Content: From November 14 to 15, 2013 National Machinery Industry Economic Situation Presentation took place in Beijing. On the sidelines of the conference, mei.net.cn interviewed Yan Ping, chairman of Guangxi Yuchai Machinery Group Co., Ltd. Yan introduced Yuchai's efforts in corporate innovation development, speaking on the key tasks of transformation and upgrading of the internal combustion engine. Referring to the situation next year, Yan considered the internal combustion engine industry to be likely to continue the micro growth of this year as the national reform policy become increasingly clear.

MEI: Yuchai has drawn wide attention with a lot of national awards for science and technology this year. Could you say something about Yuchai's efforts in innovation development?

Yan Ping: Yuchai won the second national prize for progress in science and technology at the beginning of this year. This is a breakthrough. Yuchai's seven achievements have recently won the 2013 China Machinery Industry Technology Award, representing a "bumper harvest" for Yuchai. These awards recognize the innovation ability of Yuchai people and inspired their innovation spirit. Yuchai's every development and every breakthrough in major research is based on the innovation accumulation of numberless people. Without innovation, enterprises will end in extinction in fierce market competition.

Innovation is the inexhaustible power and unchanged subject of Yuchai's development. To promote and continuously ensure Yuchai's top innovation ability in the industry, we have made great efforts to build innovation culture, establish an innovation system, create an innovation platform and train innovation talents.

Innovation needs to be guided by culture, creating and forming innovation culture is indispensible for corporate innovation. Development originates from innovation and innovation is the source of corporate development. Over the six decades, Yuchai has made innovation boldly and skillfully throughout its development. Innovation is the important factor of Yuchai's cultural system. Yuchai always holds that innovation engineering is the endogenous power for Yuchai's sustainable development as well as "life engineering" Yuchai must make great efforts on. In every process from product R & D, manufacturing process, production flow, product marketing to corporate management, Yuchai has moved forward and worked miracles through innovation. For example, we introduced TRIZ concept to intensify technological staff innovation management and encourage output of innovation achievements. In the production field, we have introduced Toyota's lean production concept, vigorously practiced lean manufacturing and upgraded products to boost product quality. Innovation concept has struck deep roots in the heart of every Yuchai constructor and innovation culture has been widely recognized in Yuchai.

Innovation needs to be guaranteed by a system, working out and implementing innovation system is indispensible for corporate innovation. We not only encourage innovation, but also establish a system to push forward innovation. Establishing a system is to make innovation achievement incentive well-founded. We will give necessary incentive to every Yuchai constructor according to the system as long as he or she has made innovation achievements on their posts. This is also acknowledgement of the innovator's labor fruit, which will motivate more people to innovate, thus shoring up Yuchai's overall innovation ability. We have a special fund to award technological experts. In 2012, we awarded a car worth 500,000 yuan to two technical experts: Zhuo Bin and Shen Jie each. In terms of high-skill talents, Yuchai has invested 1 million yuan to award high-skill talents for four consecutive years. We have also taken grass-roots innovation into account, established a minor innovation award system to give material incentive for staff's innovation and benefit-producing achievements. This year, we will also extend the scope of innovation achievement awarding by including innovation achievements between large corporate projects and minor innovation in the scope of awarding.

In addition, Yuchai has also intensified the management of inventions and creations of technological staff, worked out the regulations on patent work management, effectively aroused the enthusiasm of technological staff about invention, creation and patent application, promoted original technology invention and sharpened corporate core competitiveness. So far, Yuchai has topped the list of Guangxi's enterprises in terms of patent application for seven consecutive years.

Innovation needs to be supported by a platform, building and applying an innovation platform is vital to corporate innovation. Innovation needs necessary carriers, so is corporate innovation. With tremendous R & D strength, Yuchai has established research bases in Nanning and Yulin, owned a national corporate technical center, a state-accredited laboratory and a postdoctoral workstation, and established a dozen domestic and overseas product and technology R & D centers in association with world-famous research institutions in countries like Germany and Austria as well as renowned universities like Brunel University, Tsinghua University, Tianjin University and Shanghai Jiaotong University, thus creating a strong R & D platform centering on independently developed technologies and geared to global frontier technologies.

We also attach great importance to high-skill talents' innovation and have established six corporate skill master studios. Of them, the national benchwork skill master studio has been approved by the State and is establishing an autonomous region model worker innovation studio.

We also hold a high-skill Achievement Exhibition annually to present technicians' innovation achievements.

To intensify engineering technologists and technicians management, we have conducted integrated management of the science & technology association and the technician association, appointed Yuchai's prestigious skill master Chen Jinyuan as president of both associations, established an association management office to coordinate the management of the two associations. In addition, we have planned to turn the high-skill achievement exhibition into a show of engineering technologists and technicians.

Innovation needs to be promoted by talents, valuing and training innovation talents are critical to corporate innovation. Corporate development needs innovation and innovative talents are the key to innovation. Thus, it is important for an enterprise to establish the concept of "strengthening the enterprise through talents", value and train innovative talents in order to grow strong.

Talents are the foundation of corporate development as well as a lever for enterprises' leapfrog development. They have played an increasing conspicuous role in promoting corporate development. Internally, we tap potential and heavily reward technological experts to set good examples for talent innovation. At workshops, we extensively practice the "tutorship" system to help newcomers grow. For R & D staff, the HR department arranges them to work on the production line for a period of time and allowed them to work on R & D after passing the assessment.

Externally, we actively establish interactive talent training mechanism with institutions of higher education and send outstanding staff for further studies at institutions of higher education. Now, with the development of the enterprise, we have higher requirements for talents, have begun to introduce overseas talents and are in dire need of some high-end talents with international vision and expertise.

Yan Ping: In my opinion, transformation, upgrading and restructuring shares the common purpose of sharpening the international competitiveness of China's internal combustion engine industry.

Actually, the tasks include:

First, the state should attach great importance to the development of the internal combustion engine industry and encourage core internal combustion engine manufacturers to innovate to turn out internationally advanced and competitive engines. Internal combustion engines are promising in terms of environmental protection, energy conservation and emission reduction, and technological innovation will be an eternal theme of development of the internal combustion industry.

Second, the state should attach great importance to localization of core parts of internal combustion engines, support and promote the innovative development of core parts manufacturers. Strategically, long dependence on imported core parts is unfavorable to enhancing the international competitiveness of Chinese internal combustion engines and national security.

Third, product quality is the key to competition as well as the most important factor for the transformation and upgrading of internal combustion engine manufacturers. Quality not assured, transformation and upgrading will be empty talk.

Fourth, from the perspective of environmental protection and energy conservation, the state should raise the access threshold of the internal combustion engine industry, ban and eliminate those low-level, low-efficiency, high-energy-consumption and seriously polluting enterprises. Enterprises should also strictly implement national emission regulations, be committed to building green power and take upon themselves to be "controllers of the largest mobile pollution source".

Fifth, efforts should be made prevent industrial over capacity and duly develop the cyclic economy through remanufacturing to accomplish sustainable development.

Sixth, at the level of policy and strategy, we should upgrade the structure of the internal combustion engine industry, pay attention to modern manufacturing service development, extend the industry chain and strengthen the industry.

MEI: The internal combustion engine industry has grown much more rapidly than other industries this year, what do you think has led to the growth? How do you judge the situation next year?

Yan Ping: After the slump in 2012, the internal combustion engine industry recovered slightly in the first half of this year, registered year-on-year growth of 3.73 percent and continued increasing in the second half. I think the growth is primarily driven by policies.

In 2013, the state raised CNG engine and diesel engine emission standards, pushing forward the development of the internal combustion engine this year. Guided by policies, alternative energy engines and new energy engines like CNG engine have grown substantially and been widely used in fields like urban public transport.

After years of preparations, the national IV standards eventually came into effect this July. The standards' implementation will somewhat stimulate diesel engine consumption this year.

With the recovery of the truck market and the growth of the agricultural machinery market in the second half of this year, the industry continues growing. The growth of the agricultural machinery market is the result of government guidance. In the recent decade, central and local agricultural machinery subsidies have produced prominent effects. The amount of central agricultural machinery subsidy has soared from 70 million yuan in 2004 to 21.5 billion yuan in 2012 and is expected to be some 24.5 billion yuan in 2013, and the scope of subsidies has been expanding. Many local governments have also granted certain amounts of subsidies in support of mechanization of some varieties. Over the decade, the central government has appropriated a total subsidy of 96.16 billion yuan, driving a direct investment of 418.3 billion yuan from local governments and farmers, and becoming the primary driver of the agricultural machinery market.

Among the segments of the internal combustion engine industry in 2013, the construction machinery sector has not seen restorative growth yet on a plunge in engineering quantities.

Overall, I think the development of the internal combustion engine industry is still driven by policies. Exports have grown slowly and breakthroughs are yet to be achieved in core technologies.

As for the situation next year, I think the internal combustion engine industry is likely to continue the micro growth of this year as the national reform policy become increasingly clear.

However, internal building is the key to corporate development. Only with strong competitiveness will an enterprise make a profit despite industrial slump.

MEI: The Third Plenary Session of the 18th CPC Central Committee has just concluded, what is your expectation of the reform plan unveiled by the Party Central Committee from the perspective of the enterprise? How will the enterprise brace itself for future development?

Yan Ping: After the conclusion of the Third Plenary Session of the 18th CPC Central Committee, China's future reform path has become clear. This shows the reform courage, insight and cohesion of the new leading body of the Party Central Committee. It is not easy for the new government that has just taken office for a year.

As for the plenary session, I think the biggest highlight is that it underlined the role of the market. Reviewing the development history of the internal combustion engine industry, we know that the developments have been inseparable from national and governmental regulation and control. Without out the government's tangible support, China's internal combustion engine industry would not have achieved such brilliant results. However, with the rapid development of the industry, some mechanisms hindering industrial development has loomed large. Particularly, addressing the problem of overcapacity in the internal combustion industry will be the top priority of upgrading in the next period.

Driven by interests in local areas, some backward production capacity have been continued and even encroach on the market of advanced technologies, bringing about a strange phenomenon that "bad money drives out good" and delaying the development of the industry.

Making the "market" play a decisive role can eradicate the problem, enable enterprises to compete in the market better and more fairly, and give play to the market mechanism of survival of the fittest. Of course, "market" is a double-edged sword, and we should not only employ market leverage properly, but also see the future direction of state-owned enterprise reform and strengthen internal building to remain invincible in market competition.

Thus, in the future, we urgently need to fulfill the following work:

First, we should push forward our own system reform with unprecedented courage and strength. The reform is not minor mend but fundamentally removing the barrier to development at present and in the future, and establish the operation mode of a large-sized international enterprise to better cope with future challenges;

Second, we should increase investment in talent training and product R & D. Future competition boils down to corporate core technology competition. No matter how the system is reformed, we should increase rather than reduce R & D investment, and make early preparations for talent training to avoid the phenomenon of advanced system and backward talent;

Third, we should properly address our existing development problems. An enterprise will always encounter a lot of difficulties during its development and some are internal and external resistance, which needs to be resolved by consensuses of all staff, the enterprise and partners. How should staff view corporate reform? How to better deal with the relationship between the enterprise and the government? How will suppliers better grow with us? These problems we have encountered in development before must have new solutions in the future.

(Source: mei.net.cn)