Seventy years ago, a product called the four-way reversing valve, designed and invented by the American company Ranco, changed the history of household air conditioners, which were previously only capable of cooling. For decades thereafter, Ranco was the undisputed leader in the four-way valve sector, boasting the most comprehensive product range, the most patents, and the highest degree of production line automation.
However, in 1996, executives at this international giant grew alarmed. A four-way valve product independently developed by a Chinese township company was rapidly capturing market share. Consequently, the President of Ranco personally led a delegation to the company's door, proposing to acquire an 80% stake in the factory's four-way reversing valve business for 300 million yuan—a premium of nearly ten times the value of the business's assets at the time.
Faced with this astronomical offer, the head of the township company refused. In a more dramatic turn of events, in 2007, this very company turned the tables and acquired all of Ranco's global four-way reversing valve operations, including its brands and talent.
Today, that former township enterprise has grown into the vast "Sanhua Group." Its core company, Sanhua Intelligent Controls, has seen its market capitalization surpass 220 billion yuan, building a diversified business portfolio centered on "cooling, heating, and robotics." The Zhang Daocai family has also accumulated tens of billions in wealth through their holdings in the company, becoming the richest family in Shaoxing.
The history of Sanhua Intelligent Controls can be traced back to the "Xijiao People's Commune Agricultural Machinery Repair and Manufacturing Factory" established in September 1967 in Xinchang County. This was a small township factory with only seven employees, equipped with just a single forge and a handful of hand tools, engaged in simple agricultural tool repair and manufacturing, inconspicuous among the many small factories in the township.
A turning point arrived in 1984 when Zhang Daocai was appointed as the factory manager, setting the small factory on an entrepreneurial journey. Born in 1950, Zhang Daocai was recruited to the factory in 1979 as a management talent, though public records contain few details about his early life.
After joining the factory, Zhang Daocai was responsible for supply and marketing, traveling the country to find products. During his travels across the national market, he discovered that with the rise of long-distance transportation and roadside restaurants, kitchen refrigerators were being widely used, yet related refrigeration components were in extremely short supply.
Therefore, Zhang Daocai steered the small factory's development focus towards refrigeration components, leading the agricultural machinery factory to transform and rename itself the "Xinchang County Refrigeration Components Factory." While the direction was set, the path ahead remained fraught with challenges. The small factory was essentially in a "three-noes" state: "no products to operate, no equipment for production, and no talent for management."
For instance, the factory workers were mostly young farmers from nearby villages, full of enthusiasm but suffering from a "knowledge deficiency." They couldn't read blueprints and didn't even know how to use a micrometer.
To address the talent shortage, Zhang Daocai pursued a strategy of "internal training and external recruitment." He traveled to Shanghai Jiao Tong University to jointly establish a "University-Enterprise Spark Joint Entity" and initiated the independent research and development of a two-position three-way solenoid valve. He also invited professors from the university to provide intensive training for employees and founded a vocational school for staff, teaching "mechanical drawing, design, and business management knowledge."
Subsequently, Zhang Daocai also made significant investments to recruit technical experts from home and abroad, building a composite talent team with both theoretical knowledge and practical experience.
The gradual strengthening of the talent base laid the groundwork for technological breakthroughs. In 1988, a three-way solenoid valve independently developed by Sanhua successfully passed real-machine testing in a Haier refrigerator and received appraisal from the Zhejiang Provincial Science and Technology Commission, which stated its "performance meets international advanced levels and can fully replace imports."
Thereafter, technological breakthroughs were rapidly translated into profitability, propelling Sanhua into a period of rapid growth. By 1992, when "ten-thousand-yuan households" were still a rarity, the profit from Sanhua's single three-way solenoid valve product exceeded ten million yuan, marking Sanhua's first major financial success.
By 1998, Sanhua's second-generation flagship product, the "air conditioner four-way reversing valve," achieved annual profits exceeding 100 million yuan from that single product, posing a significant challenge to Ranco's products.
The subsequent events are widely known. In 2007, Sanhua, which had grown from a small township factory, completed the acquisition of Ranco's global four-way reversing valve business. After years of integration, the related business was injected into Sanhua Intelligent Controls. This acquisition was a milestone marking Sanhua Intelligent Controls' ascent to the top of the global refrigeration controls industry.
As time passed, Sanhua Intelligent Controls has become the world's largest manufacturer of refrigeration control components. Its products, including four-way reversing valves, electronic expansion valves, microchannel heat exchangers, shut-off valves, and solenoid valves, all hold the number one global market share.
Recently, Sanhua Intelligent Controls experienced a highlight moment in the capital markets. On January 19, its intraday stock price hit a record high, and by the closing on January 23, its total market capitalization reached 227.4 billion yuan. Concurrently, the wealth of the Zhang Daocai family has also risen significantly.
On the Hurun Rich List released in October 2025, the Zhang Daocai family's wealth was listed at 34.5 billion yuan, ranking them as the richest in Shaoxing. Now, with the further increase in Sanhua Intelligent Controls' stock price, the family's wealth may have climbed even higher.
Supporting Sanhua Intelligent Controls' market cap of over 220 billion yuan is not just the "cooling" business of refrigeration control components, but also the "heating" business of new energy vehicle thermal management.
The 2025 interim report showed that revenue from Sanhua Intelligent Controls' refrigeration and air conditioning appliance components and automotive components businesses accounted for 63.88% and 36.12% of total revenue, respectively. Not long ago, Sanhua Intelligent Controls released its 2025 performance forecast, indicating that driven by these two business segments, the company's net profit attributable to shareholders is expected to increase by 25% to 50% year-on-year.
It is worth noting that this "heating" business was acquired. In 2017, Sanhua Intelligent Controls formally entered the automotive thermal management sector by acquiring 100% equity of Sanhua Automotive Zero through a related-party transaction. However, the groundwork for the "Sanhua Group" companies in this field was laid over thirty years ago.
As early as 1987, shortly after Zhang Daocai took charge of the Xinchang Refrigeration Components Factory, he began exploring the development of automotive thermal expansion valves. In 2004, Sanhua Automotive Zero was established, and in 2008, the company reached a turning point in its development.
That year, Zhang Daocai visited Wanxiang Group founder Lu Guanqiu. During their exchange, they reached a consensus: new energy vehicles are powered by batteries, and the battery, motor, and electronic control systems all have significant heat dissipation requirements. The supporting components offer high added value, presenting an opportunity for Sanhua.
So, why did Zhang Daocai choose to enter automotive thermal management? This decision stemmed from his observation of technological commonality. Both refrigeration/air conditioning and automotive thermal management rely on core components like valves, pumps, and heat exchangers to achieve precise temperature control and efficient heat transfer.
Based on this insight, Zhang Daocai made a bold decision: to bet on the heat pump technology route, which was still a niche area at the time and not endorsed by many industry experts. History proved Zhang Daocai's gamble correct.
In 2017, Sanhua's automotive electronic expansion valve won the American "Automotive News" PACE Award, making it the first Chinese automotive components company to be shortlisted and win the award since its inception in 1994. Dubbed the "Oscars of the automotive industry," this award significantly boosted Sanhua Automotive Zero's reputation.
Today, Sanhua Intelligent Controls' automotive electronic expansion valves and integrated modules hold the number one global market share, with customers covering mainstream global automakers and new electric vehicle startups.
Beyond automotive thermal management, the capital market's imagination for Sanhua Intelligent Controls is also fueled by "robotics."
According to public information, Sanhua Intelligent Controls entered the field of manufacturing bionic robot electro-mechanical actuators several years ago, focusing on providing products that are lighter, smaller, and more precise. This approach mirrors the logic used when entering automotive thermal management: "study the system, develop the key components."
Sanhua Intelligent Controls' foray into robotics is not a reckless crossover. Brokerage research reports indicate that the motor technology, precision manufacturing processes, and mass production capabilities accumulated in the automotive thermal management field align highly with the technical requirements of humanoid robot actuators.
Over the past year, the robotics business has frequently captured investor attention. For instance, in October 2025, a rumor claiming "Sanhua Intelligent Controls secured a 5-billion-yuan robot order from Tesla" ignited the market, causing the company's stock price to hit the daily limit-up within half an hour. That evening, Sanhua Intelligent Controls clarified, explicitly stating that the rumor of a large order was untrue.
While Sanhua denied the specific large order, collaboration with Tesla is not without basis. In December 2025, a research report from Soochow Securities mentioned that with mass production of humanoid robots by an overseas giant imminent, Sanhua Intelligent Controls was expected to secure 70% of the actuator assembly share, solidifying its position as a primary supplier. Some viewpoints further suggested that this overseas giant is Tesla.
In summary, the growth of Sanhua Intelligent Controls from a small township factory to a company with a market cap in the hundreds of billions is the result of both technological reuse and strategic market selection. Beyond the core foundation of "cooling and heating," the robotics business carries new expectations. However, this business has yet to contribute significantly to earnings, creating a gap between market enthusiasm and fundamental performance.
Looking ahead, whether Sanhua Intelligent Controls can successfully translate its robotics technology into substantial revenue, thereby supporting its current market capitalization of 220 billion yuan, remains a key point for continued observation.
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