The Decision of the CPC Central Committee on Major Issues of Deepening Reform in an All-round Manner adopted at the Third Plenary Session of the Eighteenth CPC Central Committee noted, "In order to adapt to the new situation of economic globalization, we must open to the outside world while opening to the domestic market, better combine "bringing in" with "going out", promote the orderly and free flow of international and domestic elements, efficient allocation of resources and deep integration of markets, step up efforts to foster the new advantage of participating in and leading international economic cooperation and competition, and promote reforms through opening up."

How will enterprises participate in international competition amid full market competition? After years of foreign cooperation, Guangxi Yuchai Machinery Group Co., Ltd. has provided a new sample for foreign cooperation.

On November 12, the world-famous financial center--beautiful Victoria Harbour was calm. On this day, China's largest internal combustion engine manufacturer--Yuchai Group concluded a joint venture agreement with Hoifu Energy Group Limited in Hong Kong.

The signing ceremony was very simple. Yuchai Chairman Yan Ping talked with the partner in whisper. In the rustling of pens, the two sides forged a partnership. The cooperation appeared relatively low-profile in the context that some domestic large-sized enterprises were scrambling for overseas operations including bargain hunting.

Previously, Yuchai had carried out cooperation with multinationals like Caterpillar, Wartsila and Petronas, covering product manufacturing and investment trade in the domestic and international markets.

In the investment way different from bargain hunting, Yuchai has improved itself, known the rules of overseas business games, and built the management foundation and network foundation for its overseas development.

Introduce western learning to China

On November 18, Yuchai held the overseas anti-corruption act training, with the participation of Liang Bing, vice general manager of the Overseas Department of Yuchai and director of Yuchai India Office, as well as management staff of all branches and subsidiaries of Yuchai Machinery Co., Ltd. Yuchai should not only combat corruption at home, but also prudently deal with rigorous restraints from foreign laws.

The story behind dates back 20 years.

20 years ago, when many state-owned enterprises were still developing slowly on old ways, Yuchai made another decision of far-reaching influence after its shareholding reform. On May 24, 1993, upon approval by the then State Commission of Foreign Trade and Economic Cooperation, Yuchai introduced foreign capital and obtained the business license for the Chinese-foreign joint venture--Yuchai Machinery Co., Ltd., marking Yuchai's second major reform after the shareholding reform in 1992.

In a short span of three years from 1992 to 1994, Yuchai seized the opportunity of the new system reform to independently develop medium-duty diesel engines. Yuchai's products predominated by diesel engines swiftly occupied half of the domestic market, with its annual sales revenues and tax payments and profit earnings up 112 percent and 180 percent on average, thus breaking market monopoly by foreign diesel engines, making Yuchai the world's second-largest and China's largest internal combustion engine manufacturing base, and marking a significant milestone in Yuchai's development history.

The older generation of Yuchai people can mostly remember the soul-stirring process. In September 1993, Yuchai with ample capital for technical renovation introduced a production line from Brazil. With flags around, in the deafening sound of gongs and drums, vehicles loaded with modern production equipment eased into Yuchai, announcing the start of Yuchai's journey towards an internationally advance enterprise.

In 1994 which followed, Yuchai International went public on the New York Stock Exchange as China's first overseas listed Chinese-foreign joint-stock enterprise, setting a precedent for successful private offering of foreign shares and opening up a road leading to the international financial market. Yuchai has been soaring on the way of enterprise reform. From the joint-stock reform in 1992 to the Chinese-foreign joint-stock reform in 1993 and to the listing in the USA in 1994, Yuchai eventually opened the gate of the modern industry through a series of foreign cooperation.

For Yuchai's management today, the most important significance of marching towards the capital market lies in acquisition of capital and the internationalized management system from the capital market. The fine institutional foundation has developed more sustainable advantage for Yuchai.

When some state-owned enterprises are still restricted by relevant regulations on talent introduction and salary incentive, Yuchai has turned the institutional advantage of "separating government functions from enterprise management" into the group's talent advantage, technical advantage and product service advantage. Meanwhile, advanced foreign management modes have taken roots in Yuchai, concepts and knowledge similar to Foreign Corrupt Practices Act have been mixed in Yuchai's daily management to make its business activities free and up to standards. All these have made Yuchai an industrial leader.

This is Yuchai's first joint venture cooperation and a brave attempt of reform.

Bring Chinese learning to the west

Afterwards, Yuchai introduced foreign management experience for many times. In this process, confident Yuchai kept developing new ways of international cooperation.

Li Ke is president of Yuchai Logistics Co., Ltd. Several months ago, he was vice general manager of Yuchai Remanufacturing Co., Ltd. (Yuchai Remanufacturing), a joint venture of Yuchai and Caterpillar. Speaking of his experience of working at Yuchai Remanufacturing, the young president was filled with emotions. The company established with Caterpillar has thoroughly broken away from the operation mode of domestic enterprises and almost indiscriminately imitated Caterpillar's management experience. This is a hard choice for Yuchai, an enterprise with a history of over six decades.

"We have a solid management foundation and rich management experience, and our management mode is successful in China, but why did we introduce Caterpillar's operation mode?" Li said. In the early days of Yuchai Caterpillar Remanufacturing Co., Ltd., many management staff from Yuchai often had the doubt.

The doubt and puzzlement even led to unavoidable frictions. At a management meeting, Yuchai's management and Caterpillar's were divided on whether to criticize an employee in public. Li said, "We always like making public problems and focusing on problems instead of individuals, only in this way problems can be resolved." But our colleagues from Caterpillar did not agree and neither could convince the other. At last, a decision was made to vote on "whether to criticize an employee in public or in private".

The friction actually exists in the vast majority of domestic joint ventures. Due to the difference in management culture, the two sides will unavoidably have disputes over some specific problems, how to settle the disputes is what all business managers have to face during foreign expansion and cooperation, there is no lack of precedents of enterprise collapse due to improper settlement of such disputes.

Yuchai took a way different from confrontation. Li said, "Despite many conflicts, we resort to dialogues. I think dialogues are heart-to-heart talks. For example, we place two chairs on one side of a desk. If a superior talks with a subordinate, they sit together instead of across the desk, that's it. Such dialogues are not confrontations and are of great help to mutual understanding and acceptance.

Sit down and talk to straighten out problems, cooperation will be smoother. The cooperation between Yuchai and Caterpillar is exactly moving forward amid such atmosphere and understanding. After introducing Caterpillar's full management mode, Yuchai neither totally accepted nor directly confronted it.

Yuchai took a way of handling specific to oriental culture. For example, some foreign enterprises are weak in execution and performance management due to their loose and free culture. Yuchai has never abandoned its requirements for execution and performance, but how to communicate with the foreign side? To this, Li said, "The way we took is being mild and patient but not giving up."

Bit by bit, a new mode has formed in their cooperation. Such a management mode combining Chinese and western styles has brought the company on track, and Yuchai has found out the game rules of international competition and cooperation.

Core competitiveness ensures "stable yields despite drought or flood"

Corporate core competitiveness is what Yan Ping often mentions. The key to business development is internal building, only strong competitiveness can lead to "stable yields despite drought or flood", he said.

As to how to sharpen core competitiveness, enterprises differ in ways. Yuchai chose foreign cooperation and introduced advanced technologies to improve its level. For industrial insiders, this is more reliable than many enterprises' practice of bargain hunting.

Besides introducing remanufacturing technologies from Caterpillar, Yuchai also worked with Petronas with years of experience in lubricant manufacturing. The cooperation laid the foundation for Yuchai to improve its lubricant manufacturing technology.

In June 2013, Yuchai Petronas Lubricants Co., Ltd. was inaugurated. Andrea Dolfi, a lubricant technology expert from Italy, acted as the vice technical general manager of the company. The primary task for him and his colleagues is how to make Yuchai lubricant up to first-class international standards.

How to sell improved products abroad is another problem faced by them. Yuchai's other subsidiaries also need to intensify overseas market development. For example, in terms of Yuchai's core product engine, as domestic engine production has been severely excessive, Yuchai must make great efforts to advance its overseas network construction. Though Yuchai leads the domestic industry in terms of market inventory in Southeast Asia, but the development speed cannot meet Yuchai's demand still.

Combined with Yuchai's need for selling construction machinery and other products, Yuchai is in dire need of advancing the fast development of overseas markets.

"If our overseas market network is not built, internationalization is just an empty talk," Yan said.

Yuchai seized the opportunity after "encountering" Hoifu Energy in Hong Kong.

Yuchai established an office in East Africa this November, beginning to extend from its "traditional base"--North Africa to Central Africa and South Africa. Ahead of Yuchai is the vast African market. After years of operations, Yuchai has established 46 offices and over 3,000 service outlets worldwide, and developed 95 service agents abroad.

In order to participate in international competition smoothly, Yuchai must make its products more competitive abroad, resolve the problem of overseas sales and find out the game rules of international competition.

While constantly developing its international network, Yuchai's engine exports were up 40 percent year on year in the first half of 2013.

After six decades of development, the enterprise has been constantly extending its path of internationalization.

(Li Chunmei/Song Yonggeng Source: Peoples Daily Overseas)