When Tan Xuguang, chairman of Weichai Group, announced that 10 years later, Weichai’s objective to become a first-billion-dollar engine manufacturing base and to challenge the world’s first goal is actually a Cummins target. As the world's largest independent engine manufacturer, Cummins has been holding the position of the world's oldest internal combustion engine. If Weichai wants to be the first in the world, the most critical step is to surpass Cummins. How far is the distance between the two?
Weichai and Cummins go hand in hand
The comparison between Weichai and Cummins is because the two companies share many similarities. First, both are independent engine manufacturers and the engine product line is relatively complete. Since the acquisition of Yangchai and Baudouin in France, Weichai has had a full range of engine products ranging from 2.8 to 16 liters. The Cummins engine's power coverage also ranges from 31 to 3500 hp.
Both have a sound industrial chain. Cummins has four major business units: engine, electric power, distribution, and parts and components. In the Components Business Unit, Cummins has four major businesses: turbocharging, emissions processing, filtration, and fuel oil. Weichai's industrial chain extends from the engine to transmissions, axles, and even entire vehicles. After the reorganization of Shandong Heavy Industry, Weichai's industrial chain has become more complete, and has built four major systems: engines, commercial vehicles, construction machinery and parts and components.
Judging from the specific output value, Weichai Power expects the Group's total net profit in the first half of 2010 to be approximately 2.56 billion to 3.17 billion yuan. Cummins’s global net profit for the first half of the year was 395 million U.S. dollars, of which, the second quarter global net profit reached 246 million U.S. dollars, an increase of 339% compared with the 56 million U.S. dollars in the same period of last year. The net profit of the two is almost the same.
Regardless of indicators such as operating income or net profit, the gap between the two is not significant. In this sense, Weichai already has a higher level of capital with Cummins.
If not constrained by insufficient capacity, Weichai's market performance will be even better in the first half of this year. Since October 2009, the market demand for various types of engines in Weichai has continued to prosper. In some places, dealers have even seen the phenomenon of “a machine hard to obtainâ€. Until June of this year, the phenomenon of supply shortage did not improve. At present, Weichai has a monthly production capacity of 50,000 units.
During the visit to the new factory building of Weichai in the High-tech Industrial Park, the reporter saw that the production lines of both the New Energy Engine Company and the Remanufacturing Company were busy and the production capacity of the two companies was the largest in the country. On the WP10 production line, workers took "three shifts" to meet market demand.
Based on the judgment of market development, Weichai has listed a 10-year plan. In the next 10 years, Weichai's total investment will reach 15 billion yuan, and two major engine production bases will be built in Weifang - a high-tech industrial park manufacturing base that mainly produces 4-15 liters of high-speed diesel engines, and high-power medium-speed diesel engines. Binhai Industrial Park's manufacturing base, centered on the Weichai engine, builds a satellite industrial cluster production base for key components.
If the base is built, the production scale of Weichai will be equal to Cummins.
There is a good chance of success
With goals, there is momentum for progress. For Weichai, it has the advantage that it has the courage to catch up with Cummins.
Weichai has the backward advantage that Cummins does not have. Keeping the first is always difficult, and there are many competitors behind it. As a latecomer, Weichai can integrate existing multi-resources, learn the first experience and lessons learned, and can quickly innovate and eventually realize a curve overtaking.
Weichai has extensive experience in capital operations and resource integration. Industry insiders once commented: Weichai is already a central enterprise that is not a central state-owned enterprise. It operates assets across seven provinces including Shandong, Shanghai, Shaanxi, Chongqing, Heilongjiang and Hunan. Recalling the history of Weichai, it is the success of many times in using capital as a link. Weichai has achieved a state-controlled, inter-regional, inter-provincial restructuring and created a unique powertrain industrial chain of “engine + transmission + axleâ€. This not only solves the problem of collaborative R&D and collaborative support, but more importantly, Weichai can systematically apply new products and new technologies to all aspects of the industrial chain from heavy trucks to construction machinery in the shortest time, thus enhancing the core Competitiveness.
Weichai knows more about China's commercial vehicle market and better meets the needs of Chinese users. Weichai's truck power has reached 40% in the heavy-duty vehicle market with a total weight of over 14 tons, and the passenger car power share reached 75% in the market area with a power of more than 11 meters. It can be said that in the over 10 litre engine market, Weichai has an absolute dominant position. Weichai's products have formed a good reputation among users and become synonymous with economy, reliability, and strong applicability. In the first half of this year, Weichai sold 330,000 engines of various types, which is equivalent to its 2009 annual production.
Under the background that China has become the world’s largest automobile production and sales market, the importance of the Chinese market is self-evident. Weichai, which has the advantages of local operations, should consolidate and further expand its advantages in the Chinese market, and it must be the first place in the world. Not far away. Weichai Holding's Fast is the best example. Fast, which occupies 80% of the heavy-duty transmission market, is already the world's largest manufacturer of heavy-duty transmissions.
Learn the length of Cummins
A successful multinational company is first and foremost a successful local company. Some people also say that export volume is one of the criteria for measuring whether a company is accepted globally.
In the localization of the Chinese market, Cummins is one of the best multinational companies. In China, Cummins has 26 organizations, including 15 wholly-owned and joint ventures, and employs more than 7,000 employees.
In the global market, Cummins has a footprint in more than 190 countries and regions, and has more than 500 distribution agencies and more than 5,200 distributors. New markets such as China, Russia, India, and Brazil have also achieved rapid growth.
China has become Cummins’ second largest national market except the United States, and China will be the most important market for Cummins in the future. Currently, the largest capacity Dongfeng Cummins has sold more than 160,000 engines annually in China. Cao Side, a Cummins global executive and current vice president of the Cummins Group, once commented that the sound performance of the Chinese market has helped Cummins effectively withstand the challenges of the financial crisis and enabled the company to maintain a healthy profitability and to develop new products and technologies. Lay the foundation for future development.
Cummins' most worthwhile learning for Chinese companies lies in its innovative, inclusive and localized strategy.
Therefore, for Weichai, to achieve the world's first, 100 billion sales target, there are still many ways to go in internationalization and localization. Weichai has already realized this. Tan Xuguang once said: We still lack the talents and teams to run international companies. This is our weakness. Therefore, in the past two years, Weichai has accelerated the pace of the introduction of international talents, has repeatedly recruited foreign talents, and established research and development centers in Austria and Chicago.
At the same time, the further expansion of overseas exports, the establishment of offices overseas, the improvement of accessories outlets, and the eventual establishment of factories are also the inevitable paths for the internationalization of Weichai. After completing the goal of 1.5 million units of engine sales in 2015 and more than 2 million units in 2020, Weichai cannot rely solely on the domestic market, and the vast international market needs to develop. At the beginning of last year, Weichai secured the relevant assets of France Baudouin with a price of 2.99 million euros, which filled the gap in Weichai's production of high-power engine production of 16 liters or more. This was seen as an internationalization of Weichai. A small step.
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