Weichai Group: Collaborative Leaps under Multiple Industry Chains

“The transformation and upgrading are not empty talks. Without the multiple transitions in the 21st century, Weichai is likely to be submerged in the flood of the market.” Xu Hong, Party Secretary of Weichai Holding Group, expressed emotion at the “State Enterprise for Transformation and Upgrading” speech. .

From revenue of 800 million yuan in 1999 to revenue of 100.4 billion yuan in 2013, Weichai has taken every step of the world's attention. “Weichai has become a global industrial company, and it is inseparable from technological R&D and capital operation. It can be said that technological innovation is the pinnacle of business, and capital operation will open up all aspects of the market for scientific research transformation. International R&D centers and production bases Will provide new development opportunities for Weichai.” Xu Hong said.

The perfect turn under the relevant multiple strategy

"Through more than ten years of development, Weichai has not solely depended on the production of heavy-duty engines . It has formed a diversified layout of the four business segments of powertrains, complete vehicles, luxury yachts and key components." According to Xu Hong, Weichai Group currently has the world's largest market share of heavy-duty engines, heavy-duty transmissions, and luxury yachts. In addition, the heavy-duty truck market has also ranked fifth in the country.

Xu Hong said that Weichai Group will achieve "from land-based power to all-round power, from general technology to core technology, from investment to investment and consumption, from domestic development to global development, and from manufacturing to service manufacturing. The five major transformations.

Weichai, which has been focusing on engines, has begun to move toward diversity in recent years. Although many people in the industry believe that diversification is not a good road, diversification of Weichai is different from other companies.

“I think diversity is not wrong in itself. The risk is whether it has entered the right field and whether it can achieve effective control. Weichai has chosen relevant diversification. This is an inevitable choice for us to reach a certain stage, but we Whether or not we can operate effectively is the biggest challenge for us." For the relevant diversification, Weichai Power Co., Ltd. Chairman Tan Xuguang interpreted this.

In Tan Xuguang's view, the so-called "relevant diversification" refers to the diversification of the same industrial chain, rather than rigidly putting together the upstream and downstream that have little internal correlation.

Under the relevant diversification strategy, Weichai triggered a full-scale industrial revolution that shocked the industry: the merger of the Hunan Torch returned to the Mainland for re-listing, Weichai Heavy Machinery went back-to-back listing, strategically reorganized Yangchai Power, Jiachuan Lightweight Vehicle, and Yangzhou. Starbus led the establishment of Shandong Heavy Industry Group... This series of capital operations and resource integration has enabled Weichai to successfully achieve three leapfrogs: the engine consists of a single heavy truck market, and heavy trucks, construction machinery, passenger cars, shipbuilding, etc. The leap in market support; the leap from a single product platform focusing on 10 litres and 12 liters to a full range of product platforms; and a leap from a single engine product to a collaborative development of multiple gold industrial chains such as commercial vehicles, construction machinery and ships.

Xu Hong said that under the strong drive of "product + capital", Weichai has achieved perfect turning in the transformation and upgrading of state-owned enterprises.

Industrial chain revolution under international mergers and acquisitions

The two-wheel drive made Weichai a huge success in the country, but Weichai's exploration of capital does not stop there.

In January 2009, Weichai won the first step of cross-border M&A with a bid of 2.99 million euros to obtain related assets and product technology from the French Baudouin company. In January 2012, Weichai signed a strategic agreement with Italy's Ferretti, the world’s largest luxury yacht manufacturer. In September of the same year, Weichai Power also signed a cooperation agreement with the world's leading industrial forklift manufacturer and the global leader of hydraulic technology, the German KION Group.

Behind Weichai's frequent attempts in the international capital market, it reflects its unique business philosophy: International companies should not only satisfy the growth of general trade, but should learn to base themselves on global allocation of resources and skillfully use capital to control resources. Tan Xuguang believes that “if we rely on our own home to build a brand, it may take 30 to 40 years. But when the right time comes, once our strengths form a synergy with the advantages of foreign controlled resources, we will greatly reduce our strategic goals. time."

If it is said that the acquisition of Baudouin is a preview of Weichai's international operation, the integration of Ferretti Yachts will expand the application areas of the product by occupying the core technology of yacht manufacturing, and expand the core engine technology of Weichai from the land to the ocean. The strategic cooperation with KION is more of a sword for its high-end hydraulic technology. It can not only achieve industrial technology upgrading and product import substitution, but also directly promote the construction of Shandong's domestic high-end hydraulic R&D and manufacturing base, and support Shandong Heavy Industry in the field of forklifts. The realization of the Asia-Pacific market strategy.

Engine's core competitiveness

Whether it is related to diversification or cross-border mergers and acquisitions, Weichai's engine technology, which represents the highest level of China's equipment manufacturing industry, has accumulated a stronger core competitiveness.

In recent years, in order to compensate for the impact of heavy profits on heavy truck sales, heavy truck companies in the first and second camps have built their own engine plants to seek “vertical support”. If Dongfeng is behind Cummins, it will cooperate with Volvo and Renault in the engine field, and JAC will also introduce Navistar's products. The market has a lot of concerns about the downstream customer risks brought by the original leading engine manufacturers for some heavy truck companies. As the most comprehensive automobile and equipment manufacturing group in China, and the largest engine manufacturer in China, Weichai Power still maintains its leading position in the industry in the face of various competitions such as the establishment of joint ventures with strong international giants entering China and the active growth of local companies. In addition to its dominant position, it also showed a strong momentum of development.

Wei Dehui, vice president of Weichai Power, frankly stated: “The Chinese auto industry is highly developed. We have felt the pressure deeply. But we are not worried about the market pressure.” Indeed, WeiChai still has an absolute advantage in the heavy-duty engine supporting field. Because the mainstream consumption of domestic heavy trucks is still concentrated in the low-end market with a price below RMB 400,000. In recent years, Weichai is accelerating the research and development of new products as well as technological upgrading of existing products. “Weichai will always insist on doing a good job of products, be a product with strength, 'I have no people, I have excellent people', will always be imitated, but will never be surpassed. The emphasis on the product is that we respond to the 'wolf's coming 'The fundamental countermeasures,' he said.

On May 4th, Weichai Power and China's largest commercial vehicle manufacturer Beiqi Foton Motor Co., Ltd. (hereinafter referred to as “Fukuda Automobile”) once again “strong alliance” is undoubtedly the leading position in the Weichai engine industry. Another evidence. This is the third time since 2006 and 2008 that the two sides signed a comprehensive strategic cooperation agreement. According to the contents of the agreement, Weichai Power will continue to maintain its position as the largest strategic supplier of heavy truck trucks for Foton Motors. Zhai Dehui said: "This cooperation shows that engine manufacturers with superior technology and product advantages are still and will continue to maintain their leading position in the ups and downs of the industry."

According to industry sources, the engine industry is a typical industry with high-tech barriers and high manufacturing experience barriers. With the core competitiveness of “cost, technology, and quality”, the position of Weichai Power as the No. 1 strategic supplier of Foton heavy truck products will be difficult to shake. .

“The engine is the core competitiveness of Weichai, and we have a very obvious advantage in terms of cost and technology. The development of the engine industry needs long-term accumulation, not just overnight. At present, many car companies at home and abroad put into production engines, but they There is still a considerable gap between us and us.” Yu Dehui said that from January to March this year, Weichai Power achieved sales revenue of 16.6 billion yuan, up 26.5% year-on-year; profit was 1.37 billion yuan, up 35.3% year-on-year, and sold 125,000 engines. The growth rate was 17.6% year-on-year, and the growth continued to be better than the industry average. These data are the best portrayal of the Weichai Power brand advantage and market feedback.

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