Zhang Daocai (third from right), founder and chairman of Sanhua Holding Group, and Lin-Jie Huang (fourth from right), Sanhua's vice-president and chief scientist, along with Sanhua employees stand in front of Mississippi-based R-Squared Puckett Inc, a manufacturer of air-conditioning and heating parts, after it was bought by Sanhua in 2012. Provided To China Daily

Honeywell, BMW, and General Electric have one thing in common: Some air conditioning and refrigeration parts used in their products come from the same supplier, China's Sanhua Holding Group.

The three brands represent the three industries that Sanhua's products are being widely used: HVAC (heating, ventilation, and air conditioning) machines for commercial and residential buildings, air conditioning and thermal systems in automobiles, and home appliances that need cooling and heating functions.

Sanhua in Chinese means "three flowers," a coincidence that Sanhua's products have now blossomed in three areas. When Zhang Daocai founded Sanhua in 1984 in a small town in Southeast China, he hoped that the flowers of "management, technology, and talents" could lead his small refrigeration components factory to a bright future.

By focusing on technology, Sanhua has developed into one of China's leading manufacturers of cooling and thermal parts and systems, employing more than 10,000 people worldwide with production bases in China, North America, Europe and Asia.

Sanhua's dedication to innovation has won it big-name followers. According to Zhang Yabo, president of Sanhua and son of the founder, Carrier, the inventor and global leading manufacturer of HVAC machines, has signed a strategic agreement with Sanhua to co-develop a control system for Carrier's products.

"We also recently won a bid to provide electric expansion valve (EEV) to the leading electronic car manufacturer in the US, who has very high standard in energy efficiency," said Zhang, stopping short of naming the car company.

"Our valve smartly controls the temperature of the vehicle battery to enable it to run at the most energy efficient way," he said.

Sanhua is among the pioneers of Chinese companies to sell products in the US market, first through a trade company in 1990s, then establishing its own US operation in 2002 to manage sales and distribution.

Sanhua's US connection went deeper in 2007 when the company acquired Ranco, the inventor and world's leading manufacturer of four-way valve (FWV), which is used in HVAC machines to control the flow of refrigerant to switch between cooling and heating.

Sanhua continues to build upon Ranco. Its FWV product is now on its fourth generation, supplying leading global HVAC brands including Carrier, Trane, Honeywell and Goodman, along with other parts.

"The FWV we sell now is 80 percent smaller than the original Ranco size, which greatly reduced price and energy consumption," said Lin-Jie Huang, Sanhua's vice-president and chief scientist in charge of the company's R&D efforts worldwide.

Huang started his career in automotive research and design with General Motors as a research scientist upon receiving his PhD from the University of Pennsylvania in 1989. Before joining Sanhua in 2012, Huang was vice-president for global R&D at Danfoss, a Denmark-headquartered global producer of HVAC machineries.

"I chose Sanhua because of its dedication to innovation," said Huang, who holds more than 300 international patents and was admitted to the Innovation Hall of Fame at Delphi in 2004, a spinoff from GM and now the world's leading auto-parts manufacturer.

According to Huang, it took Sanhua five years to master the skills it takes to manage an acquired foreign company and maximize its value. The Ranco process prepared Sanhua well for its next phase of globalization.

Sanhua bought bankrupt AWECO Appliance Systems, a Germany-based producer of home appliance parts and system, in 2012, and moved the production base to Poland, where the cost of labor is one-third of Germany's, but kept and expanded the R&D team in Germany. AWECO started to generate profits in the last quarter of 2015.

Sanhua further expanded in the US in 2012, acquiring Mississippi-based R-Squared Puckett Inc (R2), a local manufacturer of precision heat transfer. Sanhua is using R2 as a base to expand its presence in the US, increasing its employees from about 20 to currently more than 150, adding production lines, and buying nearby lands to make the facility a campus to include logistics, service, and technology centers. Now the US operation accounts for Sanhua's 45 percent output.

Sanhua is also planning to set up an operation in Detroit to be closer to its customers in the automobile industry, who now include General Motors, Ford, Mercedes-Benz and BMW.

Sanhua's global footprint now also includes Mexico, India and Thailand. A facility in Turkey is in planning.

With its rapidly growing capacity worldwide, Sanhua's goal is ambitious: reaching $4.6 billion by 2020 and doubling that by 2025. How will it achieve that? Zhang's answer: relying on innovation to go green.

"We are dedicated to make products that are more energy efficient. That is our fundamental goal. We want to contribute to the environment," said Zhang, an engineering major with an executive MBA.

charlenecai@chinadailyusa.com