Sanhua Intelligent Controls: From a Small Factory in Zhejiang to a Giant Worth Hundreds of Billions, the Secret of Rise Behind Three "Bold Gambles"
From the hot - topic discussion triggered by the appearance of robotic dogs on the Spring Festival Gala to the inclusion of "embodied intelligence" in the 2025 Government Work Report, humanoid robots have become one of the most - watched industrial tracks at present. On the industrial chain of this track, in addition to downstream enterprises like Tesla and Unitree Technology that are directly facing the market, there are also some key players upstream of the supply chain. They are not well - known to the outside world but have manufacturing advantages and technological accumulations. Their development status directly affects the growth rate and growth space of the entire track and, to a certain extent, shapes the form and capabilities of the final products.
Sanhua Intelligent Control is such an enterprise.
Except for stockholders and industry insiders, many people may not have heard of the name of Sanhua Intelligent Control (hereinafter referred to as "Sanhua"), let alone know what the various valves and components it produces are used for. Zhang Daocai himself once summarized that Sanhua is built on three products: the two - way three - way solenoid valve produced in 1987, the air - conditioning four - way valve developed in 1995, and the electronic expansion valve that matured in 2014.
As an "invisible champion" in the field of electromechanical components, Sanhua has, over the past 40 years, always focused on technological R & D and production process improvement. It has quietly grown from a small factory in Xinchang, Shaoxing to the world's largest manufacturer of refrigeration and air - conditioning control components and a globally leading manufacturer of automotive thermal management system components, providing core components for almost all leading enterprises in the global air - conditioning and automotive industries. The financial report shows that Sanhua Intelligent Control's operating income in 2024 was 27.947 billion yuan, a year - on - year increase of 13.80%; the net profit attributable to the parent company was 3.1 billion yuan, a year - on - year increase of 6.10%.
On January 15, 2025, Sanhua applied for listing on the main board of the Hong Kong Stock Exchange again, and its A - share market value exceeded 100 billion yuan. At a time when the development of new energy vehicles is in full swing, Sanhua Intelligent Control has once again planned ahead and participated in the upsurge of the intelligent robot industry, targeting robot electromechanical actuators as a key development area in the future.
If the iteration of the main products constitutes the explicit line of Sanhua's development, then the expansion into the global market is an implicit line during this period. Since its establishment, Sanhua has been in direct competition with international brands such as Danfoss, and the battlefield has never been limited to the domestic market. As of September 30, 2024, Sanhua's overseas market revenue reached 9.051 billion yuan, accounting for 44% of the company's total revenue. It has also built 13 production factories overseas and employed more than 5,000 overseas employees to support global market production capacity and market operations.
What factors have determined Sanhua's growth from a small factory to an "invisible champion"? What right steps has Sanhua taken in the past 40 years?
1. A Decade of Acquisition and Anti - acquisition: From a Small Factory to a Small Giant
In 2007, in a meeting room in Huanglong Century Plaza, Hangzhou, the Sanhua team led by Zhang Yabo was having a difficult acquisition negotiation with the British company Danfoss. A few hours later, the two sides parted on bad terms. Zhang Yabo, who was embarking on cross - border mergers and acquisitions for the first time, said harsh words on the spot: "If you leave this time, don't come back."
As the acquirer, Sanhua had the initiative. At that time, Sanhua's growth in the four - way valve market was booming, and its sales volume had ranked first in the world for three consecutive years. Danfoss, the earliest inventor of the four - way valve, which had monopolized the global market for nearly half a century, had been losing the mid - and low - end markets under Sanhua's competition, and its revenue and profits had been declining.
The four - way valve is an essential component of air - conditioners. It is only a few dozen centimeters long. By moving the piston to change the flow direction of the refrigerant, it determines whether the air - conditioner is cooling or heating. Thirty - eight years after Danfoss invented the four - way reversing valve, in 1995, Sanhua completed and put into operation its first four - way valve production line.
Sanhua Intelligent Control's four - way valve product
In 1998, Sanhua was just a small player in the four - way valve market, but it had already caught Danfoss's attention. Danfoss proposed to acquire Sanhua's four - way valve business at a sky - high price of 300 million yuan.
Regarding the "olive branch" extended by Danfoss, there was a fierce debate within Sanhua: Should they seize the opportunity to make a fortune but give up the long - term future, or should they hold on to the product but face the strong competition from their peers? Out of confidence in the development prospects of the Chinese air - conditioning market, Zhang Daocai, the founder of Sanhua, chose the latter.
Zhang Daocai is Zhang Yabo's father. In 1979, he became the head of the sales and supply department of the former factory of Sanhua - Xinchang Agricultural Machinery Repair and Manufacturing Factory in Shaoxing. He promoted the factory's transformation to produce refrigeration accessories. By cooperating with Shanghai Jiao Tong University and Haier, in 1987, he broke the monopoly of foreign enterprises and developed the first "two - way three - way solenoid valve", earning 10 million yuan in a year.
Entering the 21st century, the Chinese air - conditioning market entered a period of rapid growth. Zhang Daocai decided to shift the R & D focus of refrigeration components to air - conditioning stop valves. To compete for market share in the domestic air - conditioning market, Sanhua continuously optimized its production internally to reduce the cost of four - way valves and increased sales volume by offering low prices. Externally, it sent salespeople to visit domestic air - conditioning brands across the country to compete with imported products for customers. Soon, domestic air - conditioning brands such as Gree, Midea, Haier, and Changhong became Sanhua's customers one after another, and the annual sales volume of several valve products reached millions.
In 2005, Sanhua Co., Ltd. was listed on the Shenzhen Stock Exchange, raising 295 million yuan. In the following year, the sales volume of four - way reversing valves exceeded 25 million sets, and its global market share rose to 50%.
Ten years after Danfoss proposed to acquire Sanhua and was rejected, in 2007, the two companies sat at the negotiation table again, but this time their roles were reversed. Sanhua acquired Danfoss's four - way valve business, and thus leaped to become the giant with the most complete varieties, the most patents, and the strongest production capacity in the global four - way valve market, with its market share increasing to 60%.
"This decade - long investment was a right move." Many years later, Zhang Daocai still often mentioned this past event. For him, the ten - year acquisition battle with Danfoss meant the correctness of adhering to long - termism and the necessity of winning competition with product strength.
2. From Xinchang to Hangzhou: Booking a Ticket for Electric Vehicle Dividends
On July 28, 2017, at the Model 3 launch and delivery ceremony held by Tesla in California, the scene was boiling, which also attracted high attention from the global technology and manufacturing industries. At the delivery ceremony, Sanhua's executives were also invited as special guests. As one of Tesla's core suppliers, Sanhua had just won the PACE Award, known as the "Oscar" of the automotive industry, with its electronic expansion valve technology. This was also the first time a Chinese automotive parts enterprise had won this honor. In addition to supplying thermal management components to Tesla, Sanhua is also a first - tier supplier to large European automotive manufacturers such as Mercedes - Benz, BMW, and Audi, as well as domestic automotive manufacturers such as BYD, Geely, Li Auto, and NIO.
The prospectus shows that in the nine months ending in September 2024, Sanhua Intelligent Control's revenue from automotive parts was 8.111 billion yuan, accounting for 40% of the total revenue, making it a new growth engine for the enterprise. Behind Sanhua's transition from air - conditioning four - way valves to electronic expansion valves for new energy vehicles is another decade of "right moves".
As early as 2006, Sanhua separated its automotive air - conditioning parts division and established Sanhua Automotive Parts Co., Ltd. in Xiasha, Hangzhou. At that time, Xiasha was part of the Hangzhou Economic and Technological Development Zone, which provided many support policies for the automotive industry. Sanhua then established several companies here one after another, initially building a development system for the automotive air - conditioning parts industry.
Sanhua Intelligent Control
At that time, the automotive industry was still dominated by fuel - powered vehicles, but a few people had foreseen the rise of electric vehicles in the future. In October 2008, a few months before Tesla began mass - producing and delivering its first batch of electric sports cars, the Roadster, Zhang Daocai visited Lu Guanqiu, the founder of Wanxiang Group, in Hangzhou. Lu Guanqiu told him, "There's no need to focus on traditional cars now. If you want to do something, focus on new energy vehicles."
Although Sanhua's expertise in thermal management systems was already being used in fuel - powered vehicles, it was even more crucial for new energy vehicles as it would directly affect the vehicle's energy - consumption efficiency. Lu Guanqiu's words made Zhang Daocai realize that only by designing good control components and assemblies for automotive air - conditioning thermal management in advance could they seize the future of the automotive industry.
In 2009, Sanhua established a central research institute in the Xiasha Industrial Park in Hangzhou, focusing on new energy vehicle air - conditioning systems as the main research direction. After four years of difficult exploration of product routes and communication with customer needs, Sanhua finally successfully developed automotive electronic expansion valves and reached cooperation agreements with several leading American new energy vehicle brands.
The electronic expansion valve is a key component in the new energy vehicle thermal management system, which can precisely control the flow of refrigerant to achieve more efficient thermal management. With the full - scale explosion of the new energy vehicle industry, Sanhua replicated its success in the air - conditioning four - way valve market. Relying on technological innovation and first - mover advantages, it became a leading enterprise in the thermal management parts industry. In terms of sales volume, production volume, and revenue, in 2023, automotive electronic expansion valves and integrated components accounted for 52.6% and 65.7% respectively, both ranking first in the global market. Compared with the global market share of around 15% for Valeo of France and Mahle of Germany, it can be said that Sanhua has an absolute leading position in the global electronic expansion valve market.
3. Layout in Humanoid Robots: Building the Third Growth Curve
Zhang Daocai has expressed his admiration for Tesla and Elon Musk more than once. At the 2019 annual business plan conference, Zhang Daocai said, "Tesla is well - known for its innovative management and can develop new products very quickly. In this era, it's the fast fish that eats the slow fish. Sanhua must be fast."
Entering 2025, the "fast - swimming" Tesla has accelerated its steps in the field of humanoid robots. At the factory in Fremont, California, where the Model 3 was once launched, Tesla updated several recruitment notices related to the development of the Optimus humanoid robot, accelerating the mass - production process of Optimus.
Tesla's humanoid robot
Meanwhile, the domestic humanoid robot market is also booming. Data from the Market Supervision Big Data Center shows that as of the end of December 2024, there were 451,700 intelligent robot industry enterprises in China, a 206.73% increase compared with the end of 2020.
Sanhua keenly sensed this trend. As early as around 2022, it planned to enter the robot field, betting its third growth opportunity on this track. Sanhua mentioned in its 2022 and 2023 annual reports that it would target robot electromechanical actuators as a key development area in the future, "providing new high - value - added growth points for the company in the next 5 - 10 years".
"Centering around automation and realizing machine - for - human substitution, we hope to free people from tasks they don't want to do, improve efficiency, and increase people's freedom. In detail, automated production lines, robots, humanoid robots, and the Internet of Everything are all specific implementation methods and are the company's opportunities and directions. In the broad field of automation, (Sanhua Intelligent Control) focuses on the core components it is good at and engages in B2B business." Zhang Yabo once introduced in an interview.
In the same month when Tesla released recruitment notices for humanoid robots, Sanhua announced in a notice that it had signed an "Investment Agreement for Sanhua Intelligent Control Future Industry Center Project" with the Management Committee of Qiantang New Area, Hangzhou. It plans to invest no less than 5 billion yuan in Qiantang District, Hangzhou, to build a R & D and production base for robot electromechanical actuators and domain controllers.
Sanhua's decision to locate its humanoid robot R & D base in Qiantang, Hangzhou, is for the same reason as its investment in automotive parts production here 19 years ago, which is to enjoy the local government's policy support in aspects such as assistance in approval, tax incentives, and application for national key projects. In addition, as an important city in the Yangtze River Delta economic circle, Hangzhou is gradually forming an industrial system in advanced manufacturing and artificial intelligence, which is conducive to Sanhua's further integration of regional supply - chain resources and expansion of market share. For example, Unitree Technology's "robotic dog" that appeared on the Spring Festival Gala this year and Deep Robotics, another company known as one of the "Six Little Dragons in Hangzhou", are both robot R & D companies located in Hangzhou.
Not long ago, Elon Musk said that the goal for 2025 is to manufacture thousands of Optimus humanoid robots, and the production volume will increase tenfold in 2026, reaching 50,000 - 100,000 humanoid robots, and may double tenfold every year thereafter. If Sanhua Intelligent Control can continue to form a binding relationship with Tesla and other enterprises, it means that it has locked in the next round of industry growth dividends in advance.
Conclusion
Looking at Sanhua's development over the past 40 years, the secret to its long - term growth can be summarized as follows: always focusing on the electromechanical components field it is good at, conducting technological R & D in line with industrial development trends, and catching the growth express trains of emerging tracks three times. Each breakthrough in the technological route and product transformation means more technological and talent accumulation, gradually building a deeper moat, enabling it to gain an early advantage in the next technological upgrade and occupy a dominant position in the industrial chain.
Hermann Simon, a famous German management scientist who first proposed the concept of "invisible champions", once said, "Chinese invisible champions show very similar characteristics to German invisible champions, such as high aspirations, down - to - earth attitude, and single - mindedness." Like many "invisible champions" that are well - known in the industry but unknown to the outside