East Meets West: Hemisphere GNSS's New Era - Inside GNSS - Global Navigation Satellite Systems Engineering, Policy, and Design

East Meets West: Hemisphere GNSS’s New Era

Xinping Guo, president and chairman, Beijing UniStrong

Although not on the scale or at the strategic level of China National Offshore Oil Corporation’s takeover of Canada’s Nexen Inc., the recent acquisition of the Precise Products business of Hemisphere GPS by Beijing UniStrong Science & Technology Co. Ltd. marks a notable achievement in the GNSS world — the acquisition of a North American manufacturer with core GNSS receiver intellectual property by a Chinese enterprise.


Although not on the scale or at the strategic level of China National Offshore Oil Corporation’s takeover of Canada’s Nexen Inc., the recent acquisition of the Precise Products business of Hemisphere GPS by Beijing UniStrong Science & Technology Co. Ltd. marks a notable achievement in the GNSS world — the acquisition of a North American manufacturer with core GNSS receiver intellectual property by a Chinese enterprise.

The development comes as a consequence of the long-time Calgary, Alberta–based company’s transformation into a precision farming–focused company renamed AgJunction, which has moved its corporate headquarters and operations to Hiawatha, Kansas.

In an exclusive interview with Inside GNSS, Phil Gabriel and Jon Ladd — respectively, president and board chairman for the newly established UniStrong subsidiary, Hemisphere GNSS — described the series of events leading to the transaction, the nature of the relationship with the Chinese parent company, and the company’s plans for growth.

The acquisition began in mid-September 2012 with an internal decision at Hemisphere GPS to group its core GNSS R&D team and Precision Products business unit together and market it to a strategic buyer. In late September, the company engaged PI Financial of Vancouver, B.C., as its investment bank to identify prospective buyers.

Gabriel said that proposals were received from interested suitors and face-to-face meetings took place in early November. As a distributor and customer of Hemisphere GPS since 1997, UniStrong was an obvious candidate. On November 21, the two companies signed a letter of intent, which started a quiet period in which to negotiate a definitive agreement.

Ladd, the former president and CEO of NovAtel, Inc., was approached by UniStrong to handle the Hemisphere acquisition talks. He was joined by Werner Gartner, NovAtel’s former executive vice-president and chief financial officer. Although Ladd had never met the Chinese businessman, he knew of Guo and UniStrong from his experience in the Chinese market through NovAtel’s distributor BDStar.

Ultimately, a deal that incorporated 10 separate agreements on such issues as cross-licensing was signed on January 31. Gabriel, who has more than 15 years of experience with Hemisphere GPS, serving for the past six years as the vice-president and general manager of the Precision Products business, was named president of the new company.

As a UniStrong subsidiary, the corporate locus of the Hemisphere’s operations, including the GNSS engineering team, will remain at Hemisphere’s existing facilities in Scottsdale, Arizona. The finished products team will relocate in Calgary, where it has benefited from proximity to the strong GNSS-related program at the University of Calgary.

Founded in 1994 by Chinese entrepreneur Xinping Guo, its current president and chairman, Beijing UniStrong reported total revenues of 437.5 million renminbi (US$70 million) in its most recent annual financial statement with net income of $7.1 million in for the year ending December 31, 2011.

Over the years, UniStrong has developed products incorporating GPS, GLONASS, and BeiDou technologies, including survey/GIS and handheld GNSS devices. It has been listed on the technology-oriented Shenzhen stock market since April 2010.

The Hemisphere GPS Precision Products business generated about $13.3 million in 2012 revenues from sales in marine, land survey, construction, mapping, and OEM segments.

What Happens in North America . . .
Ladd and Gabriel believe that the North American subsidiary will retain substantial autonomy, while gaining strong investment and backing for expanding operations in China and leveraging UniStrong’s product engineering and design and manufacturing capabilities. Hemisphere GNSS plans to hire about 12 people in the near future, said Gabriel.

Gabriel, Ladd, and Werner will serve on the Hemisphere GNSS board with an emphasis, Ladd said, on “making sure the governance aspects are strong and Western style.”

High on the list of priorities is securing GNSS technology IP developed in North America while expanding its presence in a Chinese legal and business environment  that doesn’t always operate by Western rules.

Addressing the risk of IP theft, Ladd said, “If you are going international, you want IP protection.” As Hemisphere develops technology for the parent company, “the IP stays in North America.”

“Keeping it in North America protects the IP and also protects the ‘Mother Ship’” by preventing IP from being pirated in China by other companies.

The Hemisphere executives describe Guo as authentically entrepreneurial, operating more in a Western mode and delegating authority, which many Chinese top managers are reluctant to do.

“Guo was incredibly hands off” during the talks with Hemisphere, Ladd said. “He was there at the beginning of negotiations, then said ‘I’m not adding any value here’ and left it to us.”

“You can tell a lot by how employees act when a company’s leaders are not around,” Ladd added, whether they are able to take initiative, make decisions, and pay bills.

UniStrong stands out from other Chinese companies in its practices, Gabriel agreed, including the way that the firm respects contracts. “That gave us a sense of comfort,” he said.

Hemisphere GNSS will continue as supplier for AgJunction, and Gabriel said the two companies will be stronger as separate entities. In recent years, as the agricultural market came to dominate Hemisphere GPS’s strategic efforts, Precision Products became “a smaller piece of the whole pie” with the business unit primarily being funded enough to develop ag products.

Hemisphere GNSS will build specific products for the China market, develop high-precision BeiDou technology, and grow organically and through further mergers and acquisitions.

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