As the Top 10 Outstanding Figures for the Chinas Economy in 2008 , the pilot of Yuchai Group Yan Ping is a famous figure in Guangxi Yulin city.  

My childhood dream was to be a general. If I were now 18 years old, I would go to the military and worked hard to be a general. This is a bold, passionate chairman with full sense of responsibility and broad view.  

During more than 1 hours interview, he talked without any tiredness. Though he is not a general in the military, but his soldier-like qualities made us feel that he is a business general.

Move forward: reform or fail  

The year 2005 was an extraordinary year for Yan Ping and Yuchai Group.  

At that time, the domestic diesel engines industry slowed down. The internal combustion engine industry slipped in a recession; the situation was getting worse and worse and the auto industry slid, particularly the trucks. The heavy duty trucks and quasi-heavy duty truck market fell by as much as 32%   

Yan Ping, the director of Development and Reform Commission of Yulin City of that time was appointed the chairman and Party secretary of Yuchai Group. Under such special circumstance, to be the head of the world's largest independent manufacturer of diesel engines, a company with an income of over 10 billion Yuan, posted both challenge and opportunity to Yan Ping.

Where would the 45 years old with a master degree but no experience in auto field take Yuchai with more than 15,000 employees to? Was he able to lift Yuchai out of difficulties? A great number of employees asked the questions. Some even called the city government to reconsider the appointment.  

In the face of doubts and challenges, he took a period of time to talk with the grassroots units, have seminars with experts. After those talks, he found the institutional and managerial problems behind the rapid development of Yuchai.  

There is a saying: a new official applies strict measures. Upon the finding, he initiated three measures.  

The first measure was to restructure the institution and streamline the management team. It was a sensitive issue because it affected the interests of lots of employees. But Yan Ping said  truthfully: Ive done a lot on the management systemic reform. However, if our management lags behind in the fast development, the enterprise will be a person in need of calcium. 

Since July 2005, step by step, the group has integrated related departments, and formed 5 core sections, in a bid to strengthen the Group's overall planning and optimize and share the corporate resource inside the group. The 5 sections are: strategy, financing, cost control, information and culture. At the same time, the company streamlined the high level management team, and cut deputy chiefs to only one. In the Group headquarter, only 42 employees were remained. It was reduced from the previous over 70, namely, up to 37% were cut. At the end of 2006, a total of more than 100 people were cut in the Group and the Yuchai Machinery Co., Ltd. The managers were all selected from open competition. The function of the Group gradually turns from administration oriented to resources integration oriented.  

The cost for one engine production of Yuchai is probably the highest in the whole industry, Yan Ping said honestly to the reporter. Thus the 2^nd measure was to reduce costs and improve efficiency. The cost control center links the cost indicators to the responsibility of leaders in accordance with the incentive based examination and supervision procedures. At the same time, he deepened reform on the labor, personnel, and distribution system. In addition, he intensified the order management, getting the sales and production departments work closely.

Business competition is a competition of human resources. How can the Group with headquarter located in the remote boarder of Guangxi attract and retain talents is the key issue for Yan Ping to deal with. The set human resources as the principle and the reward talents is the 3^rd measure.  

In November 2005, Yan Ping decided to put aside 40 million Yuan to reward units and individuals that have made major contributions to the technologic development. The senior R&D personnel were hired at high cost. As the reporter learned, the bonus package to a person with a PhD degree is very high: an apartment of about 150 square meters and a salary of 160 thousand per annum.  

We need not only to give them good treatment, a good platform, but also to fully respect them. As the Group chairman, no matter how busy he is, he insists on having dinner with technician backbones each quarter. This has become a kind of unwritten rule.

In 2007, the first corporate engineering research institute of the industry was found in Yuchai. It has a personnel of 360, state-level technology center and post-doctoral research workstation. The lab is the first in the industry to be certified as the national accredited laboratory and is one of the largest and most sophisticated and advanced laboratory in the industry. The lab strongly ensures the product R&D, and builds a comprehensive range of varied product platform to let Yuchai keep ahead in domestic market share.  

So far, the three measures are in place. And how are the effects? 

In 2005, facing the big low tide, Yuchai advanced despite difficulties. The company earned a total income of 12 billion, an increase of 12.3%. The sales volume reached 267.5 thousand, up 16%.The export hit 17 million, an increase of as much as 96%. It is called Yuchai miracle by insiders of the industry.

Responsibility comes first: to provide China with a "green power"  

Everybody is responsible for the rise and fall of the country. In the war time, the patriotism is the responsibility of a General. In the peace time, how should entrepreneurs contribute to society?   

As a manufacturer, if our products bring pollution to society, the products are not viable, no matter how good our products are. Engine is the core product of our company. If we were unable to set an example in terms of environmental protection and low emissions, we would no longer be China 's largest internal combustion engine production base, or industry leader. Once the business turned away from a national and social responsibility it would never grow strong in the Chinese market and in the world

In order to carry out the value of green development, Yuchai stays on independent innovation and make all efforts to develop new products. In 1998, 2 years ahead of the enforcement of the national emission standards, Yuchai launched State I diesel engine. In 2007, 5 years ahead of State V standard, Yuchai produced the first home made State V diesel engine in China . In the industrial pollution control, its total emission particles remain in the level of 1995 while it has maintained a fast growth of 30% for consecutive 7 years. In the energy saving and fuel consumption, it lows as much as 14% while the power increases by 60%.Yuchai always calls for gasoline engine into diesel that would save 30% of fuel. Currently, Yuchai is the only sedan diesel engine maker that possesses the R&D, production and parts making capacity in China . 

During the Beijing Olympics70% of the public transport vehicles of Beijing were equipped with Yuchai diesel engines. Yuchai made great service to green Olympic Game.  

In order to meet social responsibility, Yuchai has worked hard to make donations to community. Since 2005, Yuchai has donated a total amount of more than 80 million Yuan to charity. In February, it produced 16 power generators at a record speed for the blizzard-hit area in Guilin . It also sent a donation of 110 thousand Yuan and a large number of clothes to the area. When the Sichuan earthquake occurred in May, the Yuchai Sichuan office and service stations organized rescue teams, service teams to assist in find survivors and maintenance of rescue vehicles. Moreover, the group contributed cash and supplies worth 16 million Yuan.  

In a move to fulfill the social responsibility, in May 2008, Yuchai formally joined the Global Compact, in support of its 10 principles including the human rights protection, labor standards, environmental protection and anti-corruption. In June 2008, the first social responsibility report in the internal combustion engine industry was released by Yuchai Group. It signaled Yuchai was active in honoring social responsibility and willing to accept the monitor of society.

Vision: Building a world-renowned brand   

In 2007, the 3^rd year since Yan Ping came to Yuchai, the annual sales revenue of the company went up to 18.3 billion Yuan from 10 billion in 2004.The amount for 2008 is expected to reach 23 billion to 25 billion. On the other hand, the annual production and sales of diesel engines reached  500 thousand from 200 thousand in 2004. The achievement made it at the top of the industry.  

For his outstanding accomplishment, Yan Ping received a series of awards, such as Nominee for 2006 CCTV Economic Figure, Top 10 Entrepreneurs of Guangxi and Top 10 Outstanding Figures for the China s Economy in 2008.

However, beside the applauses and cheers, he found another problem. Yuchai has some distance from internationalization. It has a 44 years export history since the 1^st exportation to Viet Nam and Singapore in 1964. Still, for a long time, we saw no big growth in the international market, and the export makes up only 5 of the total sales volume.  

In the face of the economic globalization, if an enterprise left from the world market, it could not grow big and may even decline. Yan Ping noted.  

Internationalization is the only way for the company to progress. In 2008, Yan Ping and his team drafted the mission of excellent quality and Yuchai globalization and set the goal of building a world renowned brand and become a large international corporation. It officially started the internationalization process.

During the interview, Yan Ping explained their goal in overseas market: to export 75 thousand engines in 2009, and 100 thousand in 2010, accounting for 35 of the whole sales volume. By 2010, Yuchai will target markets in Asia, Africa, Latin America and Eastern Europe with the focus on Southeast Asia and try to make the export up to 10~20 of the whole year. Between 2010-2015, Yuchai will gradually enter into the North America, Western Europe and other developed markets and export a total amount of 300 thousand, accounting for 30 of the year.  

Authors: Yang Hanjun, Zhong Bin         Source: Chinese Businessman