"The engine is an industry shortcoming in China. Our dream is to make the engine stronger. In recent years, as a state-owned enterprise, Weichai Power has grown from the brink of bankruptcy to the annual profit up to 10 billion yuan. Over the years, we have never invested a penny on the non-principal business or real estate.” Tan Xuguang, Deputy to the National People's Congress and Chairman of Weichai Power, said.
Tan Xuguang gave a deep message to the reporter on the morning of March 8th when General Secretary Xi Jinping participated in the deliberation of Shandong delegation of the 13th National People's Congress. "General Secretary Xi Jinping says that the direction of the central spirit and the national strategy are to avoid breaking away from entity and strive to move from a large manufacturing country to a manufacturing power. An enterprise must be wholly devoted to its principal business before success. Any mixed operation must aim to complement the principal business rather than make profit."
"This talk is about my heart." Tan Xuguang says that in recent years, in the face of fierce market competition and the temptation of “high return” in real estate and financial industries, many enterprises get distracted with high profits and neglect their principal businesses. As a result, those enterprises fail to keep up with the pace of transformation and upgrading due to insufficient attention and innovation, "trying to save a little but lose a lot".
"May 8, 2008, Comrade Xi Jinping gave an important instruction when inspecting Weichai Power: ‘You have created a national brand and contributed to building an innovative country. I hope that you will make persistent efforts and achieve better results.’ This instruction has guided our tremendous changes in the past 10 years.” Tan Xuguang says that in the past 10 years, Weichai Power’s principal business has grown continuously and the revenue and profit have risen steadily. In 2008, Weichai Power's revenue and profit were 50 billion yuan and 2.9 billion yuan respectively. In 2017, Weichai Power's revenue reached 230 billion yuan, and the profit exceeded 10 billion yuan.
“This is the reward of our persistence.” Tan Xuguang says that in the past 10 years, no matter how the external environment changes, no matter how the industry is ups and downs, Weichai Power always adheres to its principal business, focusing on enhancing the engine business, grasping the "node" of innovation, and promoting the industrial structure to move from low end to medium- & high-end.
The temptation is always there, depending on your willpower. “When I went out of Shandong Province for investment, the local government asked me if I wanted a commercial land. I replied that it would be fine to offer me the best business environment.” Tan Xuguang says that there was also a local government that encouraged Weichai power to engage in real estate development. Weichai Power refused and believed that its engine business would pay back more than real estate.
Concentration on the principal business is the only way to do a good job of innovation. Tan Xuguang believes that focus on innovation is essential for China's manufacturing to achieve high-quality development. In 2008, Weichai Power's R&D team had 250 people only, and now has 2,500 people. In 2008, Weichai Power had 300 technology patents only, and now has 3,000 technology patents. In the past 10 years, Weichai Power has invested 15 billion yuan in engine R&D, established a complete R&D system, and developed an individual innovation road which integrates “independent innovation, open innovation, and first-line innovation”.
For Weichai Power, concentration on the principal business does not mean refusal to change. In the past years, Weichai Power has always adhered to the diversified development path on the same industrial chain while keeping eyes on its principal business, and has worked out the road of transformation to high-end.
"In the past, everyone thinks that Weichai Power a diesel engine manufacturer. Now we have adjusted the structure, forming a powertrain with engine, transmission and axle. In this way, we have mastered the core technology of heavy-duty trucks. At present, our engine price in the domestic market is 10% higher than that of internationally renowned competitors.” Tan Xuguang said.
Concentration on the principal business will offer you the courage to "go global". "Mastering core technology and improving China's manufacturing capabilities are the most important factors for Weichai Power's overseas mergers and acquisitions. The capital operation of Weichai Power is based on the development of the industry rather than the pursuit of money. Weichai Power's mergers and acquisitions aim to complement the core technology shortcomings and are based on strategic structure adjustments.” Tan Xuguang said.
Weichai Power is also actively promoting its international capacity and equipment manufacturing cooperation along the “Belt and Road” to develop its international economic cooperation and new competitive advantages: local production in India with light asset model, cooperation factory in the form of technology output in Myanmar and Ethiopia, perfect marketing network in Southeast Asia... completing the strategic layout of globalization.
“In 2017, 40% of Weichai Power's revenue and 30% of the profit came from overseas business, marking the official entry of Weichai Power into the list of international enterprise groups.” Tan Xuguang says that Weichai Power will bear in mind General Secretary's entrustment, continue to concentrate on the principal business and unshakable, adhere to the technology innovation, build core competitiveness, and accelerate the Chinese powertrain to the world's high end. As a benchmark enterprise in Shandong equipment manufacturing industry, Weichai Power will continue to assist Shandong's new and old kinetic energy conversion strategy this year, focusing on the construction of Weichai New Energy Power Industrial Park. After the project is put into operation, the revenue of at least 100 billion yuan will be increased.