Panoramic view of Yuchai machinery plants

The year 2008 marks the centenary anniversary of Chinese internal combustion engine industry and the 50th anniversary of Guangxi Zhuang Autonomous Region. Yuchai Group, the winner of centenary achievement reward of Chinese internal combustion engine industry, is getting close to the goal of rebuilding another Yuchai within 3 years which was set in 2006. The major content of the goal included the sales reach 20 billion Yuan, twice of 2005. In 2007, its sales income passed 18 billion Yuan, with a total of 500 thousand diesel engines, maintaining the leader in China for 7 years in a row. Facing the global economic turmoil this year, Yuchai is still hopeful to gain 30% growth and accomplishes the goal of rebuilding another Yuchai within 3 years.  

The past 3 years are the rapid development 3 years of Guangxi. It used 45 years to break 100 billion Yuan GDP in 1994, 6 years to break 200 billion in 2000. In 2006 when Yuchai set the 3-year goal, the GDP of Guangxi reached 480 billion Yuan and the growth exceeded 100 billion for the first time. In 2007, it climbed to 595.6 billion Yuan. Given the unprecedented historic opportunity, Guangxi has moved on a fast track of development with a much stronger momentums.  

It can be said that the process of rebuilding another Yuchai within 3 years has witnessed the surging development of Guangxi, too.  

A small factory on remote boarder became a leading enterprise of the industry  

At the time of the establishment of the Autonomous Region in 1958, Yuchai with only several hundred employees produced the first coal gas engine. In 1978, its annual output of engine was 5,201.This year its output is expected to 500 thousand. The average annual growth is 26% for the past 30 years. It had developed from a small factory on remote boarder into the largest scale diesel engine production base and the largest scale single plant in the world on the production and sales. It is known as the first power brand in China . It now has 37 wholly-owned, holding, partly-shared subsidiaries, 16,000 employees, and a total asset of 11.6 billion. Yuchai witnessed the development of the China s auto industry and  the difficulty development path of Guangxi industry.  

Yuchai had become famous in the 1980s and 1990s. But in the mid-1990s, it slipped into a doldrums for a period of time. Until 2004 its sales income exceeded 10 billion Yuan. After took office in 2005 Yan Ping introduced the core value of green development and win-win in harmony and set the goal of rebuilding another Yuchai within 3 years that put Yuchai on the fast development track.  

The same as Yuchai, the locally specialized industries of Guangxi started to take shape and grow up in the decades. Currently, auto machinery, non-ferrous metals, sugar, power and other industries hold an important share in the country. Among them, refined sugar production and micro-cars, wheel loaders and diesel engine top the corresponding industries. The development of Yuchai reflects the development of Guangxi.

One flower burst brought all flowers blooms   

During its first time fast growing in the 1990s, Yuchai single diesel engine oriented products such as YC6105QC  gained huge popularity across China. However, through counterfeiting and R&D, competitors caught up with Yuchai. The intensified market plus the worsening of the economy depressed Yuchai for years. The requirement for engine is always limited so the single product could not sustain the development of the company.

Learn from its own mistakes, Yuchai made its way to diversification.  

In 2006, Yuchai made it clear that beside the core business of diesel engine, it would pay great attention to the construction machinery, special-purpose vehicles, auto parts, auto chemical products, logistics and other related industries. Through growths in wider fields, diversified operation and industrial chains, Yuchai built more core businesses, expanded rapidly and achieved   great development.  

In 2007, core business sectors including engineering machinery, auto parts, automotive chemicals and special purpose vehicles achieved a great success with a total of sales 7 billion Yuan. It was more than one third of the gross income of Yuchai. Because of the positive prospect of these sectors3 to 5 enterprises will be separated from the core business sections and be listed in the stock. The Yuchai Logistics Group Co., Ltd founded in 2006 turned profitable in 2007 with an income of 1.6 billion Yuan, a yearly  increase by 200%. It received a series of titles like the 2^nd place of the top 100 transport enterprises in China . High level manager of Yuchai revealed that the company is trying to list Yuchai Logistics Group Co., Ltd in the stock within 3 years by way of capital reform and companies reorganization.  

Similar to Yuchai, by adopting diversified operation, a growing number of locally specialized industries of Guangxi began to be leaders in the industry. For example, the sugar industry has extended from single sugar products to paper, alcohol and a range of relevant industries. Aluminum, manganese, and other resources processing enterprises has started the road from primary products to intensive processing for high value-added.   

The opportunity of Guangxi sends Yuchai to fly  

The beginning of Yuchais huge development in 2006 coincided with the initiation of Guangxi Beibu Gulf area development. Earlier this year, Guangxi Beibu Gulf Economic Zone was listed as the national strategy level. It becomes the first international regional economic cooperation area. Yulin, home to Yuchai, is included in the zone. This series of historic events added huge opportunities to the development of Guangxis national industryYuchai.  

At the beginning of this year, Yulin city enforced the strategy to grow Yulin by strengthening Yuchai by using the brand advantages of Yuchai. From Jan.Oct., it started a total of 52 key projects.Each of them pumps in at least 30 million Yuan with the totaling 7.7 billion Yuan, to directly or indirectly support or serve Yuchai. It has designated Yuchai industrial park based mainly on auto and parts processing for the core business area, with more than 100 supportive enterprises. In the plan, the GDP of the industrial park will reach 30 billion Yuan in 3 to 5 years, rebuilding another Yuchai on the present base.  

Convenient transportation between Guangxi and ASEAN offers advantages for Yuchai to get access to the ASEAN market and internationalization. Currently, 3 years ahead of schedule, the bilateral trading between ASEAN and China achieved 200 billion US dollars. It put ASEAN continual to be the largest trading partner of Guangxi. Being an important target of Yuchais oversea market, along with the trading acceleration between China especially Guangxi and ASEAN, ASEAN is bound to be the springboard for Yuchai to enter into a broader market of the world.

Author: Luo Han, Lei Hui   Source: Hongkong Wenhuipo