Li Huiyong, the founder of Raykeen: After transforming from poor management to being consecutively ranked first in China, it is now expanding along the Belt and Road Initiative. | A "Little Giant" of the Era.
Introduction: With the arrival of the era of hard technology, a large number of hidden champions, single-item champions, and specialized, refined, distinctive, and innovative small giant enterprises are beginning to come to the forefront. These enterprises are the core pillars of domestic substitution and the reservoir for Chinese companies to become global companies.
Based on this, Yingke has launched a new column: The "Small Giants" of the Era. Through in-depth communication with founders and investors, more small giant enterprises can be seen and recorded.
The following is the first article in this column.
Author | Li Yitong
Editor | Peng Xiaoqiu
In the past decade, domestic laser medical enterprises generally faced problems such as lagging equipment updates and non-standard internal management. This led to many domestic enterprises finding it difficult to survive in the laser medical market, which has long been dominated by foreign-funded enterprises. Ruikang is one of them.
In 2013, due to poor management, Ruikang urgently needed to find a new buyer. By chance, Ruikang came into contact with Li Huiyong. Later, the two sides hit it off, and Li Huiyong quickly completed the acquisition of Ruikang.
Li Huiyong graduated from Tianjin University with a bachelor's degree, specializing in industrial chemistry. After graduation, he served as a technician at North China Pharmaceutical Co., Ltd. Before taking over Ruikang, he served as a manager in the Shijiazhuang Business Department of Huaxia Securities and the Investment Department of Petroleum Longchang Co., Ltd.
In fact, before acquiring Ruikang, Li Huiyong had not really set foot in the laser medical equipment industry. And his decision to enter the game at this time is largely related to his academic background and capital operation experience.
After officially taking over, Li Huiyong found that Ruikang had problems such as a lack of teams, a lack of industry experience, and a weak technical foundation. For this reason, he started to restructure the internal structure of Ruikang and promoted the team to carry out product innovation and technology upgrade work. In less than a year, Ruikang overcame many technical difficulties in the domestic holmium laser industry.
At the same time, Li Huiyong formulated the corporate strategy of "increasing investment in research and development" and "strengthening academic promotion". After ten years of independent research and development, Ruikang has launched a number of laser medical equipment. Among them, products such as Youlu® Laser (SRM-T120F) and Youlu FreeStar® Ultra-Pulse Fiber Thulium Laser (SRM-T1F, SRM-T2F) have been selected into the "Shanghai Municipal Innovative Product Recommendation Catalog".
In 2022, Ruikang was successfully selected as a national-level specialized, refined, distinctive, and innovative "small giant" enterprise recommended for support by the Ministry of Industry and Information Technology. As of this year, Ruikang has ranked first in the national market share of urological lithotripsy laser therapy machines for five consecutive years.
However, Li Huiyong believes that Ruikang's vision should not be limited to the domestic market. In 2023, he established a dedicated foreign trade team, marking the first year of Ruikang's "going global".
At present, Ruikang's customer network has covered more than ten "Belt and Road" countries such as Vietnam, Ukraine, Papua New Guinea, Zimbabwe, Nepal, India, Somalia, Thailand, Mexico, and Bangladesh. In the future, Ruikang also plans to further expand its overseas business in developed country markets.
However, whether in the domestic or foreign market, compared to ten years ago, the competitive situation in the current laser medical field is more intense. Li Huiyong also frankly admitted in the conversation that Ruikang has indeed encountered some obstacles in its business expansion at home and abroad this year.
In such a market environment, what countermeasures does Ruikang have? In response, Li Huiyong told Yingke that Ruikang will grasp its existing core advantages and explore new paths for sustainable development. "New challenges will emerge one after another. Only by improving cognition and constantly self-updating can new problems be effectively solved."
The following is part of the conversation (edited) between Yingke and Li Huiyong, Chairman of Shanghai Ruikang Laser Technology Co., Ltd.:
Seizing the Opportunities of the Era of Domestic Substitution
Yingke: Based on what judgment did you choose the entrepreneurial direction of laser medical devices at that time?
Li Huiyong: This can perhaps be regarded as a coincidence. Ruikang was poorly managed at that time and happened to be looking for a buyer, so we bought it.
Yingke: Looking back from the present, was the judgment correct at that time?
Li Huiyong: I think it is correct. First of all, the medical industry is a forever sunrise industry; second, we have also caught up with the era of domestic gradually replacing imports; and finally, of course, our luck is also relatively good - at that time, the competitors in this subfield were not so strong, which gave us a growth opportunity window.
Yingke: What does the "domestic substitution of imports" you just mentioned actually mean?
Li Huiyong: It can be viewed from several perspectives; on the one hand, it can solve the "neck-stuck" problem, which is a matter of autonomy; on the other hand, localization can significantly reduce our procurement costs; in addition, the response speed of domestic suppliers is actually much faster than that of foreign ones, which is very helpful for the subsequent upgrade and iteration of our products.
Yingke: Then what stage has Ruikang's localization process reached? What difficulties have been encountered in the promotion process?
Li Huiyong: We now have four series of products that have been listed, including holmium laser, thulium laser, medical laser fiber, and surgical planer. Except for the thulium laser, which needs to be purchased externally, the other three series of products have basically achieved localization.
In terms of difficulties, it is the lack of talents. Because our laser therapy machine requires compound talents who can cover fields such as optics, machinery, software and hardware development, power electronics, and materials. Therefore, finding suitable talents within a short period is a great challenge for us.
Yingke: Although localization is a hot topic currently, it is undeniable that there is still a gap between some domestic equipment and the international advanced level. Then, what is the current gap between Ruikang and other international brands in terms of supply chain management, consumable efficiency, etc.?
Li Huiyong: It is true that the development history of domestic laser therapy machines and other products is much shorter than that of foreign countries. Therefore, there is still a certain gap in the overall situation, which is reflected in structural design, overall machine stability, and detail polishing.
But for Ruikang, at present, our products are no less than foreign brands in terms of performance and some clinical use experiences. Even for holmium laser, most domestic customers are more willing to use ours rather than imported ones. We will still be committed to continuous iteration and upgrading, mastering the core technology, with the goal of comprehensively surpassing similar foreign products.
Adhering to the Advantages Brought by a High Market Share
Yingke: How is the company's development this year?
Li Huiyong: From 2014 to 2023, our annual sales revenue has been growing positively, with a compound growth rate of 37%. And since 2016, we have been profitable every year.
However, the domestic market environment this year is the most severe in the past ten years. It is a considerable challenge for our domestic market sales to continue to maintain positive growth this year.
Yingke: What are these challenges specifically reflected in?
Li Huiyong: The most obvious is that the equipment purchase volume of public hospitals has decreased significantly year-on-year. Because we are an enterprise that mainly focuses on equipment and supplemented by consumables, it has a relatively large impact on us. Of course, another challenge is that there are more and more new competitors. For example, for thulium laser therapy machines, there are more and more domestic manufacturers involved.
Yingke: How does Ruikang view these new competitors?
Li Huiyong: Competition is everywhere and will continue to exist in the future. For us, following the established strategy and doing ourselves well is the only way to deal with the challenges.
Yingke: Compared with competitors, what are the main aspects of Ruikang's core competitiveness?
Li Huiyong: First, it is reflected in our market position, which is also the core advantage, because Ruikang already occupies a 50% market share in the subfield. Secondly, we have achieved localization for most of our products, and the core components of some products have achieved independent research and development. Finally, our understanding of the laser therapy machine industry, I think, is also an advantage for us.
Yingke: What advantages does Ruikang's high market share specifically bring?
Li Huiyong: Ruikang's high market share not only consolidates the brand influence, ensures the stability of product prices, but also enhances our influence on upstream suppliers, thereby reducing the raw material procurement cost. In addition, with the expansion of the scale, our per capita output value and efficiency have both improved, which has a positive promoting effect on the company's overall operation.
Yingke: Then for the entire industry, what other advantages does Ruikang have?
Li Huiyong: First, our understanding of laser medical device products may be deeper and more thorough than that of new entrants; second, because we have been working on thulium laser for several years and have been in contact with customers for a relatively long time, our understanding of customer needs and clinical pain points is also relatively good. In addition, we have accumulated more resources in the upstream and downstream.
Yingke: In the entire industrial chain, which end has the greatest say?
Li Huiyong: Because the market for laser therapy machines itself is not particularly large and is relatively subfield, the influence of the whole machine manufacturers on upstream raw materials is not that great. At the same time, we face relatively fierce market competition in the downstream. It can be imagined that the whole machine manufacturing enterprises in the middle of the stream will bear relatively greater pressure.
Yingke: How does Ruikang plan to solve the problem of growth?
Li Huiyong: First, we will increase the expansion of the overseas market. This year, the overseas market will double, and it is estimated that it will maintain this growth rate next year. Second, we will increase the sales of consumables and increase the proportion of consumables. Third, we will launch more new products to enable our laser therapy machines to be applied in more clinical departments.
Yingke: Medical aesthetic lasers are quite popular. Does Ruikang consider entering this field?
Li Huiyong: We will comprehensively consider based on our own operating conditions and technical accumulation, but for the time being, our business expansion will be relatively cautious. Because for each of our products, we hope that it can be among the best in the domestic market and can achieve independent research and development and production of core components.
Accelerating "Going Global" and Continuous Iteration
Yingke: Ruikang has successfully expanded the market in more than ten countries such as Ukraine. So how is your "going global" strategy planned?
Li Huiyong: We only started to establish a foreign trade team last year, and currently, there is only one sales manager. The core reason why our foreign trade sales started late is that we insist on first conquering the core technology of the product. In this way, when Ruikang conducts overseas sales, it can effectively solve the after-sales service problem. When the product quality and performance improve, there is basically no need for maintenance. Even if maintenance is required, by sending some accessories to the customers and providing remote guidance, they can be replaced.
Another reason is that we have not yet obtained the CE registration certificate. The current strategy is to first obtain a separate registration certificate in the "Belt and Road" countries and find a suitable distributor locally. It is expected to start the CE registration process at the end of this year, and after a certain foundation is laid for overseas expansion, we will enter developed countries in due course.
Yingke: What does entering developed countries mean?
Li Huiyong: Developed countries account for a higher share of the global market. In the long run, it is definitely an important task to enter the developed country market.
Yingke: Does the company have any further financing or listing plans in the future?
Li Huiyong: For us, everything is centered on operations. Only by running the enterprise well can listing or financing be by-products. Therefore, in this regard, there is no clear and specific plan for the time being.
Yingke: Through the entrepreneurial journey, what core capabilities and key qualities do you think are necessary?
Li Huiyong: Definitely the learning ability. We completely entered this industry as "newbies" at the end of 2013, but we can still achieve some results. I think it all stems from our learning ability. Secondly, we also need to have the ability to self-change, or self-iteration. New challenges will emerge one after another. Only by improving cognition and constantly self-updating can new problems be effectively solved.
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