Special Supplement: Industrial base reborn into the technological age

Dalian Bingshan Group, a leading Chinese manufacturer of machinery equipment, is making technological breakthroughs and helping to put Dalian on the world map.

Twenty years ago the firm used to buy equipment from the foreign countries, disassemble them, assess the components and learn to make similar products.

But now it has successfully asked its partner, the Japanese Sanyo Electric Co Ltd, to move its compressor machinery research and development center to Dalian, and share the intellectual property rights of the new products.

The group has also become the first Chinese firm to hold shares in a research and development center in a World 500 company.

The Bingshan group is not the only firm that has made tremendous achievements in technological breakthroughs and forged international competitiveness in Dalian, a key economic hub in Northeast China.

With the country unveiling the blueprint of revitalizing the old industrial base, Dalian, a coastal city, has also gained momentum in developing its core machinery manufacturing industry.

For instance, the locomotives developed by the Dalian Locomotives Co Ltd have become the major locomotives for all the freight trains put into operation for the sixth nationwide railway speedup this April.

In the international market, the corporation has become the first machinery enterprise in the country that has acquired a foreign company.

After its successful acquisition of two companies under the US-based Ingersoll group, it has also taken control of about 100 technologies, and nine patents from the two companies.

In another example, the hydraulic turbine wheel developed by the Dalian Heavy Industrial and Hoisting Group has enabled China to shake off dependence on the technologies imported from overseas.

Additionally, the group's technological competitiveness has forced overseas counterparts to cut at least half the price of similar products in the international market.

According to officials with the city, the motivation for innovating the city's heavy industrial firms has been generated by the industry, not the government.

"The innovation on technologies and product has given enterprises more core competitiveness in the market, which has furthered facilitated their motivation in innovation," a local government official said.

In recent years product innovation has contributed to an annual 30 percent increase in sales revenue for the Dalian Heavy Industrial and Hoisting Group.

But it is the huge proportion of local fiscal revenue that the local government diverted into the sector that further accelerated the research and development of innovative machinery technologies, industry insiders said.

The municipal government has invested more than 20 billion yuan ($ 2.63 billion) on 32 machinery technology projects in recent years. The local government also made it mandatory last year to invest 600 million yuan ($ 79 million) on machinery research and development every year between 2007 and 2009 to further facilitate progress in the field.

The huge input by both enterprises and the government has paid off.

According to official figures, among the 16 categories of key machinery research projects designated by state authorities, Dalian alone has made breakthroughs in projects in six categories.

Experts forecasted that Dalian's machinery manufacturing industry could benefit more from the promising domestic economic growth currently.

"It is the golden time for the development of the machinery manufacturing industry as the country has entered a new round of heavy industry development," Chen Liangwen, an assistant researcher with the China Regional Economics Research Center under Peking University, said.

"Dalian can be one of the leaders in machinery manufacturing industry as it has been advantageous with good research and development resources in this old industrial base."

But Chen also warned that China's manufacturing industry faced sharp international competition, and possible acquisition by foreign firms.

"Domestic machinery manufacturing enterprises should further enhance its capacity in research and development of core and leading technologies to ensure their market competitiveness," Chen said.

The "Digital Control Mansion" since August in Dalian showcased the city's efforts to gain an upper hand in the leading machinery manufacturing industry.

Digital control systems, considered the brain of any machinery set, is a major selling point for China's leading machinery manufacturing products, and key to the products' global competitiveness.

"Without a far vision, the local government would not have invested a huge sum in building such a base," said an industry insider surnamed Zhou in Dalian.

Right now, more than 1,100 machines in Dalian have been equipped with a "Chinese brain", a digital control system developed in Dalian.

"It has laid a solid step in breaking the monopoly of international digital control manufacturers," Zhou said.

(Shanghai Start 09/07/2007 page6)