XCMG: A Charming Enterprise-An Interview with Wang Min, Chairman of XCMG
June 26, 2014
XCMG: A Charming Enterprise
-An Interview with Wang Min, Chairman of XCMG
By a journalist of China Industry News
On May 17, XCMG won the top prize of the 3rd China Industry Award, which is reputed as the “Oscars” in China industrial sector, making it become the only prize winner in China construction machinery industry. After witnessing XCMG’s success in winning its first industry recognition award three years ago and then the industry’s top prize today, Wang Min, chairman of XCMG, was greatly excited and filled with strong emotions. With his heroic spirit and confidence, he voiced to XCMG employees his opinions on XCMG’s business performance and the industry’s development trend.
Interviewer: What is the strong point for XCMG to win this prize?
Wang Min: I set great store by an enterprise’s competence in keeping on studying, thinking, and moving ahead whether in good time or in bad time. Since its incorporation, XCMG already has a development history of 25 years, and it does not always have smooth sledding. When domestic enterprises developed at a fast rate, XCMG took the lead, and now when the economic adjustment and transformation is underway, XCMG take the lead again. XCMG possesses abundant cultural connotation and full of spirit and energy. The capacity of cohesion, creativity and fighting capacity is very important for XCMG. In my point of view, although current market competition is rampant, XCMG not just maintains its strong points in scale, but also brings in innovative philosophy, market, and mechanism. For this reason, I am very confident, because we have made new changes for the international competition, and made innovations in product, business model, and philosophy etc.
Interviewer: XCMG has been engaged in manufacturing construction machinery for more than 50 years. What is the driving force?
Wang Min: We are single-minded, and wrapped up and perseverant in one thing. Compared to developed countries in the world, the development of Chinese equipment manufacturing industry still lags far behind. If you halt your step or show interest in other things on half way, you may transform your line of business. However, we are absorbed in only one thing, and vow to make us match the world’s most advanced enterprises in every segmented industry. All along we endeavor to find the role models, in order to learn from, catch up with, and outshine them, during which we keep in step with our archrivals. As we know, dedication and perseverance is XCMG’s cultural and spiritual connotation, and XCMG has pooled a lot of talents with decades of stay in the company. That’s a remarkable achievement. In this way, XCMG has cultivated its unique culture, namely, its employees are willing to stay with XCMG regardless of any temptation. In addition, I think that dedication and perseverance shall be accompanied by reform and innovation, both of which are indispensible to a business just like a person’s left hand and right hand. If XCMG resembles a pond with dead water, it will by no means develop into today’s XCMG. As far as I am concerned, I show much interest in new things, and now I always reflect on myself and ask if I am as enthusiastic as the one who was just promoted to the chairman of XCMG 15 years ago.
The said traits enable XCMG to always stand at the forefront of the industry. I have a good news, a customer from Indonesia just ordered from XCMG one 1,250t Crawler Crane, which is viewed as the Crawler Crane with the largest tonnage exported from China. The customer promised XCMG that once the Crawler Crane is transported to the Shanghai Port, it will complete 95% payment, and the left 5% will be paid after the assembling in Indonesia. It is worth pointing out that this Indonesian customer ever negotiated with another Chinese crawler crane vendor for 4 months, and the crawler crane vendor granted him a pay term of three years, but the customer finally chose to cooperate with XCMG. That fully exemplifies XCMG products’ excellent quality, reliability, and advanced performance, which have obtained extensive reputations for XCMG at international market. This year, XCMG’s market focuses on developed countries, and lays stress on debt collection, brand, service, and technology, instead of price war. XCMG does not provide its customers with simple services, but offers the systematic solutions, in order to assist its customers in making money, because XCMG looks upon the customer value as its own value.
Interviewer: What about XCMG’s R&D ability?
Wang Min: XCMG has built a characteristic R&D system to cater for the market and customer needs, and coordinate its research institutes and technical centers of business divisions, for example, technical centers of the business units are responsible for transformation and upgrade of crane products because technical centers have much knowledge about the profession and customers. It is infeasible for XCMG to appoint technicians of the business units to work at the research institutes, because they will be disengaged from the market. Historically, XCMG ever made a detour. Speaking of the division of work between the research institutes and business units, I give a simple introduction: the research institute is mainly responsible for developing core technologies, like the generic technologies and parts technologies, which are proposed by the business units.
Presently, XCMG is engaged in manufacturing hydraulic cylinder, loader gearbox, wet type brake axle, and cement mixer reducer etc. And we know it is difficult to complete relevant R&D if we depend fully on the business units, so support from the research institutes is necessary. In my point of view, the research institute should be close to the market and synergistic in a global range. Now, XCMG is setting up an R&D platform that synergistically integrates resources globally, and it is estimated that construction of such a platform will be completed within two years.
During the R&D process, we lay stress on application of experimental means. In the past, our experiments were made for ensuring the product reliability, and in the future, experiments will be made for trial production and product development. According to XCMG’s development strategy, it will sell successfully developed products, rather than testing the products in the market. I have commanded that all departments shall not ship products out of the plant until the products have been signed by the technical director, who has a strong awareness of brand and is very picky to product quality. In the past, we focused on filling the market blank, and now we fix eyes on product quality. Today, there are an increasing number of users who give recognition to XCMG’s product, brand, value, culture, and staff, manifesting that XCMG is becoming a charming enterprise.
Interviewer: What about XCMG’s investment in technology?
Wang Min: Today, all countries attach much importance to the R&D work. Although investment in R&D by countries like Germany makes up large proportions in their GDP, China’s investment in R&Ｄis higher in absolute value. That implies all countries give priority to the manufacturing industry’s transformation and upgrade. As the saying goes, “the strong is always strong”, and only those enterprises with strong strength and farsighted vision will enlarge their investment in R&D on a constant basis. In recent years, XCMG increased its benefits year by year, so did its investment in R&D. As a common knowledge, if a business is unable to sustain talents, it is bound to lag behind. If a business is reluctant to invest in R&D, it will descend year by year. Today, the market competition is becoming increasingly fierce, and products are being upgraded at an accelerated rate. In the past, a new product was launched into the market every several years, and now, one or more new products come onto the market each year. In the meantime, the market takes on a tendency of product individualization and customization, and every customer hopes to purchase products tailored to their own needs. In this case, XCMG should reinforce intelligent production, speed up its product R&D, and make innovations in product, technology, market, business model, whole value chain, and whole production process. With advent of the information network era, the manufacture can be synergized globally, instead of being constrained in a given region. We will further enlarge the investment in scientific research, as a way to ensure the business’s sustainable vitality and profitability.
Interviewer: What about XCMG’s internationalization process?
Wang Min: XCMG is competing against international giants at home and abroad. Over the recent years, transnational companies have localized their products and employees, and thus their price is tempting to Chinese users, which forces us to make innovations in both technology and market development. In this connection, we must go global and carve out a way in overseas markets that have been monopolized by international giants for a long term. That is right the point we should focus on.
Recently, an American large-scale lease company told us that XCMG can even match Komatsu of Japan in Excavator sector and also outshine other archrivals in service. At the very beginning, the lease company purchased 100 Excavators from XCMG, and then ordered another 100 units, which stunned a famous construction machinery vendor of America, because this lease company ever purchased products from the American construction machinery vendor. By now, we have set up a plant in Brazil, not for enjoying Brazilian government’s tax reduction polices, or for competing against Chinese enterprises in Brazil, but for grabbing shares from those international giants. Compared to an international giant that has realized annual sales revenue of US$ 3 billion in Brazil construction machinery sector, Chinese enterprises only take minor shares in Brazil construction machinery market. According to the scheduled plan, we will produce products of 5 varieties and 20-odd specifications in Brazilian plant, which is a challenge to our management. In succession, we built a plant in Brazil with investment of US$ 200 million, and then purchased SCHWING Group of Germany, marking XCMG’s preliminary success in going global. I personally think that Germany indeed has advanced technologies, but it should further improve its management philosophy and means. Now, we are cooperating well with another shareholder of SCHWING.
XCMG Excavator Machinery Co., Ltd. was founded five years ago, when I served as the chairman in person and appointed an excellent general manager. By standing on the shoulders of giants, we eventually achieved success in excavator sector, implying that the late mover is not surely the laggard one. All along, XCMG Excavator Machinery Co., Ltd. has been carrying out the benchmarking, and eventually it carved out its own path of development through the process of study, thinking, practice, and making innovations. A customer from Brazil said that as compared to Komatsu excavator, XCMG’s excavators are more efficient and fuel-saving, and thus the customer purchased 20 excavators at one-time. Hearing his words, I could not believe my ears, and asked my interpreter if the interpretation was correct. Last year, XCMG 70t excavator ranked the top amongst its archrivals in Chinese market. Now, Li Zong, general manager of XCMG Excavator Machinery Co., Ltd., has been promoted to the Deputy President of XCMG, and he ever said that XCMG Excavator might lose its direction if it engaged in this sector one year behind schedule. Looking back, it would be a horrible thing if XCMG started its excavator business one year behind schedule, because some ambitious manufacturers have abandoned their excavator business now. Additionally, the product positioning is very important. At the very beginning, XCMG Excavator is positioned as internationalized products, namely, medium and high-end products, and it vows to keep abreast of American manufacturers in both products and technologies.
Interviewer: How about XCMG’s current development after its acquisition of Germany SCHWING?
Wang Min: After purchase of SCHWING, a concrete equipment giant of Germany, XCMG set up a JV firm in Xuzhou, and it controlled 60% stake in the said two companies. We planned to introduce technologies from SCHWING as soon as possible, and it is impossible for you to introduce technologies until you have set up the JV firm. To my surprise, XCMG Concrete Pump Truck’s sales volume ascends and wins over a lot of quality customers against the backdrop of the industry slump. We should tell you that the said two JV companies differ in products. Of which, SCHWING is responsible for manufacturing products of original brands, and Xuzhou plant for manufacturing those products more tailored to Chinese market. As for sales proportion, I prefer the situation of tripartite confrontation, instead of monopolizing the market.
Interviewer: What is XCMG’s development orientation? What is the goal ahead?
Wang Min: All XCMG people are proud of XCMG’s success in winning China Industry Award. To be honest, there are a lot of excellent enterprises as compared to XCMG, but XCMG is the lucky one. To XCMG, winning the prize is merely a starting point. In the age full of fierce market competition and continuously emerging new technologies, how can traditional machinery manufacturing industry transcend traditional means of competition and adopt innovative measures, which is of great significance to XCMG. So far, XCMG has made definite its advantageous industries and sectors, and it will further reinforce and consolidate the presence in these sectors. In addition, we will explore in those industrial sectors with market demands, including the environmental protection industry etc.
With the market changes, we made some adjustments in our goal. Now, XCMG is formulating a new five-year development plan, in which it attaches more importance to the product’s technical advancement, structural innovation, benefit, and quality, instead of only laying stress on its fast-rate growth in scale. In the future, the XCMG brand is well known in the world is the hallmark of XCMG’s success, and I hope that XCMG will be respected by customers all over the world.
Interviewer: Will XCMG dabble in new industries?
Wang Min: Since China’s environmental industry is promising and of enormous market size, I’m studying this, Construction machinery industry still has a future.. From January to April this year, XCMG achieved positive growth in some critical indexes, such as the main business revenue, tax, and profit. Besides, the cash flow transforms fr
om negative to positive, and increases on a gradual basis.
