Yuchai has a subsidiary which can maintain stable market sales in the conventional off season in the filter industry. Air filter assembly alone can contribute an annual sales income of more than RMB 10 million. This is Huayuan. The journalist visited the company twice in July and September for an insight into the source of its tremendous competitiveness.

2001-2002: Tripartite venture forms stable structure

Speaking of Huayuan's development, Chairman and General Manager Zhang Wen said emotionally, "I almost started from scratch, and there were only five or six employees when I joined the company." However, it was the few people who achieved brilliant sales of RMB 1.62 million when infrastructure, molds and tools were not fully in place, and production started late in December 2002.

Brilliant results are definitely backed by a tough organization and combative team. Huayuan's development is a good proof.

To meet the demand of Yuchai Machinery Co., Ltd. for engine matching, Yuchai Group and Hong Kong Huasheng Machinery Co., Ltd. jointly founded Yuchai Huasheng Machinery (Yulin) Co., Ltd. in July 2001. At that time, the guide of Huayuan had not realized that what an inspiration situation he would create, therefore an investment as small as HKD 7 million in 2001 was far from meeting the requirements for infrastructure such as premises and equipment. Besides, as the filters manufactured by Huasheng Hong Kong are predominated by repair spare parts, which lacked experience in engine matching, upon deliberation, Yuchai and Huasheng Hong Kong decided to introduce an experienced enterprise. Pingyuan Filter Co., Ltd., which had already been Yuchai's supplier, came into the views of the two shareholders. The company, a military enterprise as well as a subsidiary of Plant 116 under Aviation Industry Corporation of China, manufactured high-tech products like aviation filter, owned a national filtration test laboratory, and boasted the strongest technical capacity in the domestic filter industry. After introducing the company as a new shareholder, Huayuan's key products oil filter, diesel filter and air filter witnessed qualitative upgrading in technical performance, and met the installation requirements of Yuchai engines through third-party certification and installation tests. Not until late 2002 was Huayuan's preparation work completed and a tripartite stable structure formed. Hence, Huayuan's production came on the right track.

Zhang Wen (right) introduces Huayuan to a visiting guest

2002-2008: Accelerate development with concept of "quality first"

2003 was Huayuan's first complete year of production management. From this year, with the constant enrichment and improvement of management staff, technical force, productive force and equipment level, Huayuan entered into a stage of acceleration, with double-digit increases in the annual sales income, profit margin and output value. This was attributable to the concept of "quality first" Zhang kept to.

On April 9, 2004, due to improper operation, a foreman of Huayuan's stamping shop had three fingers cut off. Another day in the same month, the fixed plate of the filter on a product of Yuchai Machinery cracked duet to the problems of materials and design structure, affecting the installation operation of Yuchai Machinery. On that very day, all leaders of Huayuan, including Zhang, stayed and worked late into 3 a.m. Afterwards, Zhang fined himself RMB 10,000. From then on, Huayuan fixed every April 9 as the "day of Safety Quality". On this day, Zhang would organize all the staff for a safety education meeting, reminding them to always bear safe production in mind and carry out the work of safe production and product quality.

This is just an epitome of Huayuan's objective of "safe production, quality first".

From 2007, Huayuan rose from an "outstanding supplier" to a "core supplier" of Yuchai Machinery Co., Ltd. To this, Liu Hongwei, deputy general manager in charge of the production management of Huayuan, said, "we got this honor not because we are a subsidiary of Yuchai, the purchase department of Yuchai Machinery was rigorous, as a result of the scoring of our supply timeliness, product quality and after-sale service, we were up to the standards of "core suppliers", this is a recognition of our production, technical and quality work."

Now, Huayuan's products are sold through two channels-26 percent for engine matching of Yuchai Machinery, 64% sold by Guangxi Yuchai Machinery Monopoly Development Co., Ltd, and the rest sold by Huayuan. as repair spare parts. It was not easy for Huayuan to maintain the equal quality of matching parts and spare parts in the two segments. You know, to reduce cost, some enterprises in the automotive engine filter industry tend to use inferior materials in the spare parts service system after being recognized by engine plants. However, Huayuan never did this way, Li Binghe, deputy general manager in charge of sales, said, "Huayuan keeps to a medium & high-end route, we should maintain Yuchai's reputation since we use the brand, must not sacrifice our brand for low cost as some small plants do for profits. Even though we make a loss, we will not introduce inferior products to the market."

From 2002 to 2008, based on the requirements of Yuchai Machinery, Huayuan independently developed National III, IV and V filters, which already completely replaced similar import products in Yuchai system, won certifications from Delphi and Bosch. Additionally, in the domestic automotive filter industry, only Huayuan and Pingyuan could make it. Huayuan is proud of that.

2008-2010: Production surges to rival world-famous brands

With the fast growth of Huayuan, the original facilities in the old plant had been unable to meet its development demand. In December 2008, Huayuan was relocated to the new location of Yuchai Industry Park. Compared to the old plant, the new one boasted a designed production capacity of up to 600 million units (sets), up 400%.

At the new plant, Huayuan built a grand marble fountain, blue-roofed and well-structured standard premises as well as spacious and bright office buildings. For Huayuan staff, this is not only a change in the work environment, but also a new significant turning point of enterprise fate closely related to them.

The construction of the new plant boosted the work enthusiasm of Huayuan staff. Inspired by the slogan of "synchronization of plant relocation and production management", Huayuan staff overcame the difficulty that part of production lines were still in commissioning to achieve a sales income of RMB 180 million in 2009, up 20% year on year. However, there were only more than 400 employees, that is to say, every employee contributed an average sales income of up to RMB 450,000!

From January to August 2010, Huayuan's sales income increased by 50% from the same period of the previous year and accounted for 68% of the annual target, which could be described as "more than half of the time, more than half of the target."

Production surge was inseparable from Huayuan's wise talent management. Zhang said, "our team is young, 80% of which were born in the 1970s and 1980s, so it is full of energy and vitality, and all of them have a strong sense of belonging to the enterprise." Huayuan cultivated the team attentively by paying home visits, boldly promoting capable and high-caliber staff, and holding competitions for logistics and non-quota posts. Fu Wentao, deputy director of the production department, is exactly a vivid case. He joined Huayuan after graduating from the university in 2004, and was promoted to workshop director in 2005. Li Binghe, deputy general manager in charge of sales, was proud of his sales team, "Eighty percent of members of Huayuan's sales team are bachelors born in the 1980s, who are young, vigorous, fear no strong opponents, flexible, aggressive and dauntless."

However, youth also means lack of experience and tempering. With the constant growth of Huayuan and the constant expansion of the scale, staff's comprehensive quality has yet to meet Huayuan's development requirements. Hence, apart from intensifying staff training, Huayuan also actively introduced outstanding industry talents through various channels.

Now, Huayuan ranks top three among domestic brands in product quality and brand influence, competes against world-famous filter brands such as Donaldson and Fleetguard of the US, Mann+Hummel and Mahle of Germany and Sofima of Italy, is not inferior in air filter, oil filter and diesel filter. As a domestic brand, Huayuan products are of high quality and low prices, reduce costs for customers, and solved the problem of high maintenance cost. Alone in 2009, Huayuan's Euro III filters achieved a sales income of RMB 30 million.

To be No. 1 in domestic filter industry

In the "Twelfth Five-Year Plan", Huayuan set an objective of a sales income of RMB 500 million in 2013, two years ahead of schedule. Huayuan staff is working actively towards to objective.

In the air filter shop, China's largest filter production line, with an annual output of 500,000 overall injection air filters, is running in full swing and scheduled to be completed in June 2011.

Behind the production shop, the infrastructural construction of the automotive engine filter test center up to advanced international standards is expected to be completed late this year.

In the meantime, Huayuan actively develops external markets, starts from three lines-automobile plant matching, external engine plants and non-Yuchai networks, and focus on extend the business of air filter assembly to the outside.

Huayuan is intensifying introduction of mature talents in support of the development objective under the "Twelfth Five-Year Plan".

As for the future, Huayuan staff was full of confidence. Zhang said passionately, "Next, we will extend upwards and downwards the entire technical chain of the filter industry after our financial strength and technical level reach a certain extent. Fixing eyes on automotive engines only is far from enough. In the domestic filter industry, we strive to be No. 1 at home during the "Twelfth Five-Year Plan."

This is a sonorous vow of Huayuan staff. Let's wait to see.

Interview Notes:

During the interview at Huayuan, I was inspired by a spirit, which I believe to be the potential source of power for Huayuan's fast growth. It is concretely manifested in filter element, filter base and other parts on desks of staff ranging from the boss to common R & D staff; in the pair of cloth shoes wore by the deputy general manager; in the one soup and four dishes in the restaurant for leaders and clean bowls and dishes on dining tables; perseverance in working during lunch break."

I saw these for myself and cannot help being moved and shocked. We cannot judge the vitality and sustainability of an enterprise merely from the sales data it shows, but from what every staff does in every work place and in every minute. Only this can reflect the actual situation and tell our real information.

(Yang Li)