On Dec. 2, 2018, 2019 SHIG-Weichai Power Business Conference Overseas Agent Branch was successfully held in Xi’an, Shaanxi. More than 900 global overseas dealers and agents gathered to share the development achievements of SHIG-Weichai Power, share the respective successful experience and jointly research the development trend in new global economic environment.
Consolidation at every step, Weichai overseas business realizes the new breakthrough
In the increasingly complex global economic environment, Weichai overseas business obtains notable achievements, keeps development at high speed, realizes the breakthrough in many fields, and greatly increases in three years in succession.
Besides the import and export business, Weichai has made great breakthrough in overseas plant establishment, investment and cooperation, technical output, etc. On Nov. 18, 2018, Weichai and Maz cooperation project was successfully completed in Sino-Belarus “Great Stone” Industrial Park and started the trial production. The project creates the highest construction speed in local place. The large mine engine jointly developed with Belarus Belaz Group has been provided for 90t mine truck and broken through the technology monopoly of Europe and America enterprises. The joint venture construction with Russia Kamaz has been successfully developed. Weichai technical output project in Myanmar was successfully delivered and had had the batch production ability. Ethiopia project started the batch production.
The overseas output of Weichai Power realizes the great growth. Its Fengtai bus equipped with Weichai EU VI engines enters high-end markets, such as Britain and Singapore. In Oct. 2018, Weichai passed the EU VI (D) emission certification and is a Chinese enterprise which passes such certification, which lays the solid foundation for Weichai EU VI engine to enter the international market. Weichai Baudouin engine also successfully entered the American market in 2016, surpassed same type engines in Europe and America due to its excellent performance, lower fuel consumption and stronger power and gained favor from clients. Its sales volume continuously grows. In the first half of this year, Baudouin 16M33 product successfully realized the batch matching in South Korea and many other markets. It’s power station project also went global to compete with international giants.
The bumper harvest in 2018 mainly profits from the great accumulation in overseas market. Ranging from the direct trading of product, local manufacturing to overseas joint venture cooperation, over the decades, Weichai has formed the unique “overseas” mode.
Product trading: the evolution and maturity of the most traditional “overseas” mode
The export of first Weichai product can be traced back to 1952. In 1980s, with the reform and opening-up in China, Weichai export also entered a new development stage. Especially in late 1980s to beginning of 1990s, Tan Xuguang, the master of Weichai, started the foreign trade work. This young man with an aggressive spirit immediately captured the “opening-up” signal sent by the state, and started to go to international market. He said :”I've been to the most desolate island, worked in the deepest cabin and done any tiring work”. Under his leadership, in 1996, the total amount of Weichai increased from 300,000 yuan in 1980s to 60,000,000 US dollars.
A Bangladesh dealer Alam who have experienced that period is still grateful for Weichai to active persuade him to boldly carry out the market transformation. In 1994, he accepted the Weichai’s suggestion to transfer from Weichai trade to Weichai product, from selling Weichai exported single cylinder engine to selling the middle speed engine independently produced by Weichai. He holds that this “sensible” suggestion creates his development achievements nowadays. By 2018, his middle speed transport vessels firmly occupied 84% market share in Bangladesh and became the deserved No. 1 in local place. He said :“This year is the best year of my business life”. His proud "show off" obtained a burst of warm applause at once.
With the going global faster and farther, Weichai product trade patterns are also evolving and maturing. Today, Weichai has expanded its market in five regions in the world, i.e. CIS, Southeast Asia, South Asia, South& North America as well as Europe, Middle East and Africa. Its products have successfully sold to 110 countries and regions.
Southeast Asia is the traditional market of Weichai and is also the market expanded under the leadership of Tan Xuguang. Although there are many developing countries in this market, this market always occupies the largest share. With the gradual expansion of Weichai's business scope, the market also changed its strategy in time.Weichai adopts diversified product collaborative advantages to occupy the market, and on the basis of fining the ship engine traditional market, expands its vehicle engine supporting market. Through cooperation with the largest OEM manufacture (Changhai Company) in Vietnam, Weichai entered the vehicle engine market which was occupied by the European and American brands previously and had the large purchase order of more than 3,000 sets every year.
Giving play to its resource advantage to form the product joint force is one of main reasons of great increase of performance in EMEA (the general designation of European, Middle East and Africa Market). In 2018, the growth of Weichai power generation unitis expected to be doubled because Weichai changes the traditional “wide sales” mode to “concentration of Moteurs Baudouin” mode to realize the full coverage of this brand from 15kw to 1,500kw power. Such concentration of one brand lays solid foundation for Moteurs Baudouin in local place.
In order to succeed, you should know about yourself and your competitors. Weichai employed the local sales team to occupy local market under the assistance and support of Chinese sales persons, successfully got through the one-stop “rapid channel” for product sales ranging from manufacturer to terminal. Weichai persists in creation of high-end market led by brand and refuses the mark-down sale. It makes the segment market strong, makes the service network good and jointly cooperates with local excellent partners to create the differentiated sales advantage. It focuses on key markets and key customers, and cultivates its strategic partners. It broadens its horizon to compete with international brands to raise its starting point……In the completion in overseas trade market, Weichai becomes more and more familiar with the market and can accomplishes a task with ease.
Overseas merger: the exploration and breakthrough of new “overseas” mode
Overseas merger: the exploration and breakthrough of new “overseas” mode
Among four “overseas” modes of Weichai, overseas merging is one mode with the highest difficulties and most challenges.
Among many cross border mergers, “double-70% law” becomes an impassable span, i.e. 70% of mergers cannot realize the expected business value and 70% of mergers fail in the integration after merging. However, all overseas mergers of Weichai are successful due to strategic coordination and cultural integration.
The overseas merger started from 2009. In the background of European financial crisis, Weichai went global and successfully merged Moteurs Baudouin which was a French company with one hundred years’ history with investment of 2.99 million Euros. The selection of Moteurs Baudouin is not only to take the experiment for its international strategy with the “lowest costs”, but also to fill the blank of Weichai products higher than 16L. Such merger not only establishes a “bridgehead” of Weichai to enter European market, but also further extends and expands its product chain.
Whether the merger can match to its development strategy is the first factory considered by Weichai in series of overseas mergers.
The merger of Linde is because Weichai develops its engines in engineering field, but has no hydraulic parts. Through acquisition, Weichai integrates “Weichai engine and Lindehydraulic part”, creates the first hydraulic power assembly in the world and promotes a high-end “excellent” upgrading of agricultural machinery and construction machinery market in China.
The strategic reorganization of German KION is because that Weichai has commercial vehicle and construction machinery products in point-to-point logistics chain for peripheral highway, but lacks of handing equipment used in warehouse, and German KION was a forklift manufacturer ranked 2nd in the world. Such combination can form a complete logistics transport system.
The merger of American PSI is also because of strategic coordination. Gas engine produced by PSI occupied absolute dominant position in American market, but in fact, PSI didn’t produce engines. Meanwhile, Weichai had full range of engines. The cooperation of both parties got the fitting point. Similarly, the cooperation with Canada BLDP and BritainCeres Power is because of the huge potential new energy market.
Based on its main business to improve its shortage and enhance its efficiency, with respect to every overseas merger, Weichai clearly knew what it wanted, which is the main reason of successful merger of Weichai.
Compared with the difficulties during merger process, the integration of the group with new business is harder. As for most European and American enterprises, although there are many problems during operation, they have the excellent instinctive gene of European and American enterprises. How a Chinese enterprise can realize the win-win through management and integration is a major experiment in enterprise merger.
Before every merger, Weichai carefully thought following problems: how can we manage a depressed overseas enterprise well? What can we bring to it? How can we develop it? After mergering, what it can bring to Weichai? Only when these problems are sorted out, can Weichai merge.
Respect is the foundation for merger. After merging every enterprise, Weichai firmly controls the major strategies, authorizes its rights to local management level during daily work and fully respects and trusts the local management level.
Cultural integration is the best and most convenient channel for breaking through the barriers between these two sides. Weichai people know that the cultural integration is not the elimination of another culture with one culture, but is mutual learning. Linde is a native local enterprise in Germany. Previously, in fact, it was a production workshop of Germany KION Group. After being merged by Weichai, it faced the transformation from a workshop to an independent company. Sun Shaojun, CEO of Weichai Power in charge of hydraulic business, made a market investigation before taking the position in Germany. He obtained much information about Linde, i.e. Linde had high product quality and excellent technology, but also had many disadvantages, such as high costs, slow feedback to users, long delivery time and lack of after-sales service system. These weaknesses are just the advantages of Weichai. After finding these weaknesses, after arriving Germany, Sun Shaojun firstly pasted Weichai’s culture slogan “the customer satisfaction is our tenet” in his office room and explained its meanings to German employees. Then, he established a cost reduction group, delivery timeliness group and reorganized sales team. After taking these three measures, the overall development of Linde rapidly improved.
As everyone knows, most trade unions of European and American enterprises are mighty. Weichai adopted the strategy of “respect + communication”. They reached an agreement for major issues through communications and obtained consent for small issues by taking a step back. Weichai invited the labor union members to China to let them know what kind of enterprise is Weichai? When they saw the development scale and strength of Weichai, they were gladly convinced. Therefore, follow-up work was very smooth.
After merging Moteurs Baudouin, Chinese management level fired a vice general manager who was slack in work. At the beginning, Chinese management level was worried about that the local trade union may strongly against. Unexpectedly, such behavior was vigorously supported by local trade union. The behaviors of this senior management person were noticed by local trade union and employees. Any person who influences and impedes the company’s development won't be welcomed wherever they go.
Jacques, an employee of Moteurs Baudouin who has worked for 40 years, was responsible for the quality inspection of finished products. Almost sixty years of age, he always keeps the attitude to quality “excellent and meticulous”. His Chinese colleagues record his common postures during work “squatting, kneeling and lying down” by camera. In the photo, his eyes show his concentration and persistence which arouse admiration.
The thing behind the integration is mutual learning. Every year, Weichai appoints many R&D, process and design persons to the merged enterprises to learn their excellent management ideas, advanced technologies, perfection pursuit attitudes and careful working processes and invites employees of the merged enterprises to come to Weichai to learn its excellent corporate culture and team atmosphere. After continuous learning and communication, Weichai gradually cultivates a number of talent teams with international quality. Recently, Weichai plans to appoint many workshop directors to Germany to study and work.
From more than two thousand years ago to now, Chinese businessmen marched from Chang’an, the starting point of the ancient Silk Road, to the world. Nowadays, Weichai gathers enterprises from the world to discuss the cooperation to win the future. Standing at the intersection of Eastern and Western civilization, we believe that the way of globalization of Weichai will be stable and further!