types of reactions) and biosynthesis technologies.

Unlike general manufacturing enterprises, Morimatsu has focused on core areas with high irreplaceability and high added value thanks to its R&D and technological advantages, providing core equipment and value-creating services to customers, and has always been a leader in the industry in all dimensions, including R&D capability, manufacturing process and design capability.

The professional talents, which are treated as the lifeblood of the company, are the core elements of Morimatsu’s internal drive. Over the years, Morimatsu has attached importance to the cultivation of local talents, participated in the “National Engineering Practice Education Center”, implemented the “Excellent Engineer Education and Training Program”, worked closely with universities to cultivate engineering talents, provided practical teaching bases for East China University of Science and Technology and Nanchang University, and worked with East China University of Science and Technology to build a “Morimatsu Class” for piloting educational reforms. Internationally, Morimatsu insists on sending young employees to Kyoto University in Japan and other famous universities in Asia for further training, master’s degree, doctoral degree, MBA, etc., so that employees can actively participate in scientific research projects both in schools and the company, realizing the combination of industry, academia and research.

It is known that Morimatsu has obtained 167 registered patents, 29 invention patents, 136 utility model patents and 2 industrial design patents. The company’s customer base includes top-notch companies from all downstream cooperation channels at home and abroad. The innovations and breakthroughs of the top companies in their respective fields provide Morimatsu with a constant stream of business opportunities, while keep Morimatsu on its toes, constantly innovating technologies and standing firmly in the first echelon of the industry.

In sum, the internal drive of continuous innovation, years of technical experience in the industry, and customer resources in the field of each track worldwide are all adding to the moat of the enterprise, and the absolute advantage that can be achieved today can never be achieved overnight.

In fact, the arrival of each dividend period is inseparable from the accumulation of enterprises for a long time, which is both the core competition of enterprises and the moat and industry barriers that China's high-end pressure equipment has. With the deepening of China’s globalization, we should be involved in the global market. Local enterprises even those not targeting at overseas market are also engaging in global competition. Enterprise globalization has become almost a must.

Morimatsu has been adjusting itself to the big changes, from the initial “international” enterprise to the current “global” layout. The increasing pace of globalization of Chinese enterprises has also given Morimatsu more opportunities, as more and more companies go abroad to invest in localized factories in the future. Morimatsu’s modular project delivery can help these companies keep certainty in project delivery, construction cost control and other aspects.

In the future, Morimatsu will gradually penetrate its business into software services in addition to constantly expanding in areas and fields. From production systems to industrial process management, combining software and hardware, services and products, Morimatsu will focus more on capturing and utilizing data in the era of Industry 4.0, providing customers with pre-sales and post-sales technical support, operational support as well as technical transformation support through digital penetration, and performing a project’s full lifecycle coverage services in digital form. With more and more business data, Morimatsu’s core competency will go to a higher level.

In fact, the core of an enterprise is not complicated, it lies in the mastery and application of innovative technologies such as reaction technology and biosynthesis technology; what is complicated is the ability to deepen the application of its own core capabilities in different fields through the continuous consolidation and strengthening of underlying technologies and the timely innovation that accompanies these fields. It is the key of a company to moving forward under the tide.

The tide of the times is irreversible, and it is either forward or backward. We see more challenges ahead for Chinese companies, and we hope to find more quality companies like Morimatsu sailing through waves.

By: Touziguanchajie

Source: Xueqiu.com