On May 30, Yuchai Machinery Co., Ltd. (Yuchai Machinery) and China North Industries Group Corporation (NORINCO) concluded the Beiben-Yuchai engine joint venture framework agreement in Beijing. Under the agreement, the two sides will jointly build a heavy-duty vehicle engine manufacturing base in Baotou.

Wu Qiwei, general manager of Yuchai; Bai Xiaoguang, chairman of Inner Mongolia First Machinery Group (IMFMG); Li Yinhui, chairman of Y & C Engine Co., Ltd. (Y & C Engine) and Li Zhiliang, chairman of Baotou Bei Ben Heavy-duty Truck Co., Ltd. (Beiben) signed the framework agreement. Present were leaders including Guo Qijun, vice chairman of the CPPCC Inner Mongolia Autonomous Region Committee and secretary of the CPC Baotou Municipal Committee; Xu Delin, vice mayor of Baotou City; Yin Jiaxu, chairman of NORINCO; Yan Ping, chairman of Yuchai and Jiao Kaihe, president of NORINCO.

Signing Ceremony

The joint venture named "Baotou Beiben Yuchai Engine Co., Ltd." is located at the new planned zone in Baotou Equipment and Manufacturing Industry District. With a total investment of 1.51 billion yuan from Yuchai, Beiben, IMFMG and Y & C Engine and a planned area of 460 mu, the company will be constructed by three phases. After completion, the project will turn out 100,000 units of YC6A, YC6L, YC6MK and YC6K diesel and gas engines specific to vehicles annually.

NORINCO is a conglomerate that is on the mission to serve national defense security and national economic development. Its subsidiaries Beiben and IMFMG engage in manufacturing heavy-duty vehicles and equipment. Both enterprises expect much of Yuchai's YC6A, YC6L, YC6MK and YC6K engines, and intend to equip their heavy-duty trucks with these engines. As NORINCO has no independent engine manufacturer, the strategic cooperation with Yuchai Machinery will strengthen and perfect the supply chain of its core industry and enhance Beiben's market competition. Upon frequent exchanges and discussions earlier, NORINCO and Yuchai have proposed to jointly invest in establishing a heavy-duty vehicle engine manufacturing enterprise in Baotou, and have reached the intent of joint venture in August 2012. The conclusion of Beiben-Yuchai engine joint venture framework agreement marks a substantial step of the joint venture project. Through the project cooperation, the two sides have forged a close strategic partnership.

Amid the centralization of domestic auto groups and self production of engines, by working with the domestic top auto works--Beiben, by virtue of the brand influence of NORINCO and Beiben, Yuchai can enhance the popularity and market recognition of Yuchai's diesel engines, cultivate its heavy-duty engine market and achieve breakthrough, win a larger share in the market and create new profit growth points, thus reinforcing and expanding Yuchai's living space.

Apart from Beiben, all the top eight auto works in China's heavy-duty truck industry have their own engine plants, most of them use their own engines, Yan said at the signing ceremony. By teaming up with Beiben, Yuchai will accomplish advantage complementarity, resource sharing and win-win, and form its overall competitive edge in the field of heavy-duty truck engine, thus achieving a new breakthrough in its heavy-duty engine market.

NORINCO now attaches great importance to the civilian goods market, though Beiben has developed well, it will not work if it has no engine plant of its own, NORINCO has been seeking a partner, Yuchai plays a vital role in the industry and ranks top in China in terms of engine technology, Yin said, adding the successful cooperation will have a far-reaching impact on Beiben.

(Wen Zhenghua)