Riding high on equipment and machinery sector

DHI DCW Group Co Ltd, a leading player in the nation's heavy machinery and crane industry, headquartered in Dalian, a coastal city in Liaoning Province, has notched up 5.48 billion yuan in sales revenues and 1.22 billion yuan in industrial incremental value in the first eight months of the current year, increasing 39.2 and 24.8 percent year-on-year respectively.

In recent years, DHI DCW Group, the only company qualified as general contractor in the nationwide heavy machine industry, has undertaken a series of key projects.

The company won orders for 22 big cranes from Xinyu Iron and Steel Co Ltd in East China's Jiangxi Province in June.

The success of the group company marks the very epitome of the province's flourishing machinery and equipment manufacturing sector.

Statistics show that the sector achieved 63.5 billion yuan in industrial incremental value and 7.78 billion yuan in profits in the first half of this year, surging 34.5 and 76.3 percent year-on-year respectively.

Dramatic growth in the sector's size and profitability is a sure indication that machinery and equipment manufacturing, the province's traditional pillar industry, is developing on the fast track.

As an old industrial base, Liaoning Province has a number of manufacturing companies, which used to suffer low profits due to excess personnel, heavy debt burden, and being saddled with running schools, hospitals and other organizations in the past planned economy.

Finding ways to help improve the sector's performance and sharpen its competitive edge has long been the main concern of local authorities.

The provincial government has formulated a series of preferential policies, encouraging reform and innovation among local equipment makers.

A series of seminars have been held to brainstorm about innovative ideas, seeking to encourage healthy and sustainable growth for the industry.

Thanks to these efforts, the overall scale of the machinery and equipment sector has exceeded that of petrochemicals and metallurgy, to become the first pillar industry of the province.

The sector's industrial incremental value in the province reached 98.39 billion yuan in 2006, while it realized 12.59 billion yuan in profits during the same period, contributing 55 percent to the profit growth of the province's industry.

Reform thrust

Local industrial players have enhanced their reform efforts, reaping a rich bounty in the process.

Shenyang Machine Tool Group Co Ltd (SMTCL) is a typical example, as the company has continued reforms in order to improve its operational efficiency.

Early this year, SMTCL strengthened its corporate governance by focusing on marketing, production, research and development, supply chain, finance, human resources and management.

The company signed an agreement in June with JANA Partners LLC, a New York-based hedge fund, transferring its 30 percent equity stake to the latter for a $132-million investment.

The bold move aims to absorb capital injection, import managerial expertise and gain operational prowess in overseas capital markets.

This July witnessed a new high for SMTCL in computer numerical control machines output, which increased 11 percent over the highest so far recorded by the company.

Moreover, sales revenues of the company increased 12 percent over the company's best-ever monthly record.

Another example of success is the Tebian Electric Apparatus Stock Co Ltd (TBEA), headquartered in Shenyang.

Through wage reform, the company has inspired enthusiastic pursuit of work efficiency among its staff.

TBEA's sales revenues reached 2.2 billion yuan in 2006, while its per capita output value rose to 750,000 yuan in 2005 from 312,500 the previous year. The figure is projected to reach 1.25 million yuan this year.

Technological innovation

The machinery and equipment sector of the province views technological progress as key to maintaining sustainable growth.

With its rapid pace of technological innovation, this sector of Liaoning has made a significant leap from low to high-end technology, from low to high value-added products, and from a single machine to mass-produced comprehensive sets of machines.

For instance, Dalian Bingshan Group, a heavyweight in the country's refrigerating machine and equipment sector, has in recent years launched a series of proprietary, high value-added products, which are environmentally friendly and resource saving.

Sustained innovative capability and product portfolio restructuring in accordance with market demands have put the company in a better position to adjust itself to market changes.

The company has recently set up a new product line-up of machines and equipment, covering industrial refrigeration, further processing of farm products, central air conditioning, and freezers, and petrochemicals.

Backed by strong research and development capacity, the company is now listed among the only four worldwide that are capable of producing a special big screw compressor for petrochemical use.

This year, the company developed a new product family - marine air conditioning equipment, for which it took less than a year to produce a product sample.

Like Dalian Bingshan Group, Wafangdian Bearing Group Corp is also known for its proprietary technologies.

In the past three years, the firm has developed 272 innovative production projects and applied for 71 patents.

Strong innovative spirit in such companies reflects a positive change in Liaoning's machinery and equipment sector, which has achieved comparatively bigger growth in profits for its key technologies and knockout products over the past years of intense rivalry, than competitors at home and abroad.

(China Daily 10/12/2007 page18)