Weichai chairman Tan Xuguang: Economic transformation is both a challenge and an opportunity

Weichai has benefited from transformation and upgrading in the past ten years, and the way out for the future is also gestation and figuration in the new transformation and upgrading. Faced with the new normal, some people say that China’s economy is falling steeply and that radical reforms are needed; others also say that a new round of stimulus policies is ready and the winter will not be long. How to interpret the connotation of the new normal? How to grasp the development direction of the company in the new normal? Chairman Tan Xuguang said that scientific positioning, take the initiative to adapt to the new normal, and achieve new breakthroughs in reform and transformation, transformation and upgrading are both challenges and opportunities.

Weichai chairman Tan Xuguang: Economic transformation is both a challenge and an opportunity

Economic transformation is both a challenge and an opportunity

The past year of 2014 was a difficult year. The global economic recovery was slow, the Chinese economy was deeply adjusted, and industry competition was extremely fierce. The year of 2014 was also a year of harvest. We took the initiative and worked hard to achieve steady and healthy development. In particular, superior businesses such as engines , transmissions , heavy trucks , bulldozers and the KION Group have achieved good results and have continued to strengthen their leading position in the industry.

In 2015, we will continue to face the pressure of China’s economy entering the new normal. In the face of industry competition and increased integration, the environment for survival will be more complicated.

The Chinese economy has entered a new normal. We must have an accurate understanding of the connotation and characteristics of the new normal, and we must see the new trends, new features, and new impetus under the new normal. In my opinion, the new normal has not only manifested itself as a slowdown in economic growth, an upgrading of industrial structure, and changes in the driving factors. It is also reflected in the deep integration within the traditional industry, which is reflected in the fundamental transformation of business concepts.

A more stable China economy

In 2014, China’s economic growth rate was 7.4%, and it is expected to decline to about 7% in 2015, and the pressure on the economy to continue to fall. The Central Economic Work Conference has clearly positioned itself: China's economic development has entered a new normal, and it is shifting from high-speed growth to medium- and high-speed growth. The mode of economic development is shifting from extensive speed growth of scale to quality-efficient intensive growth, and the economic structure is mainly based on incremental expansion. Turning to adjusting the depth of adjustments in stocks and profitable increments, the economic development momentum is shifting from the traditional growth point to a new growth point.

We must clearly understand that the new normal is not just a decline of a few percentage points in economic growth, but it will never be a one-year or two-year adjustment. The new normal is a systematic, long-term, fundamental change, and it is a matter of the Chinese economy. Strategic choices made in the general direction of the next cycle of policy.

Economic transformation is both a challenge and an opportunity. We must also note that the traditional growth engine is still strong. Compared with developed countries, China’s infrastructure supply is still in short supply, and there is a great potential for infrastructure investment; the urbanization rate is still low, and the urban-rural dual structure adjustment will release huge demand. It is expected that by the end of the “Thirteenth Five-Year Plan”, the urbanization rate in China will reach 60%, and domestic demand will be driven by the creation of nearly one trillion yuan. The new development engine will gradually play a role. The implementation of China's "One Belt and One Road" strategy and regional economic development strategy will bring new opportunities for development. The transformation of China's economy will also force industrial upgrading and technological upgrading.

Depth-adjusted industry trends

At present, equipment manufacturing industry is in an important transition period from scale expansion to depth adjustment. First, the continued sluggishness of the industry will increase the survival of the fittest. As the economy enters a downward period, the problems of the industry's many years of backlog have escalated, and it will take a long time for the overcapacity to resolve. The industry's adjustment pains are unavoidable, and many companies are deeply trapped in survival and development. Under the new situation, optimizing production capacity, survival of the fittest and inevitability will inevitably lead to warming up of the group and industry consolidation will accelerate. This will truly test the overall competitiveness of the company.

Second, the trend of vertical integration in the industry has accelerated. Looking at the development history of companies in the same industry in the world, vertical integration of the industry has become a common development path for many companies. Ten years ago, Weichai was the first in the industry to carry out a series of capital mergers and acquisitions. Now, we have core resources such as engines, transmissions, axles, hydraulic components, etc. We have gradually opened up many commercial vehicles, engineering machinery, and yachts. Gold industry chain, this is our strategic choice to take advantage of the situation.

Value-oriented market competition

In the past, the era of relying solely on the competition between scale and cost has come to an end. We are moving toward an era of relying on core competitiveness to win, and moving toward a customer-centric value marketing era. Enterprises that lack core competitiveness are doomed to self-destruction; those companies that have core competencies and can translate into customer value can survive and thrive. What determines our core competencies? It is the understanding of a company's market and customers, the core resources and technology that it controls, and its ability to translate into products and services to meet customer needs. In the current and future market competition, companies will place greater emphasis on customer needs, establish and maintain core competitiveness, take innovation-driven development, and take the road to value marketing.

First of all, we must always insist on innovation-driven strategies to accelerate the mastery of key core technologies. Second, we must persist in value-oriented marketing and strengthen differentiated competitive advantages. How to understand and meet customer needs better and faster, and realize customer value maximization through differentiated products and services has become an important indicator of the company's core competitiveness.

The management change that keeps pace with the times

Judging from global trends, the new industrial revolution is gradually approaching. The era of mobile Internet has come. The change in corporate management has brought us new challenges. In the future we will focus on the following trends:

The first is smart manufacturing. The development of global manufacturing industry is increasingly showing new features of digitization, networking, and intelligence. “Industry 4.0”, the fourth industrial revolution led by smart manufacturing, will surely have a profound impact on the future of the industry. China's manufacturing industry is moving from the low end to the high end. The development of new industrialization is inseparable from the effective support and integration of information technology. This requires a process, but also an inevitable trend.

The second is business model innovation. In the era of mobile Internet, the traditional business model is experiencing tremendous impact, and the industry boundary is constantly breaking through. Manufacturing companies also need to establish Internet thinking, in-depth thinking about the company's operating formats, marketing service models, and organizational systems, and accelerate business model innovation.

The third is lean management. Each of our companies must bid farewell to extensive and pursue lean. No matter what kind of management methods and systems are used, there must be a concept of lean management to create maximum value for customers, minimize waste, improve efficiency, and strive for excellence.

This economic winter is very cold and long. Go against the water and retreat if you fail to enter. We only have to throw ourselves down and want to take action, make heavy fists, smash hands, and take the initiative. Only in this way can we break through.

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