Guangxi Yuchai is located at the Beibu Gulf on the coast of Guangxi and Chongqing Rato is in the southwestern inland city of Chongqing; the former is a state-owned enterprise and manufacturing giants among China's top 500 enterprises, and the latter is a Chongqing-based private enterprises remaining "young". In the context of transfer and westward movement of industries and intensification of cooperation between the state-owned enterprise and the private enterprise, combination of the two companies involves the hottest economic elements at present.

New pulse of Chongqing's economy

A state-owned enterprise from Guangxi and a private enterprise from Chongqing have recently tied the knot--Guangxi Yuchai Group (Yuchai) and Chongqing Rato Holding (Group) Co., Ltd. (Rato) signed an agreement to invest 3 billion yuan in building a new diesel engine manufacturing base.

According to Zhu Liedong, chairman of Rato, after joining hands, the two sides will massively introduce industrial technical experts from countries and regions like the USA, Europe and Japan, to independently develop new medium & high-end diesel engines.

The two sides will build a global high-end small-displacement diesel engine industry base in Chongqing, with a Phase 1 annual output of 350,000 energy-conserving diesel engines and an annual output value of 10 billion yuan.

The reporter learned that the key products of the project are off-road medium & high-end diesel engines. Now the annual global output and sales of new quality energy-conserving diesel engines were some 3 million units mainly manufactured by Japanese and European enterprises.

Additionally, Europe and the USA are primary demanding markets. The USA imports some 400,000 units of engines and terminal equipment from Japan and Europe annually.

"Yuchai engines and Rato engines are strongly complementary, and the proposed mini diesel engine in the project is beneficial supplement to both sides' product lines as a field both sides have never set foot in before," Zhu said, adding that the project will fill a gap in medium & high-end off-road diesel engines in China, too.

By tremendous technical strength and extensive market surveys, Yuchai and Rato strive to build products comparable to European and American enterprises." To make the project successful, we have conducted demonstration for more than two years, deployed over 20 teams and invested over 10 million yuan in early market surveys across the world," said Yan Ping, chairman of Yuchai Machinery Co., Ltd., adding, "I shared the same belief with Chairman Zhu that we will do the best in China if we do."

High-end equipment manufacturing is developing at full speed at Chongqing Liangjiang New Area. The cooperation between Yuchai and Rato is just a scene.

Background: two years' preparation, integration of advantages

It had been two years before the agreement was reached between Yuchai and Rato.

"Coordinated by the Chongqing Municipal People's Government and Chongqing Liangjiang New Area, the two enterprises began cooperation negotiation two years ago and the negotiation has yielded good results now." Yan said emotionally.

Yuchai ranked 18th among China's top 500 machinery manufacturers. The giant chose Chongqing because of its solid industrial foundation, but Yan was moved as he recalled.

"We have been to Chongqing many times and made a lot of calls over the two years, but Chongqing's investment promotion team thought of everything for us to our surprise," said Yan, Chongqing's local government is most efficient in handling concrete affairs for enterprises among a dozen provinces where Yuchai has invested in, making him confident of the project's success.

Why will Yuchai join hands with Rato? "Rato is a good company with strong advantage in overseas markets like the USA," said Yan, adding, "I shared the same ideal and concept with Chairman Zhu: building China's best mini diesel engines."

"Chairman Zhu" mentioned by him is Zhu Liedong, chairman of Rato. Rato targeting medium & high-end markets like North America and Europe have earned good reputation in the international market. In October 2013, at the invitation of Gary Locke, then US ambassador to China, Zhu attended the 1st Select USA Investment Summit President Obama was present in person. During the summit, Rato was invited by several US state governments who offered appealing preferences for building a plant in the USA.

Only 1,200 representatives from 60 countries were invited to the summit organized by US President Obama, Zhu was one of them due to Rato's influence and status in the international market.

Views: Strong combination of "state-owned economy" and "private economy"

"There are a lot of private enterprises in Chongqing, but few are capable of cooperating with state-owned enterprises. Yuchai-Rato cooperation is a case of cooperation of demonstrative benefit," said Zeng Guoping, a professor of Chongqing University, adding that combination of the state-owned economy and the private economy can not only bring respective advantages into play, but also enhance both sides' internal and external vitality and competitiveness. Wang Xiumo, a professor of Chongqing University of Science & Technology working on Chongqing's industry, said, "Strong combination can lead to win-win in technology, fund and brand, and extension to the rest of the country and the world."

Insight: Great market and low cost upgrade manufacturing

Yuchai will build a mini diesel manufacturing base in Chongqing Liangjiang New Area in cooperation with Rato. Actually, in the context of global industrial transfer and westward movement of industries, Chongqing Liangjiang New Area which has became a new highlight of capital investment has begun to show its effect as kernel while leading the western region in economic growth.

"The ongoing fourth industrial transfer is extension from Southeast Asia and China's coastal areas to the inland of the central and western regions, or westward movement of industries. This exactly tallies with the great opening of the inland and has brought an unprecedented opportunity to Chongqing Liangjiang New Area," said a head of the Administrative Committee of Chongqing Liangjiang New Area, adding that westward movement of industries has led to changes in market and concept, promoted the development of local enterprises and driven industrial upgrading.

Westward movement of industries and flow of international capital are inseparable from two key factors: great market and low cost. Chongqing Liangjiang New Area has provided a figure: the comprehensive cost of the area's production factors like water, electricity, gas, land and labor is only some 60 percent of that in coastal areas.

"The western region has a lot of distinctive advantages and a broader development space and market. As an old industrial base, Chongqing's manufacturing boasts a lot of unique resources, which is also the biggest attraction to giants moving westwards to Chongqing." Strategic economist Gao Liankui said.

The project's settlement is also an epitome of development of high-end equipment manufacturing of Chongqing Liangjiang New Area.

According to a head of Chongqing Liangjiang New Area, equipment manufacturing has developed well in the area as one of its three major industrial clusters, gradually formed industrial sectors like general aviation, rail transit and instrument & apparatus, developed a considerable scale and shown a prominent trend of cluster development.

"Chongqing Liangjiang New Area targets high-end equipment and will focus on developing energy-conserving and environment-friendly green equipment in the future. Yuchai-Rato cooperation is bringing the general engine project to the medium & high-end market through independent innovation, is an innovative project in the field of equipment manufacturing, plays a guiding role in Chongqing and the country, and is of great significance," the head said, adding, "Settlement of Yuchai-Rato new diesel engine project in Chongqing Liangjiang New Area can not only further perfect the area's high-end equipment industry chain and promote the development of the area's high-end equipment industry cluster, but also well match Chongqing's auto industry. The project has broad development prospect."

(Gao Liang/Zhong Jingrui/Yang Yuankai/Chongqing Economic Times)