HeT: A Closer Look (by CBN Global)

HeT is a high tech company that covers intelligent control, product design, software services and manufacturing. It has grown to be a major power in the industry with its core technologies and effective management. HeT became a listed company at Shenzhen Stock Exchange on May 11^th, 2010. In 2014, HeT achieved net profit over 45.32 million Yuan, year increase of 28.85%, returning 0.3 Yuan per share.

Timeline of HeT Visit

14:53:00

CBN reporter arrived at HeT. Investors and company management are ready to begin.

14:55:00

Jeffrey Liu, CEO of HeT, gave a company introduction.

14:56:00

Liu, ‘Whirlpool was looking for a partner in China. We are the only one (that could meet all the requirements).’

15:02:00

Liu, ‘Our core business will always be intelligent control. We will reach out and expand, but not abandon our core. We will only do it better.’

15:06:00

Liu, ‘The internet used to be point communication. In the future, it will connect everything.’

15:08:00

About a hundred investors and reporters came to visit.

15:22:00

On the factory floor. Visitors put on dust-proof coats and static electricity resistant cost. Our guide gave us a tour in the factory.

15:35:00

Our tour guide mentioned that the factory normally ran on full capacity during the day without using the night shift. More factories were under construction.

15:36:00

Electrolux was the biggest client of HeT, accounting for about 10% of the business. HeT hoped to have 35% of the business coming from Electrolux in the future.

15:49:00

Visitors tried on smart sleep assistance devices. The device we tried was a mattress with body sensors. It was the result of the collaboration with Sleemon. HeT was in charge of product development, data collection and data processing.

15:52:00

The first batch of this smart mattress was just in production and would be for sale soon. It is great news for people like me who wish to sleep better.

15:57:00

Liu, ‘Next generation internet hardware is our focus.’ In the interview, Liu expressed that people and devices would be closer together when it came to IoT. He believed that it was full of opportunities for HeT and predicted that it would be profitable for the company in the next 3-4 years.

15:59:00

About pledged shares, CEO Liu said that he needed it because his salary was quite low after HeT started trading publically. He could sell the pledged shares to increase income. Public records showed that Liu held 37,685,000 shares, accounting for 22.7% of all shares. He was holding 28,120,000 pledged shares, which is 74.6% of all publically traded shared (or 16.93% of all shares). There were still 9,575,000 shared unpledged.

16:18:00

Liu said to the reporters that the technology behind smart appliances and health devices was not difficult; it was all about the sensors. However, not one company could monopolize the industry. HeT will have to collaborate with others.

16:23:00

Investors: will robots be HeT’s core competency?

Liu: the cost of labor will only be higher. Manufacturers will have to find automation solutions. Foxconn, for example, has tried automation for years, but it seems a bit slow for now. We know what we want and we know what we are good at. We could replace a worker for about 50,000 Yuan with the cost of machine for 40,000 Yuan and another 3-4 thousand Yuan for installation and testing.

16:30:00

Investors: any plans to collaborate with domestic appliance manufacturers and brands?

Liu: our first ever client was Hai’er; then we had Kelon and Midea, all domestic brands. We expanded our clientele abroad. Foreign brands have higher standards; it was difficult for us at first, but we overcame. High standards became our normality. We still have a long way to go in the global market, but we are coming back to capture the growing smart home market in China as well. We have founded subsidiaries to get back in touch with our partners in China.

16:35:00

Investors: what is your opinion on competition between big data companies and traditional appliances manufactures?

Liu: big data is very valuable, but it has a barrier to entry. Compared to Hai’er and Midea, we are much smaller on the size of the company. However, our market presence makes us competitive. Traditional appliances manufacturers’ old core competency may even drag them down. Our technology is our winning strategy.

16:36:00

Liu: we are working on health with big data. We do not make wrist bands; we only do what others haven’t done.

16:40:00

CBN online participant: does HeT have employee stock holding plans?

Liu: employee morale has always been our priority. Prior to publically trading, we set 8% of the shares for our management as a form of recognition. There will be more programs like that, but I don’t know when yet.

16:42:00

CBN online participant: how do you distinguish HeT from LeadShine (another competing company)?

Liu: LeadShine is more industrial while our end customers are families. We have a greater scale; their structure is less organized. We serve different markets.

16:46:00

Investors: will it come to a point when HeT will have a hard time catching up to the speed of the development of internet?

Liu: we invested 100 million Yuan in the internet related departments, of which 90 million Yuan came from public financing. We can invest in the internet and we can develop our other businesses. We can do it all.

16:51:00

Investors: what is it like to use a fridge from HeT?

Liu: say you think your fridge is not working, but the manufacturer says it’s fine. In the future, we will send real time status back to, say, Electrolux. The manufacturer will be able to contact you before your fridge malfunctions. The fridge data can be useful to both manufacturers and end users. It is the same with other products. Sleep assistance devices can monitor your health; smart kitchen devices can know when you are using too much salt or suggest a recipe. Our data services are free. There are many other ways to generate revenue. All we care is to serve customers well. Money will follow.

16:54:00

This concludes today’s visit.