XCMG, To Be a Weight Leveraging the World

January 13, 2015

In this era of change, how to draw a boundary becomes a balance capability test for all Chinese businesses. With a cliff ahead, XCMG, the first mega enterprise in construction machine industry with hundred billion RMB assets, has found a best short-cut for a U-turn to catch the world's top runners.

As the chairman of the board, Mr. Wang Min makes his judgment that the warm business season has not ended yet, but another one, which is warmer, is waiting for us ahead. He has prepared to lead his legion for another expedition. This time, he is going to bring the Golden Fleece back before the arrival of the warmer season. He wants to crown the realization of his strategic vision making his business to be the flagship of world's top enterprise. He wants to cheer the ceremony of the runway he opened for other Chinese businesses.

Drums are beating. His crane division continues to consolidate his frontier by its mobile cranes with leading advantage in the world. Its crawler cranes have grabbed the top place in the domestic market. The loader division is his elite troop to break into the domestic market. His excavator division, which was just set up five years ago, beats foreign brands and becomes the second runner in the domestic market. His concrete machine divisions blend the heritage of XCMG and Schwing GmbH together to fortress the third place in the world. And his road machine division provides buyers with unique packaged solutions and becomes one of the top five road machine businesses in the world.

His new born divisions also show their muscles. The foundation machine division, heavy truck division and tower crane division generate approximately annual revenue of 2 billion RMB each. In the last years, the foundation machine division had its sales doubled in a continuous manner, and the heavy truck division kept reporting its surging profits. They are becoming his money cows.

Changing From a Buffalo with a Heavy Load into an Elephant with Wisdom
XCMG was called “a buffalo with a heavy load on back”. Indeed, XCMG did never dump her employees and drop her load no matter what was going to happen.

“Competitors were almost caught us and we heard their steps. All of them had not been our match by adding them together. But they were close to us one after another. XCMG was in mud,” Mr. Wang recalled the situation.

XCMG survived the bad situation and became stronger ultimately. “We were not only having a forward looking vision, but did more to share the difficulties with this state-owned enterprise,” Mr. Wang Min told us.
“Taking critical responsibilities, going forward straightly and becoming a useful one to this nation” were always XCMG’s mission, path and destination, She never gave up promises, which allows her become a proud of this nation together with other giants, such as China Aerospace, China High Speed Rail.

Now, in the arena of world construction machinery, XCMG no longer minds the altitudes of other multinational companies. She has her own style and territories. Her 4000-ton crawler crane is No. 1 machine in the world, which breaks the limit on 60000 tons/meter and moves such limit up to 88000 tons/meter high. She made 1600-ton all-terrain crane, which is still the largest one in the world. Her 12-ton loaders are among first line choices along with world’s brands, and become headlines by mega orders of international buyers. For example, a single order from Venezuela prompted her for a shipment of more than 6000 units in worth of 750 million dollars. It is an order which never had happened in the world.

As for the future, XCMG has very specific and clear goals: staying in her own businesses, and forcing herself into the top 3 of the world within 5 years; pursuing not only the sales revenue, but also the comprehensive index. Mr. Wang told reporters: “in 2020, when celebrating her 30-year anniversary, XCMG will be a world-class enterprise with super comprehensive strength. XCMG’s brands, in terms of both quality and performance, shall be the best in the world.”

New Industrial Concept: Better to Be the Stronger Other Than the Bigger
The growth curve of XCMG has long been good and fast. First to be the stronger and then the bigger is XCMG’s logic. Pursuit of quality and efficiency and pursuit of intension-focused growth have been constituted into XCMG’s business guidance.

For China's economy, especially for the machine industry, reconstruction and transformation will be a long haul. We shall make a farewell to the unsustainable models. We shall foster new growth patterns. We shall find our growth, quality, and efficiency from such reconstruction and transformation.

It is great and happy to recall the just-concluded Shanghai International Construction Machinery Exhibition (Bauma Show) for XCMG directors of almost all product lines. It is a proud of XCMG indeed. At the show, XCMG presented not only her creativity and imagination through her technologies and products, but also through her philosophy, culture, management, branding and other soft power dimensions.

At Shanghai New International Expo Center, XCMG had her slogan High-end Manufacture and Green Dynamics for the World as her theme and had a blockbuster by debut of her 240-ton electric drive mining dump trucks and 400-ton excavators as a packaged tool kit, which made her the only supplier of such super large mining machines the domestic market. This also means that XCMG has upgraded herself from a simple machine maker to a comprehensive solution provider as a forefront runner.

It is a delight that Chinese construction machines have more rational and mature innovative features. Simply showing her higher and weightier things was no longer in this show. XCMG was being focused on her intension-type development.

Prior to this, many businesses were more willing to take those R & D projects with some sort of so-called critical breakthroughs. They forgot that in every significant breakthrough achieved by world’s top makers were involved very craftsmanship details of innovation and ultimate experience to reflect a kind of new industrial spirit.

In this field, XCMG’s core component division is worthy of all the merit. It brought innovation from overall manner into the details of core components -- hydraulic cylinders and valves, and novel transmission and smart electronic control system. Packaged solutions have been developed and factors of independence on exports eliminated, helping XCMG to fortress her initiative in her global value chain.

From mercantilism to new industrial spirit, XCMG has chosen a product evolution path by taking the Germany industry spirit as her benchmark and embedding innovation, integration and upgrading language into her strategic change toward a world-class company.

Macro Innovation Systems and Micro Innovation Communities
In every XCMG division, you can find a strong sense and passion for innovation. Here, each line has a world-class competitor as its benchmark. All of them know there is no end in this run. People fight with their enemies by stamina and faith. Those players who lost the game will be pushed out.

This is hard battle, which will have Chinese industrial revitalization checked. For lifting machines, XCMG needs to fully catch up with a leading German company. For excavators, it is a top Japanese company as her target for a full-round catch-up. For overall strategic target, these world’s brands will be her natural enemies. She has major strategic focuses summed up in “three highs and one big”, i.e., high-tech, high value-added and high reliability, and large tonnage.

XCMG's confidence and unyielding courage have pushed her to build her world-class innovation platform. At the end of 2012, the new campus of XCMG Academy was put into use, which is located in Xuzhou EDZ as an investment of one billion RMB. You can find five R & D centers there for technology, product, experiment, engineering, and management.

Today, this novel platform is becoming XCMG’s smart “chip” and innovative “hub”, from where some core and forward-looking technologies join in their lines toward XCMG’s markets all over the world.

There are macro innovation strategic systems in XCMG Academy. In each division's R & D team, you can find a lot of new micro-innovation communities, which are more close to their customers and market. If the macro innovation strategy is the foundation of her sustainable development, then the micro innovation communities are weapons for quick market adaptation. Macro systems and micro communities complement and support each other. A strong collaboration has been formed to send XCMG indigenous and independent innovation campaign to a new height.

In the new international exhibition center at Shanghai, debut of PUYI tower crane, a boutique innovation of XCMG won big cheers. It hosts a dissembling balance technology, an innovation for safety issue which has been a concern for a long time. The second generation crawler crane has the light quantitative structure concept integrated into its design. The new generation wheel crane is focused on aspects of green energy, smart technology and superb performance. All of them were pointing to XCMG’s development trend.

Keep Growing Innovatively under Novel Normality
In China, echoes of the novel normality are wandering over ground where a new round of industrial revolution is occurring. On an economic work conference held by the Central Committee of Chinese Communist Party, an important initiative was proposed, asking all economies to adapt themselves with the novel normality of economy and pay close attention to tough and innovation-driven issues. It is a critical judgment based situation.

As a microcosm of the new normality, China’s heavy construction machine industry, which experienced a high speed growth in its past golden decade, has stepped into the modest growth ear. Mr. Wang began to think: "What can XCMG do to earn her second 100 billion RMB? Old methods are all out of time. XCMG must pay attentions on enrichment of her system, quality, efficiency, technology and reliability. ”

And this is just the dynamic code for innovative growth under the new normality. All division directors of XCMG consider this novel normality provides China with an opportunity to reshape her international image. In forthcoming 2025 planning of Chinese machine industry, the issue of transition from a big industrial power into a strong industrial state will be proposed as a key task. In this context, XCMG has launched her campaign targeting at the high-end innovation, business restructure and upgrade to adapt herself to this novel normality.

Wang has said that large cranes can lift up huge weights with its heavier weights behind. It is also true for a state. Importance of a weight depends on its own leverage capacity. What and how can get us to build determine our nation's position in the world. “XCMG's transition to be a China's weight in this industry is our only way.”

Move forward with firm steps and keep doing integration of the changed and unchanged things to help cultivate XCMG's business intelligence. Market demands and users' experience always change. But the effort pursuing innovation does not change. We must hold our position persistently and throw our focuses on our faith to cast XCMG's new footage for adaptation to this novel economic normality.

U.S.A

XCMG, To Be a Weight Leveraging the World

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