No matter how fierce the competition is, Weichai will always have the confidence and strength to win the future. On January 20, Tan Xuguang, chairman of Shandong Heavy Industry Group and Weichai Holding Group, offered a profound analysis of the industry situation that Weichai is in and a deep interpretation of Weichai's advantages against the challenges at the Supplier Conference. He said that during the transition period of strategy adjustment, Weichai has the confidence and strength to look for opportunities in the challenges and make a win-win future happen in the cooperation.
Weichai is standing at a new starting point
This time last year, Weichai announced that the sales revenue exceeded 100 billion RMB at the Supplier Conference. In the new year, standing on a higher starting point, Weichai had a new breakthrough with the cooperation and support of all suppliers. In 2014, Weichai's operating income reached a record high of 107.3 billion RMB. Tan Xuguang pointed out that our environment is more complex into the new year, with the pressure from macroeconomic changing into a new normal, the challenges brought by industry trend of vertical integration, and the difficulty of self transformation of the company. Under the new situation, facing new competitions, Tan Xuguang emphasized that only with cooperation can we achieve win-win, only with synchronization can we develop, and only with unified pace can we see through the fog to usher a new future. We have to strengthen their confidence while being wary of the risks, to see farther and be more solid.
Confidence comes from the era we are in
Where does this confidence come from? Tan Xuguang pointed out that we need to find the opportunity in the challenges because the engine industry is still a boom industry. As a traditional force of growth, China's infrastructure is still underdeveloped compared with developed countries. There is a big potential for investment in infrastructure. China's urbanization rate is still low, thus the urban and rural restructuring will release a huge amount of demands. China's urbanization rate is expected to reach 60% at the end of Thirteenth Five-Year Plan and create and create nearly 100 trillion RMB worth of domestic demand. As the new development driving force, the implementation of the "One Belt and One Road" advocated by China will promote economic and trade cooperation between China's equipment manufacturing industry with Asia, Africa and Europe. Meanwhile, China's economic transformation will force the equipment manufacturing enterprises to upgrade their technologies, restructure and innovate business models, thus helping us to upgrade and improve the quality and efficiency. Needless to say, our business is in the booming period, and we are living in a still promising era of strategic opportunities.
Confidence comes from Weichai's Backward integration mode
In the trending wave of vertical integration, Weichai chose backwards integration to focus on the main markets of the engine products. Weichai integrated the quality resources from the industrial chain and established a strategic framework that used vehicles and engines as the guidance and powertrain system as the core. a leader in the power system as the core. As early as 10 years ago, Weichai realized that a company relying solely on engine business is difficult to survive in the industry and carried on a series of capital acquisitions first in the industry to own core resources such as gearboxes, axles, hydraulic parts and others, establishing several gold chains in the commercial vehicles, construction machinery, and yacht industries. Under this strategic framework, Weichai engine can internally support vehicle development and externally meet diversified market demands, going both ways and gaining broader market space.
What is the core competitiveness of the company?
Faced with the same situation, what will determine the company's core competitiveness are the understanding level of the customer and the ability to convert the advantages to meet customer needs with products and services. Tan Xuguang said that Weichai's ability to understand and meet customer needs is stronger compared to competitors. For Weichai had been rooted in the Chinese market for nearly 70 years, and had a more profound understanding to Chinese customers' demands, industry trends, and technical route adjustments. In this process, especially in the past 10 years, Weichai not only provided customers with engines, but also with integrated services based on five powertrain systems to meet the needs of different customers. Weichai constantly deepened the understanding of the Chinese market, continuing to enhance the core competitiveness of the company.
Considering the future market demands, Weichai will create the most cost-competitive, technology-competitive and quality-competitive products to provide customers with differentiated products, services and values.
Tan Xuguang: Weichai will stand by the suppliers during the core competitiveness establishment process
Being different from companies with forward integration, Weichai did not choose to integrate supplier resources with capital means, but used the product as the link to build the cooperation and sharing platform with suppliers. To create the most competitive products, the suppliers and Weichai need to develop together. Tan Xuguang said that all competitiveness, regardless of which, are inseparable from the supplier's competitiveness. That was why Weichai needed everyone's cooperation and support. Tan Xuguang hoped that all suppliers could think ahead to actively work with Weichai's product strategy and allocate resources in accordance with Weichai's standard, not only to support the traditional well-received products, but also to support the new products. Focusing on the future development, supplier should relate to their actual situations to establish cost competitiveness, core technology competitiveness and quality competitiveness. As a community of interests, Weichai will further strengthen the assistance and management of the suppliers to ensure that our suppliers are the best team in the industry.