Cummins's layout in China

In the 4-9 litre mid-horsepower engine, it cooperates with the Dongfeng commercial vehicle with the largest sales volume of medium trucks. In the 11 liters high-powered engine, sales of heavy trucks with over 15 tons of heavy trucks are handed over by Shaanxi Auto, while light-duty engines occupy 1/3 of the light truck market. The share of Beiqi Foton teamed together. At this point, Cummins completed the overall layout of the full range of automotive engine products into China.

"As the world's only independent diesel engine manufacturer, Cummins is a model for multinational companies to take root in China," said one industry source.

Since entering the Chinese market in 1975, Cummins has had eight series of fourteen engine product series that have been locally produced through joint ventures in mainland China. It is the only international diesel engine manufacturer with comprehensive local production capabilities.

Currently, Cummins has more than 20 institutions, 8 sole proprietorships and joint ventures in China. Sales exceeded US$1 billion for two consecutive years, and more than 850,000 engines were put into use. According to the Cummins official website, over one-third of the 1999 National Day 50th anniversary parade and parade was equipped with a Cummins engine. Cummins has become the largest foreign investor in the Chinese engine market.

Cooperation with Beiqi Futian

On March 7, 2006, the engine giant Cummins of the United States and Beiqi Foton Motor Co., Ltd. signed a feasibility study on the joint venture to establish a light-duty diesel engine production enterprise.

The signatories of the feasibility study report include Beijing Futian Automobile Co., Ltd. (Fukuda), Beijing's largest light-duty truck company, Beijing Futian Environmental Protection Co., Ltd. and Cummins Inc., and Cummins (China) Investment Co., Ltd. "Beijing Foton Cummins Engine Co., Ltd.".

The feasibility study report is a key step before the two parties sign the joint venture contract. The report makes detailed plans for the cooperation between the two parties. According to the feasibility study report, Cummins and Foton will form a 50:50 joint venture to form a joint venture to produce a new generation of Cummins high-performance light-duty diesel engines. The products will be used in light trucks, pickup trucks, SUVs, MPV utility vehicles and small non-compact vehicles. Highway equipment and other fields.

The two parties will invest in capital, equipment, land and technology. The joint venture company is expected to be established in 2006 and put into production in 2008. According to the feasibility report, the joint venture has a duration of 30 years, a total investment of 1.946 billion yuan, a registered capital of 1.019 billion yuan, and funds will be available within three years. Compared with Xi'an Cummins Engine Co., Ltd. (registered capital of US$24 million) jointly constructed by Shaanxi Zhongqi and Cummins last year, this cooperation is even larger.

Hua Jinsheng, Cummins Global Vice President and President of East Asia, believes that “this cooperation is a key step in the development of Cummins’ business in China. Foton Motor is a leading company in the field of commercial vehicles and light trucks in China. Our cooperation has continued Cummins and China. Excellent companies have a tradition of strategic cooperation, and Cummins is committed to introducing a full range of heavy, medium, and light engine products to the Chinese market and local production.This time, Cummins and Foton Corporation have joined hands to jointly enter the Chinese light diesel engine manufacturing field. Cummins has attached great importance to the Chinese market and our confidence in the long-term development prospects of China's economy.” The cooperation with Foton is Cummins' first large-scale entry into the field of light commercial vehicles in the world and will further improve the diversified structure of Cummins products and markets. .

At this point, Cummins completed the introduction of a complete range of automotive engine products into China: the 4-9 litre mid-horsepower engine and the Dongfeng commercial vehicle with the largest sales volume of medium trucks, and the heavy-duty truck with more than 15 tons of 11 liters of high-powered engines. The overlord Shaanxi Auto, in turn, joined hands with Beiqi Foton, which occupies 1/3 of the light truck market.

In the Chinese market, cooperation with Dongfeng and Shaanxi Auto is the two key pieces of Cummins.

Cooperation with Dongfeng and Shaanxi Auto

The cooperation between Cummins and Dongfeng began in the 1980s, when the country proposed that the truck engine project be updated to introduce mainstream products from the world. Cummins keenly captured this message and successfully developed into a partner of Dongfeng Motor Corporation (China's second automobile). In 1986, Cummins and Dongfeng Motor’s diesel engine plant began permitting the production of Cummins B-Series engines. The so-called license production, that is, U.S. export technology, extracts a certain amount of technical royalty from the produced engine, and the two parties have no management or human resources.

In fact, as early as 1978, Cummins began to negotiate with China's relevant industry authorities to discuss the production of large-horsepower engines in China.

Until January 25, 1981, Cummins finally reached an agreement with Chongqing Engine Factory to produce three series of high-powered engines: NHK, K, and KV. In the early days of cooperation, the license production method was adopted.

After the expiration of the two production technology license agreements, Cummins and two manufacturers, Chongqing Engine Plant and Dongfeng Engine Plant, embarked on a joint venture.

In 1995, Cummins and Chongqing Engine Factory established Chongqing Cummins with a 50:50 equity ratio. In June 1996, Cummins and Dongfeng formed Dongfeng Cummins Engine Co., Ltd. with the same 50:50 equity ratio. In February 2003, the registered capital of the expanded Dongfeng Cummins Engine Co., Ltd. exceeded US$100 million through a capital increase and the shareholding ratio remained at 50:50. The joint venture between Cummins and Dongfeng also expanded from the original 3.9-liter engine to the current 3.9-liter, 5.9-liter, and 8.3-liter models, namely the Cummins B and C series. Currently, Cummins is focusing on expanding Dongfeng Cummins's production capacity, and plans to increase from the current annual output of 130,000 units to 200,000 units in 2010.

During the three years between 1994 and 1996, Cummins initially completed a strategic layout in China, with six joint ventures and wholly-owned companies.

In February 2005, Shaanxi Heavy Duty Truck, one of Cummins's other important partners and one of China's three major heavy-duty trucks, signed a feasibility agreement for the formation of a 50:50 joint venture engine company. On September 16th of the same year, Xi'an Cummins Engine Co., Ltd., formed jointly by Shaanxi Automotive Group Co., Ltd. and Cummins Inc., was established in Xi'an.

According to the contract, the registered capital of the joint venture company is US$24 million, and it will produce a Cummins 11 litre fully electronically controlled diesel engine with a power range of 305 to 440 hp. Formally put into production is expected in the third quarter of 2006, the initial production capacity of 20,000 units. In 2010, the joint venture’s target output was 50,000 units.

By cooperating with heavy-duty truck manufacturing company Shaw Zhongqi in China with a market share of more than 25%, Cummins has found a good development platform for its ISM 11L high-horsepower engine and can produce locally in China.

Currently, Cummins invests more than US$140 million in China. As the largest foreign investor in China’s engine industry, Cummins has more than 5,500 employees, more than 20 offices and 12 companies and companies in China, and 14 Cummins engine products. There are already eight series produced in China, and more than 850,000 Cummins engines have been put into use in China.

The Chinese market has become an important part of Cummins' global market. The Cummins 2004 annual report shows that in 2004 Cummins global turnover was 8.438 billion US dollars, and in 2004 the Chinese market sales have exceeded 1 billion US dollars, accounting for one-tenth of its global share. Its engine production and sales volume in China reached 150,000 units, more than one-fifth of Cummins’ global production and sales. In order to consolidate the Chinese market, Cummins will invest an additional US$300 million in the next five years.

Because of the “China market’s increasingly important strategic position in the global layout of Cummins”, from 8 to 15 October 2005, Cummins board members and the Cummins leadership divided into three charter flights to Cummins’ joint venture and wholly-owned factories and distribution services in China. Network outlets, and met with some major partners, visited Shanghai, Wuxi, Chongqing, Xiangfan, Xi’an and Beijing in just 8 days.

This "China trip" was promoted by the ardent demands of several Cummins board members. "By visiting Cummins Shanghai, Wuxi, Chongqing, Xiangfan and Beijing's factory and distribution service centers, we personally felt that Cummins had made it in China. Great achievements."

Successful localization strategy

Cummins' achievements in China benefit from the successful implementation of the localization strategy and its win-win strategy with its partners.

“Cummings is a Chinese company in China. For 30 years in China, Cummins’ Americans speak Chinese and local employees have a say and decision-making power. The analysis of the Chinese market is naturally more in-depth. Take products that are best suited to the Chinese market. We have a higher success rate for production and localization in China. We will also do things that many multinational corporations are unwilling to do that are conducive to environmental protection and other advanced or not very profitable investments."

According to Steven M. Chapman, Cummins Group Vice President for Emerging Markets and Business, Cummins’s sole proprietorship and joint venture in China are all Chinese except for a few leaders, “even at the US headquarters. The R&D center also has one-tenth of its employees as Chinese."

Vice Chairman Wang Hongjie is a Chinese who graduated from Tsinghua University. "Having such a 'China Link' allows us to clearly understand the true ideas and needs of Chinese users and to bring them closer to our customers, thus promoting our business. development of."

At the same time, Cummins respects the interests of its Chinese partners. Most of the joint ventures take a 50:50 equity structure, so both parties have the right to speak. The person in charge of the headquarters said that in China, the cooperation with Dongfeng is a model and it has been very successful. Both sides follow the permit production - joint ventures - the establishment of R & D center such a path, along the way, the realm is more and more open. Because in China's large internal combustion engine market, the two sides found a win-win situation.

On October 14, 2005, Cummins's board of directors announced in Beijing that "Cummins will cooperate with Dongfeng Motor Corporation to develop a new generation of world-class 13-liter heavy truck engines," and its power covers 400-545 hp, mainly for a total weight of over 40 tons. Heavy duty truck.

According to reports, this new 13-liter heavy truck engine will be funded by Dongfeng Cummins (previously invested 28 million US dollars), based on the Cummins global development system, relying on its Wuhan Technology Development Center and Xiangfan manufacturing base for development and manufacturing.

According to Wang Hongjie, vice chairman of Cummins (China) Investment Co., Ltd., the 13-liter engine project was the first heavy-duty engine platform developed outside the United States and targeting the local and global markets. Its initial R&D was already in Columbus, the United States headquarters of Cummins. The Cummins Technology Center will be launched, and the Wuhan Engine R&D Center will jointly conduct research and development after it is put into use in mid-2006. “After the 13-liter engine is mass-produced, Dongfeng Cummins will formulate corresponding export and overseas license production according to the specific needs of overseas markets. strategy."

The new heavy-duty truck engine platform also has further upgrade capabilities for European V and US EPA 2010 regulations and is a new generation of diesel engine platform that can sustainably develop. It can be predicted that once the 13-liter heavy-duty truck diesel engine is successfully developed, Dongfeng Cummins will bring more than just an engine product, but a product platform for the development of more engines, enhancing the development potential of Dongfeng Cummins. Analysts believe that Cummins’s technology transfer has innovated the traditional technology and product introduction model of Sino-foreign joint ventures, that is, “joint ventures can only passively introduce and accept foreign products and technologies, and to a large extent It is positioned as a production base and manufacturing plant, rather than a corporate entity with independent research and development capabilities and intellectual property rights."

Zhu Fushou, vice president of Dongfeng Motor Company, stated that the 13-liter diesel engine project is the first time in 20 years of international development of Dongfeng Company with foreign companies to jointly research and develop products that are at the forefront of the world through joint ventures. “This is both owned by Sino-foreign joint ventures. The first engine R&D project with independent intellectual property rights is also a key strategy for Dongfeng to enhance its independent research and development capabilities.”

It is through the cooperation of Dongfeng, Shaanxi Auto and other partners that Cummins has made an enviable achievement in China. Tim Solso, chairman and CEO of Cummins Inc., said in an interview with the media that Cummins’s business in China has grown at an average annual rate of around 20% over the past five years. In this way, Cummins was in China in 2010. The business volume will reach 3 billion U.S. dollars.

Su Zhiqiang said that Cummins’s growth objectives mainly come from three aspects. First, the existing product line will continue to grow. For example, Dongfeng Cummins' annual production will increase from the current 130,000 units to 200,000 units in 2010, and Wuxi exchanges. Generator plants and Wuxi New Era have already begun a new round of capacity expansion projects.

The second is to promote new projects. For example, Xi'an Cummins, which will start production in 2006, is Cummins’ third engine joint venture project after Chongqing Cummins and Dongfeng Cummins in the Chinese market. In due course, there may be other project.

Then, after the integration of Cummins's entire production line, other parts will also benefit from the rapid growth of the Chinese market. During the period 2006-2010, Cummins will complete the strategic layout of the full range of component products into China.

Cummins Business in China

Sole proprietorship

Cummins Engine (Beijing) Co., Ltd.

Cummins (Xiangfan) Machining Co., Ltd.

Joint venture

Shanghai Fleetguard Filter Co., Ltd.

Chongqing Cummins Engine Co., Ltd.

Dongfeng Cummins Engine Co., Ltd.

Wuxi New Era Alternator Co., Ltd.

Wuxi Holset Engineering Co., Ltd.

Xi'an Cummins Engine Co., Ltd.

Cummins Events in China

● In 1975, Cummins' former chairman Erwin Miller visited China and kicked off the cooperation between Cummins and China.

● Cummins' first Chinese office was established in Beijing in 1979

● In 1981, Cummins signed a license agreement with CNHTC to produce Cummins high-power diesel engines

● In 1986, the diesel engine factory of Dongfeng Motor Co., Ltd. started the license to produce Cummins B-Series engine

● In 1994, the joint venture company Shanghai Fleetguard Filter Co., Ltd. was established to produce filters

● The 1995 joint venture company, Chongqing Cummins Engine Co., Ltd. was established to produce Cummins M/N/K series diesel engines and generator sets.

● Dongfeng Cummins Engine Co., Ltd. was established in 1996 to produce Cummins C series mid-horsepower engines

Joint Venture Company - Wuxi New Times Alternator Co., Ltd. was established to produce the Stanford alternator

Joint Venture Company - Wuxi Holset Engineering Co., Ltd. was established to manufacture Holset turbochargers

Sole proprietorship - Cummins Engine (Beijing) Co., Ltd. was established to produce Cummins Power Generation

● In 1997, Cummins Engine (China) Investment Co., Ltd. was established in Beijing to manage Cummins' investment and business development in China. It is also the headquarters of Cummins East Asia.

● In 1999, the sole proprietorship company Cummins (Xiangfan) Machining Co., Ltd. was established

● In 2001, Cummins launched the fully electronically controlled automotive engine that meets Euro III emission standards in Europe and China.

Cummins launches construction machinery engines in Europe, America, and China in parallel with the environmental protection standards for the second phase of European and American non-road vehicles.

● In 2003, Cummins and Dongfeng Motors expanded their cooperation and realized the expansion of joint venture of Dongfeng Cummins Engine Co., Ltd. The expanded Dongfeng Cummins will become the largest and most technologically advanced production base for medium and heavy-duty diesel engines in China.

● Cummins became the largest supplier of Euro III diesel engines in mainland China in 2004

Cummins Engine has 850,000 units in China

● In 2005, Cummins launched simultaneously to the European, American and Chinese markets the construction machinery engines that meet Euro IV emission standards and the third-phase environmental standards for European and American non-road mobile equipment.

The engine R&D center set up by Cummins in cooperation with Dongfeng Corporation formally laid the foundation in Wuhan Economic and Technological Development Zone

Cummins and Shaanxi Automobile Group set up a joint venture in Xi'an to produce the flagship ISM-type 11-litre fully electronically-controlled diesel engine of Cummins heavy-duty truck engines. Fleetguard (a wholly-owned subsidiary of Cummins) and Dongfeng Corporation established a joint venture in Xiangfan, Hubei Province to produce rows. Gas system

Cummins and Dongfeng Corporation begin cooperation in the development of a 13-liter heavy truck engine

Cummins Global's Board of Directors Holds First In China and Announces New Investment of US$300 Million

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