In 2006 Guangxi Yuchai Machinery Group Co., Ltd gross sales was 14.1 billion yuan after passed 10 billion yuan bench point in 2004. It was an increase of 2 billion yuan compared to the sales of 12.1 billion yuan in 2005 or up 16.2%. The diesel engine production and sales of Yuchai has kept a high speed of double-digits growth for consecutively 6 years since 2001. The average annual increase was over 30%. The diesel engine products and sales stayed the first in the domestic industry for consecutively 3 years. This growth was rare in manufacture industry. It pushed Yuchai to a high level in the market. The incomes of other sections such as construction machinery, automobile parts, automobile chemical industry, and special vehicles were also substantial increased. Yuchai is marching on the fast lane of development.
In 2006, Yuchai drafted a strategic 10 year development plan: fully cooperate with the domestic or international companies in joined-venture business; speed up the import and application of high technology; emphasize on diesel engine, construction machinery, special vehicles, automobile parts, chemical industry, and logistic industry; fully use the technological advantages to increase the international competitiveness; make Yuchai Machinery a world famous brand; and build Yuchai into a large scale international enterprise. Under this plan, Yuchai decides to double its size in 3 years. It is to finish sales of 20 billion yuan in 2008; increase the export to 30% of the total sales volume in 5 years; and put the brand, products and production bases into international market.
Increasing output to large the development scale
A senior level manager in Yuchai told the reporter: Yuchais managers clearly aware that the huge increase of production is the guarantee to the fast expansion of the enterprise and big step development; in other words, it is to diversify operation to develop other businesses besides engines; to strengthen and extend the industrial chain; and to build more core company.
In recent years, Yuchai Group has successfully established a diversified operation system that includes diesel engine, small construction machinery, special vehicle, automobile parts, automobile chemical industry and a up to date service network. Besides engines, Yuchais other products such as construction machinery, automobile parts, automobile chemical industry and special vehicle got substantial increased in 2006. The income from small construction machinery reached 986 million yuan. The sale of automobile parts was 1.618 billion yuan. The sale of automobile chemical industry was 1.285 billion yuan, The total amount was almost half of the sales income from engines.
According to Director Yan Ping the emphasis of the company would be put on the following: first is to strengthen and expand the key business of diesel engines, to keep the leading place, and continue to meet the public demands with proficiency and advantages; second is to get into the passenger automobile market, to actively explore its potential since its still a blank Chinese market; third is to develop the construction machinery business, to build a large-scale production base with complete series of products, to keep the position of the biggest export base of small to medium sized construction machinery in China. Yuchai would also extend the industrial around the key business to develop related industries such as special vehicles, automobile parts, automobile chemical industry and modern logistic service.
Historical increase from broadening funding channel
Historically, the fastest development of Yuchai in the last century was because the input of large funding. During the 7
th 5-year period, Yuchai got a big investment of 28.15 million yuan from the central government and it was continually increased to 100 million yuan. The funding improved the production capacity and created a solid foundation for the development. In 1992, 240 million yuan of corporate shares were raised by Yuchai Corporation from domestic non-private companies and three types of foreign funded enterprises. Yuchai set up a joint venture enterprise and acquired over 50 million US dollars from the foreign company In 1993. In 1995, 65 million US dollars were raised by Yuchai from the USA market through indirect oversea IPO. The total of above activities raised 1.2 billion yuan. 6112 projects of engine development was benefit by the funding, It was also used fro import advanced Ford production line. Yuchai made a historical step forward by those funding and activities.
Yuchai got into the capital market very early. Start to cooperate with foreign company since 1993 it became the 2
nd Chinese enterprise that listed in New York stock market in 1994. The experience on capital market set a good foundation for the future development. Last year Yuchai Group started to diversify financing channels after the positive output from the financial market. It decided to establish a new form of investment and financing by using every possible financial product and tool. Yuchai trys to change the indirect financing to direct financing, to change the short term fund into long term fund, and to raise sufficient funds for the development.
Yuchai decides to: create its team and system on investment and financing; set up special investment and financing company in the international investment and financing business; get several companies to list in domestic or overseas stock market; and diversify the investment and financing channels. Besides direct financing from the stock market, Yuchai will provide financial service for all its subsidiary companies by cooperating with famous international investment banks or funding organizations to forming a professional investment and financing company.
Yuchai is acting fast to fulfill the goal. For example, 355 million yuan was raised from out side of
last year for the construction machinery company. Its goal is to become a large-scale enterprise with 5 to 8 billion assets in 3 to 5 years by raising more money from the stock market. Other sections such as Yuchai Logistic and Yuchai Gaorun will also start to raise funds one by one.
Hold the leading position in the market steady
The Production and sales of diesel engines of Yuchai was the number one in
for consecutively 3 years and was 17% in domestic market. Last year the production and sales of diesel engines were 360,000 up 23.2%. The growth rate was much higher than the average 10.7% in domestic engine industry.
Innovation is the important factor that supports Yuchais ability to hold big share in the market. Yuchai cooperated and interchanged technology with industrial countries. A Yuchai technical development department was set up in Germany. The technical level of this department was closed to that of the Europeans. Yuchai paced up with the world advanced technology by cooperating with the world famous engine development and technical advisory company and learn their experience.
Technical talent is the secret of keeping leading position in technology. Yuchai is one of the post-doctoral research centres in China award by the National Ministry of Personnel and the world of talented people in Guangxi. Yuchai provided the modern environment for senior researchers. Its strong research team consistent of the ratio with one with doctoral degree: three with masters: 15 undergraduates.
To date, 159 patents were owned by Yuchai. The sales of patented products were 9 billion. It was 40% of the total sales. Yuchai has developed 17 series of engines with independent intellectual property rights that meet the Europe-3 and Europe-4 emission standards. Those products cover heavy, medium, light and small machines.
In summary, the technical advantages of Yuchai provide energy for the sustainable development and also become the foundation for Yuchai to explore broader area. Last year YC4W diesel car engine produced by Yuchai was put into marketed. It was the first one in China with independent intellectual property right. This product gave Yuchai confidence to get into the industry of producing whole car.