Yuchai: improve management and expand market to fight the global financial turmoil
Speech at the 2
nd session of the 6
th Guangxi Auto Industry Association council meeting
By the president of Guangxi Yuchai Machinery Group Co., Ltd. GU Tangsheng
Dear directors, specialists, ladies and gentleman:
Welcome. In the 2009 spring speech, the Chairman of Yuchai Group YAN Ping said: During the financial crisis, the loser will sink down but the winner will take the chance and rise sharply! Facing the risk and challenge brought by global financial crisis, with the support from the Chinese Communist Party Committees, government, society and efforts from YUCHAI staff, Yuchai Group has done: set the scientific development perspective as its guideline; carried out and implemented the strategy of Powerful Yuchai and Prosperous Yulin; stayed on the principle of Improve management and expand market; saved energy for further development to cope with another round of financial crisis. Yuchai promptly adjusted the strategy and finally overcame the negative impacts of the crisis.
From January to July 2009, Yuchais sales income reached 15.026 billions Yuan, jumped 8.73% year-on-year; the sales of 412 thousand units of diesel engines is 5.95% higher than the previous year ; the construction equipments segment achieved a sales volume of 1.108 billion Yuan and 2964 units, a 42.24% increase yearly . We are still ranked as No. 1 in the sales of diesel engine. These numbers are not only showing the breakthrough in sales volume but also our beliefs and willpower. These also proved that Yuchai has leveled up its management and cooperation. It also shown that Yuchai achieved self-breakthrough. It is guarantee for its future healthy development.
All Yuhcais achievements were attributed to the following:
1. Solid faith and development strategy adjustment
The real economy declined sharply from Sep. 2008 due to the global financial turmoil, especially the shrinking market and serious challenge to auto industry. Yuchai made timely overall adjustment by thoroughly analyzing possible development and by studying current international situation and domestic industrial stimulus plan. All these reactions helped Yuchai to solidify its faith on development.
a) Centre government decided to increase the investment on fixed assets and infrastructure. Current key projects would be post-disaster reconstruction, South-to-North Water Diversion project and Transport the Natural Gas from the West to the East, etc. The real estate market was expected to recover in 2009. Based on the above information, Yuchai thought the engineering vehicle and construction equipment segments would be the first to see the upturn.
b) The government intensified the support to agriculture and steadily promoting the rural infrastructure construction. Therefore, the market of agriculture machinery and vehicles, as well as the minibus are expected to have a rapid growth.
c) The downturn of economic and shrinking market will result in the reshuffle in auto industry especially the engine industry. The cash flow as a key weapon for enterprise to survive competition will face the toughest challenge. However, the rule of selecting the superior and eliminate the inferior in the industry gives Yuchai a chance to expand the market and increase its market share. In addition, Yuchai takes advantage from its diversified product lines compared with its competitors.
d) The slowdown in development during the crisis let us have more time to focus on the management, product quality control, R&D of new models, and improve our system of development, production, sales and service. These would be a solid foundation for Yuchais future development.
Considering the above advantages, development chances, the market and Yuchais strength, Yuchai came up with a guideline for management at the beginning of 2009 C
Improve Management and Expand Market. That is to say, the internal management and external market expansion are two priorities for Yuchai. They are also the key measures to ensure a healthy, safe and sustainable development of Yuchai. Meanwhile, Yuchai has set the objectives to: actively react to the global financial crisis, establish group strategic management system, constantly adjust internal industrial structure, extend external financing channels, seize market opportunities, speed up the technological upgrading, bring in talents to enhance competitiveness.
2. improve management, optimize production and administration
Yuchai adopted series of measures to enhance the competitiveness: improve management and effectiveness, optimize ordering system to coordinate with production plan, implement cost effective project and total budget management to reduce operation cost, carry out quality control program, crack product crisis and take more market share. Yuchai also established group management system, financial control system, responsibility system, culture system and consistently implement cost effective project. These also gave strong supports for Yuchai to battle the crisis.
In addition, Yuchai optimized its industrial structure by forming the industrial cluster, stripped the industry of small size and little technology application. For example, Yuchais state-owned share has quit from nine subsidiaries such as Da Ye Company, paper-making industry, clothing company etc. At the same time, Yuchai concentrated on its core industry and expanded industrial chain. For instance, Yuchai purchased 35% share of Zhejiang Hong Hai Group to solve the problem of its hydraulic components heavily relied on overseas manufacturers. These made solid foundation for Yuchai Heavy Industry Co. to form its industrial cluster.
3. Seize the opportunity, gain market advantage
Yuchai seized the opportunity - the fiscal stimulus for speeding up domestic demand. Yuchai expand the market to increase the sales volume. By introducing compatible policies - as for the fiscal stimulus of four trillion Yuan, the government also released the detailed policies such as providing subsidies for purchasing agricultural machinery and tools, adjusting fuel tax, adjusting highway toll by weight class. Yuchai fully prepared for these policies. The sales team gave a quick response by targeting the rural market and engineering vehicle market. They adjusted series of sales strategies to New country construction, Vehicle to Country, Modification of Yellow-label vehicle, Engineering Construction, "Promotion of hybrid power. Meanwhile, Yuchai strengthened the cooperation with key clients, kept an efficient communication with clients, sent specialists to key auto manufacturers for market promotion. These promoted the overall sales of whole series of four-cylinder engine and traditional mid-size engine YC6J. The sales volume of heavy duty engines such as YC6M and YC6A series also went up along with the boost of heavy duty engineering vehicle market. Yuchai has achieved a pattern that the light weight engine, medium duty engine and heavy duty engine balanced developed. Yuchai also made the miracle that the monthly products orders were over 70,000 units in March and April. Yuchai found chances during the crisis.
Yuchai engineering machinery segment took the lead in the renovation of sales concept. The market trend was not clear at the beginning of 2009, but they carried out series of promotions such as Spring Thunder Program, Gifting BMW cars according to purchasing points, Golden Ox Gift Pack, and Gifting Wuling Sunshine cars on purchasing of Yuchai excavator. These programs were carried out by careful planning and supported by heavy advertising. Yuchai hold 268 promotion events which have made a surge in sales of excavators. Yuchais 15 ton minus excavator took the No. 1 place in national sales. The Marchs sales also broke records for the monthly order over 1000 units since the establishment of Yuchai Heavy Industry Co., Ltd.
4. Form YC alliance to secure a smooth supply chain
Suppliers are long-term alliance members and important cooperative partners. Yuchai and its suppliers have been closely related and mutually dependent and formed win-win based cooperative partnership. To fight the crisis, Yuchai built up the new cooperation C YC Strategic Alliance. Yuchai encouraged the co-development with its suppliers by optimizing, integrating and distributing the supply chain of parts. The integrated advantages and lowered operational cost lifted Yuchais overall competitiveness to a new level. Yuchais leading performance has proved that it is a lively strategic cooperation model.
5. Innovate financing channels, ensure Yuchais healthy development
Yuchai built up the strategic cooperative partnership with China Development Bank to change from short-term financing to long-term funding. Under the tight credit policy during the crisis, the long-term funding from China Development bank in 2008 is a strong support for Yuchais sustained growth.
a) Yuchai actively promotes the publication of its key subsidiaries such as Yuchai Heavy Industry, Yuchai Power Company, Huayuan Company. The goal is to build a platform for long-term funding as a key for its expansion and development, and make the change from indirect financing to direct financing.
b) Opportunities only give to him who prepared, so does an enterprise. Led by Board of Chairman YAN Ping, Yuchai planned ahead of time, made full preparation for financial crisis, while also maintained a relatively rapid pace of development. Yuchai is showing a unique Yuchai Phenomenon to the whole industry.
The first half of 2009 has gone, we are still keeping our quick pace and ready for the new leap and achievement.
Lets hand in hand and create a brighter future.
Thank you everyone!
Guangxi Auto
