CW gets, and sells, its bearings in US

Updated: 2012-11-16 14:51

By Wang Jun in Los Angeles (China Daily)

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Hu Lirong is excited about an upcoming conference of suppliers to Nexteer Automotive Inc, a Chinese-owned company in Michigan that makes vehicle steering systems. General Motors Co will use the event to unveil the next generation of its Chevrolet Silverado and GMC Sierra trucks.

For Hu, the highlight of GM's presentation will be the trucks' electronic power-steering systems, which use ball bearings made by his company, CW Bearing USA Inc, also based in Michigan. Hu is president of CW, which is a wholly owned subsidiary of China's Cixing Group Co.

CW gets, and sells, its bearings in US

Hu Lirong (second from right), president of CW Bearing USA Inc, joins managers from US-based tool maker Stanley Black & Decker Inc at an industry conference. PROVIDED TO CHINA DAILY

The executive, who occasionally goes by his adopted English name, John, likes to refer to himself as a "farmer entrepreneur", a humble moniker he also applies to his dad.

"My father still lives in the company dorm compound, and drives a modest Buick," he said of Hu Xiangen, who cofounded Cixing and remains chairman and CEO of the privately held company.

The elder Hu is also one of China's richest people.

"He doesn't know much about, or pay much attention to, high-priced luxury cars" — key status symbols among Chinese elites.

Hu Lirong, 43, worked on the family farm as a boy, while China was beginning to open up to the world.

When he was a teenager in 1983, the son recalled, 18 relatives pooled all their money and set up a small factory in the small city of Cixi, in eastern China's Zhejiang province. Hu Xiangen was a salesman at the factory.

Hu Lirong remembers that his father frequently traveled on business to the country's north, including Harbin in Heilongjiang province, which borders Russia. While on those trips, the elder Hu managed to learn some Russian.

Hu Xiangen rose to director of the factory, as China was preparing to undertake market reforms in its economy.

He understood the importance of technology to the ball-bearing industry, which in China has scores of manufacturers like Cixing. In 1987, Hu invited engineers from bearing-research institutes in Shanghai and Luoyang, Henan province, to help improve the Cixi factory's technology.

At 20, Hu Lirong started work at Cixing, first as an apprentice on the factory floor. He learned the ropes of bearing manufacturing under the tutelage of his shi-fu — a skilled senior worker assigned to teach and supervise young colleagues. Hu lost the tip of his right index finger to an accident.

In 1994, Cixing Group set up its first US operation in Southern California, under the parent company's CW Bearing mark. The overseas move came in response to Deng Xiaoping's call for Chinese businesses to "make foreign money," according to the younger Hu.

He moved to the United States in 1997 to take charge of the California branch and other CW Bearing USA operations in Charlotte, North Carolina; St. Louis, Missouri; and Mexico City. The company now runs a global sales and distribution network, with offices also in Europe and Latin America that market its deep-groove and angular-contact ball bearings.

To date, Hu and CW have survived both a US trade case against the bearing industry and the global financial crisis.

In March 2003 the US International Trade Administration, which vets trade complaints from the Commerce Department, gave the green light to an anti-dumping action against ball bearings and related parts imported from China.

In response, Hu hired Washington lawyers with experience fighting previous anti-dumping complaints. CW managed to win the case, resulting in removal of the 133 percent duty that had been slapped on its bearings. It was an early example of a Chinese company successfully defending itself against a US anti-dumping case.

"There are more than 3,000 bearing companies in China, many of which are in Ningbo," the executive said, referring to the metropolitan area where Cixi is based. Only the healthy and strong among that large contingent will survive, he said.

Hu is proud of his company, which has done more than just survive in the US market. For several years running, CW Bearing USA has been named a Supplier of Excellence by power- tool maker Stanley Black & Decker Inc.

Hu said the next challenge for the company is to diversify its areas of operation. Currently, the auto industry makes up 40 percent of GW's market. He wants to increase that portion to 70 percent within five years.

"My father says, 'Never stop being perfect' (Cixing's motto). I always tell my employees that everything is possible."

In 2008, CW's research-and-development team made a breakthrough in ball bearings for electronic steering systems — a product that among other features helps vehicles reduce exhaust emissions. But the cutting- edge technology turned out to be a challenge for the sales team.

"It was so new, nobody had ever sold them," Hu explained. Today, a number of models are equipped with CW ball bearings in their power-steering systems — Ford Motor Co's F-150 pickup trucks, GM's Chevrolet Malibu, and Chrysler Group LLC's Chrysler E300 and various Dodge cars and trucks.

For 2013, Ford has ordered 5 million sets of CW bearings for another truck model. Another five-year goal, Hu said, is for the company to acquire known peers in the bearing industry. He hopes deal-driven growth will catapult Cixing — now among the 10 biggest bearing makers in China — to one of the top five in the world.