On September 3, 2019, T50 Summit of World Construction Machinery Industry was held in Beijing, with more than 800 participants including executives of manufacturers and mainstream terminal users from 13 countries. XCMG, as a leader in the industry in China, ranked the Sixth among the world top 50 manufacturers released in the summit. Since the release of the ranking, XCMG has led Chinese enterprises for 20 consecutive years, once again showing its strengths as the pillar of a great power.
In the first half of 2019, XCMG hit a record high of sales, with revenue exceeding 70 billion yuan, increased by 30% year on year. By keeping high growth of profit scale and continuously reinforcing high-quality development, XCMG has become a name card of China with the highest reputation in the global construction engineering industry.
Wang Min, Chairman and Secretary of the Party Committee of XCMG is interviewed by Hexun.com in the summit.
1. Hexun.com: As XCMG hit a new high of performance in the first half of 2019, please talk about how to design XCMG’s strategic planning in the next stage.
Wang Min: Thank you for your concern for XCMG. Construction machinery, a industry that is lively and prosperous, boasts a lot of excellent entrepreneurs. I’m proud that XCMG, as a senior state-owned enterprise with profound industrial culture, keeps strong momentum of development in such a competitive market and maintains the First place in the industry in China.
XCMG is in a key stage of development as there is a major change in its system of property rights, namely the reform of mixed ownership by end of this year. Next, specific measures will be taken as per the approved scheme. To become a state-controlled enterprise, we hope that top 30 private enterprises from China Top 500 can become our partners, including 1% of backbone from our incentive scheme.
This change is another major, historic and significant change since the founding of XCMG 30 years. Our profits will double. An excellent world-class enterprise needs not only first-rate product quality, technology and profitability, but also outstanding ability of management.
XCMG will certainly make greater progress by the reform of mechanism. I have known which way we will go and what is our weakness, so our goal is to take the third place in the global industry within five years. I’m confident that we will move forward firmly and faster by the reform of mixed ownership.
2. Hexun.com: XCMG has been included in the Two Top Pilot of State-owned enterprise. How does XCMG create new mechanism and vigor through the reform of mixed ownership?
Wang Min: I cannot image in the history of Xuzhou that an excellent equipment manufacturer which has 76-year-old history is transferred from a state-owned enterprise to a state-controlled one and listed. Xuzhou Municipal Party Committee and Xuzhou Municipal Government have made a great step forward on liberation of mind as required by the State Council. I value the structure of “state-owned+private+backbone”. Most importantly, an advanced mechanism requires not only a normative corporate structure, but also clarified rights and liabilities among the Board of Directors, the Party Committee and the General Manager.
What we do is to maximize benefit and shareholders’ returns. The mechanism we adopt now is to pay management and the most excellent technical and sales personnel the reward that best matches their value. I’m so tired now because I work hard to make reform. Therefore, I’ll continue to work hard to make reform, and the mechanism will be expanded. XCMG, as far as I know, is potential. As I said just now, my weakness is also my potential. XCMG, as a listing company, will have the most excellent share in Chinese construction machinery sector and even the equipment manufacturing sector and beyond.
What will XCMG be like? XCMG’s subsidiary XCMG Construction Machinery Co., Ltd has undergone the reform of mixed ownership. In addition to construction machinery, XCMG also contains automobile, finance lease, XCMG Technician Institute, and modern architecture. The reform of mixed ownership is carried out in the sector I take charge of, as well as XCMG Information, which was founded at the end of 2014, with investment of more than 10 million yuan at first. XCMG Information was created in time since it creates value of 1.3 billion yuan within five years.
3. Hexun.com: XCMG now ranks the Sixth in the world construction machinery industry, taking the lead among Chinese enterprises for 20 consecutive years. What faith makes XCMG stick to its main business?
Wang Min: We didn’t have a clear direction at first. In the process of constant exploration, we failed and learnt lessons. There are costs and pains.
However, we’re lucky to embrace the great development of China with largest infrastructure input in the world, which drives the development of the construction machinery industry. The most basic principle I follow is that we should not give up the business passed from generation to generation. Even when we had a hard time in the early years, we invested more in research and development and produced more innovations. Opportunity is given to those who are prepared. We focus more on our own business instead of seeking other opportunities. To this point, decades of efforts may come to nothing if the main leaders are confused.
Blindness in investment and diversity may lead to going out of our own way. XCMG has received many honors, but I don’t get lost. Since XCMG is not a central enterprise, I told my employees to go ahead and just do it after the mixed ownership reform. As the new mechanism is coming, I’m more confident than ever. Therefore, the faith I pursue is never giving up and doing the best.
4. Hexun.com: This year marks the 70th anniversary of the founding of the People’s Republic of China and the 30th anniversary of XCMG. As a propellant and witness of construction machinery industry, what do you think is the most important reason for XCMG’s current achievements?
Wang Min: I’m delighted that this year marks the 70th anniversary of the founding of the People's Republic of China and the 76th anniversary of XCMG. The Group has been established for 30 years and I feel proud to be the chairman for 20 years. Our manufacturing technology and production line are world-class, as do the employees’ skills. We have so many core technologies that would have been unimaginable years ago. Now some foreign enterprises copy ours. Of course, I don’t mean we can rest easy. We still have a lot of room for improvement.
The reason why I propose the golden standard of “Advanced Technology and Durable Products” is to provide global customers with “user-friendly, useful, durable, practical” goods made in China. Man-made products certainly have a life circle, but the period can be controlled. Moreover, a handiwork should be beautiful. I worked as a coal miner in 1970 and then worked in XCMG when I was 18 years old. I contribute my whole life to it.
What’s more, the largest change of XCMG in the two decades is not its product or enterprise structure but the 23,000 employees who boast positive cultural values, iron will and steady pursuit, and powerful execution.