«China provides truly disruptive innovation»

On the occasion of the China International Import Expo (CIIE), Accenture has invited Anton Kotov, Chief Strategy Officer and Chief Innovation Officer at ABB, to discuss how ABB uses China as a hub and a source of innovation. Accenture is anniversary partner of the Swiss-Chinese Chamber of Commerce (SCCC) and connects European and Swiss companies with China’s innovation ecosystem.

Interview by Elisabeth Tester

Mr. Kotov, what are ABB’s short-term goals in China and which are your long-term goals?

Our goals in China focus on achieving growth with a customer first approach through digital innovation as well as helping our customers create value through electrification to build a safe, smart and sustainable future for all.

Where does ABB see China’s technology and business edge today compared to global markets?

China is very active in digital technology. The Chinese government strongly supports the development of 5G, IoT, AI, big data technologies, and drives digitalization in various industries. Many Chinese customers are working to achieve their potential through a robust digital strategy. The State Grid Cooperation Company, for instance, the largest utility company in the world, released its power IoT strategy and plan. This strategy focuses on how to leverage IoT technology to build a smart power grid infrastructure with the integration of renewables through digitalization and automation, both in utilities and buildings. ABB is well placed to support this transition.

How about e-commerce?

E-commerce is booming in China, both in B2C and B2B markets, which brings new business model opportunities for us. This year, we launched the ABB Ability Marketplace™ in China, an online store for ABB’s digital solutions, offering customers full flexibility to purchase and tailor their solutions portfolio to address their own challenges. This is an efficient, secure, and accessible online portal effectively meeting the needs of industry customers and partners. Through online process optimization and business performance improvement, ABB can improve the user experience and engage with more companies in shaping the future of digital electrical solutions and creating an all-win ecosystem.

What kind of innovation stems from China? Is China capable of true innovation?

China is not a copycat anymore; it provides truly disruptive innovation. China is leading in the areas of electric mobility charging solutions, access technology, AI, electronic commerce, cashless payments, digital transactions and many more. What happens in mobilification in China, for instance, is much more advanced than in the rest of the world. But China is also most innovative when it comes to bringing innovation, new technologies, and business models to market.

Could you name some specific ABB examples?

ABB China set up an e-commerce business to capture the booming opportunities both in B2C and B2B. We also invested in a Chinese AI technology company to enhance its building automation solutions. ABB Electrification acquired a Chinese EV charging company, Chargedot, in late 2019, which supplies AC and DC charging stations, as well as the necessary software platform to a range of customers including EV manufacturers, EV charging network operators, and real estate developers. With this acquisition, ABB has further strengthened its relationship with leading Chinese electric vehicle manufacturers and broadened the company’s e-mobility portfolio with hardware and software developed specifically to meet local requirements as well as service offerings.

Do you use the technology and innovations developed in China for the Chinese market only, or also for the rest of the world?

We use these technologies both in the Chinese market and for rest of the world. Examples of this include AI technology and the recently launched ABB Ability charging WeChat mini program designed in China for China. The program seamlessly connects users and charging operators to provide convenient charging services. The functionality can help users easily find available chargers and includes authorized login, account recharge, start charging, real-time monitoring, payment orders, charging end, collection sharing, suggestion feedback and other functions.

Which R&D sites does ABB have in China? What kind of research do you do in China?

Our R&D sites cover all our business areas, and we have several sites including Beijing, Xiamen, Xinhui, Shenzhen, and Shanghai. All these R&D sites are responsible for product and solution developments, with a strong focus on applications for the local market, but also for the rest of the world. A year ago, we also opened a dedicated ABB innovation center for developing solutions for the future of smart homes and buildings which provides a state-of-the-art venue for global collaboration and innovation. The facility houses up to 50 research and development engineers and brings ABB’s digital transformation to life, with a focus on advancing digitalization, AI, cloud collaboration, and open platforms in the building and home automation space, as well as ABB Ability smart digital solutions and services.

What organizational structures and frameworks do ABB’s R&D sites in China have in place to enable innovation?

ABB R&D sites in China are technical centers which focus on digital product developments, like ABB Asset Manager, an asset health management software, and the algorithms of predictive product diagnosis. These technical centers help ABB China deliver a fast response to local market needs for digital solutions. 20% of the customers in China have and require a greater digital demand in distribution systems. Customers are looking for stronger monitoring and connection functions to achieve safer and more reliable operations.

Does the management of the R&D process in China differ from other countries?

There is no difference, we are one global company with one vision, and this means that all our people, processes and products are consistent throughout the world.

What progress do you see in terms of IP rights?

We have a strict policy and process to protect our IP rights.

Is ABB affected by China’s new “Dual Circulation” policy?

This policy will incentivize investments in chips, high-end manufacturing, and new infrastructure markets, which will bring further opportunities for us, and ultimately our customers. However, this will make the competition more critical. So, as part of our long-term strategy to enable safe, smart and sustainable electrification in cities and towns throughout China, we are committed to helping customers realize the potential of digitalization and pushing the boundaries of technology to drive performance to new levels.

Is ABB actively involved in the joint “innovative strategic partnership”, established by the Swiss Confederation and the PRC?

Yes, we are working on several green energy projects led by the ABB China government relationship department.

Where do you see potential for other Swiss companies and where do you see challenges?

The Chinese market is still a fast-growing market, which can bring large opportunities for Swiss companies in digital and for those investing in sustainable growth. For example, we currently sell ecological medium voltage switchgear solutions into the metro and utility market to help customers reduce SF6 emissions. Our digital solutions improve energy management and reduce waste across smart buildings, industry and infrastructure and deliver sustainable operations from source to switch.

What can China learn from Switzerland and Swiss companies?

Chinese companies could learn from the inclusiveness of Swiss teams; they could work towards more open ecosystems within their organizations and regarding external partners. Chinese companies could also move from a cost-conscious towards a more sustainable business approach, adopting sustainability and environmental goals from Swiss companies.

And what can Swiss companies learn from China?

Speed, speed, speed. The speed of coding, engineering, and manufacturing new solutions in China is unrivaled by any other location. China performs extremely well in terms of speed, discipline, and quality – thereby reacting to market needs as well as anticipating new developments.

*Elisabeth Tester is an economic writer and author. She is communication expert for SCCC and has been living in Shanghai since 2012.

Interviewee:

About ABB:

ABB is a striking example of an internationally active company that uses China as a driver and incubator for the innovation of new technologies, products, and business models. ABB’s relationship with China dates back to 1907, when the company delivered a steam boiler to the country. ABB Xiamen Switchgear Co. Ltd., which was founded in 1992, was the first ABB joint venture company in China. It specializes in production, sales, and service of 3.6kV – 40.5kV switchgear panels and circuit breakers. Currently, it is ABB’s largest factory worldwide.

ABB pursues a full range of business activities in China, including R&D, manufacturing, as well as sales and services, with nearly 15,000 employees located in more than 130 cities across the country. The Chinese government’s new infrastructure initiative is expected to become a crucial engine of economic development for the country. Typically, the new infrastructure involves a number of key fields including 5G, internet of things, industrial internet, cloud computing, blockchain, data centers, smart computing centers, and smart transportation, which will open new market opportunities for ABB.

ABB was also present at this year’s China International Import Expo (CIIE) that took place from November 5 to 7 in Shanghai. The CIIE is the largest platform for international trade, new products, and innovative technologies, featuring more than 3,800 enterprises from 180 countries, including the world’s largest and most important companies. ABB focused on smart city, smart transportation, and smart manufacturing (robots) at the 2020 CIIE, and launched its HoverGuard UAV-based natural gas leak detection – a fast, precise and efficient examination for gas pipeline networks, protecting gas infrastructure with innovative digital technology.