Based on the global development trend of passenger car dieselization, at the turn of the century, Cummins, a traditional medium- and heavy-duty diesel engine company, started two major actions in the field of light diesel engines: one is a 4.2L and 5.6L diesel engine project with Chrysler, and the other It is an annual production capacity of 400,000 2.8L and 3.8L diesel engines in cooperation with Foton. The former is scheduled to be put into operation in Indiana, USA, before 2010, and the latter will be put into production in Beijing in 2009. But is this the only reason for Cummins?
One day in 2006, Cummings (China) Investment Co., Ltd. (hereinafter referred to as Cummins China) Vice Chairman Wang Hongjie led the Cummins Negotiation Group to Beiqi Futian for the fifth time and negotiated with Futian about the establishment of a joint venture company, Beijing Foton Cummins. Because this is already the fourth time that Cummins has negotiated a joint venture of engine production in China on a large scale, the negotiations have proceeded smoothly. The rest is only details, but he does not want to waste too much time on it.
As the chief negotiator, Wang Hongjie, who has more than two decades of experience in production, technology, and senior management of large state-owned enterprises and has served Cummins for 14 years, is already familiar with such negotiations. Therefore, he is not worried about the outcome of the negotiations, and is more concerned about the results of the negotiations. The speed of negotiations. Because just before departing from the company, he once again noticed Weichai's sales data. Faced with this rapidly rising local rival, Wang Hongjie expects to use Cummins's rich product line and international experience to seek opportunities to come back in another market outside of heavy-duty engines.
In order to expedite the negotiation speed and to show respect and respect for the Chinese commercial vehicle leader company that has rapidly emerged in the past 10 years, Wang Hongjie not only led the negotiation team several times and Fukuda's high-level executives took a drink and was slightly “intoxicatedâ€. The special plane flight team of the U.S. headquarters of the U.S. company is also on standby at any time to meet the wishes of the senior Fukuda team to visit the United States at any time. “To attract each other, the combination of the two parties will follow.†Wang Hongjie explained the successful cooperation between Futian and Cummins. “Cummins needs to cooperate with NO.1 of China's light commercial vehicles in order to enter the China’s booming light-duty diesel vehicle market. The need for upgrading the engine technology requires more internationalization. The needs of both parties are very close to each other, so we can almost talk about it."
Indeed, the establishment of Beijing Foton Cummins can be said to be very happy for the two factions participating in the joint venture. For Futian, Cummins's technology and product support undoubtedly laid a solid foundation for upgrading Futian's engine technology and firmly establishing the "light commercial vehicle king." For Cummins, it was again outside the medium and heavy commercial vehicle engine market. In China, it gained the first-mover advantage of the light engine, and at the same time, it successfully completed a global strategic transformation with the cooperation with Foton.
However, Can Fotos Cummins become a turning point for Cummins to reverse the Chinese market? The reporter confirmed from the top of Futian that Futian's personnel structure in the new joint venture company has not yet been finalized and the joint venture factory is still under intense preparation. However, Cummins’s opponents seem to be driving at full speed.
"Compared with the whole vehicle, China's diesel engine industry can be described as a fully competitive market. For example, Cummins is a 'carp' in the Chinese diesel engine market. This 'carp' is dynamic and powerful, in the water. As a result, the whole market was activated, and in the process China's 'native fish' also grew rapidly. Over the years, the exotic 'squid' of Cummins grew up, but it did not grow into a big shark, nor did it eat it. For any local competitor, China's 'native fish' is developing faster and more powerfully. The biggest beneficiaries of full competition and development are Chinese local diesel engine companies and their customers." Wang Hongjie described the reporter to Cummins and China. Diesel engine relations.
Obviously, the biggest threat to Cummins’s eyes is not the foreign counterparts whose roots are still relatively shallow in China. What really poses a serious threat to Cummins is the rapidly developing domestic engine company in recent years. Weichai and Yuchai are among the most dangerous opponents.
Talking about Weichai and Yuchai, Cummings showed a more complex mentality. On the one hand, for Cummins, who has been rooted in China for 33 years, these two opponents were insignificant a few years ago, but they were at Cummins. Looking at the next step to grow up and surpassed Cummins - Yuchai, close to bankruptcy in 1999, became a junk stock in New York, a few dollars, and now, light diesel engine, Euro IV diesel engine and other product lines made a very complete. Weichai, no one in 1999 would have thought that it could reach the point where it is today. On the other hand, the Chinese market, especially the Chinese domestic diesel engine business, actually gave Cummins a lesson. Today, Cummins sees Yuchai and Weichai as their objects of respect and study.
“Weichai and Yuchai’s total sales in 2007 reached 58 billion yuan (including some of the business volume outside of diesel engines), while Cummins China’s business volume is only 21% of this figure. The Chinese market gave Cummins a lesson! We must not underestimate China’s domestic competitors. No matter how much Cummins was initially stronger than the Chinese diesel engine companies, their development momentum is like a gun on the head of Cummins. We have no way out,†said Wang Hongjie.
From the perspective of Wall Street's investment and Cummins' own overseas strategy, Cummins’ strategy in China is steadily advancing. Taking 2007 as an example, annual growth of more than 40% will make China become the fastest growing and most successful market for Cummins overseas. However, the speed of Weichai and Yuchai is more eye-catching. But from a transnational corporation that is striving for stable returns, Cummins’ China strategy is undoubtedly a success. It is only for Cummings that he himself regrets: "We could have gone faster and we have taken bigger steps."
The successful joint venture with Beiqi Foton has once again occupied an industry commanding height, but how to ensure the stability of the vested market in the future is the direction that Cummins should pay more attention to. Cummins, aware of this, has begun to seek change. How will Cummins fight this new battle?
Does Cummings, who intends to go back on the road, change his Chinese strategy? Vice President Wang Hongjie told reporters: "As a mature multinational corporation, Cummins will not arbitrarily change its established strategy in the region, especially those that have been proven successful experience for many years." For Cummins, it has been repeatedly verified Successful experience refers to the strategy of leading technology, localization, diversification, and operation with leading companies in the market.
In China, the success of Cummins boils down to four points: the strategy of insisting on the simultaneous introduction, localization, diversification, and cooperation with the leading companies in the market. However, in the face of its competitors who understand the Chinese market more, Cummins still needs to make greater changes.
In a few short years, Weichai not only built and strengthened its own industry chain for heavy trucks, but also made great strides in internationalization. Both in terms of technology and capital, international cooperation is very extensive. If Weichai can reach 100 billion yuan by 2012 The goal, then no doubt, will become a world class engine leader at the same level as Cummins.
From 2004 to 2005, Yuchai and Weichai respectively jumped from 5 billion yuan to 10 billion yuan. Although the data on the Cummins China website is not very detailed, it can be roughly estimated that 2004 was the key time for Yuchai and Weichai to surpass Cummins. Judging from the history of the development of China's auto industry, this year is where the growth rate of China's automobile production and sales suddenly dropped from 35.08% to 15.49%. The analysis may be due to the price difference implicitly expressed by Cummins’ high-level Chinese.
"The ultimate bottleneck of the Cummins engine and even of all multinational products is the price difference. This is a barrier that can never be broken. Transnational products cannot be cheaper than domestic goods." Wang Hongjie explains Cummins's frustration. "In China, prices are particularly priced." We firmly grasp the hands of these local engine companies in the hands of Weichai and Yuchai.â€
It can be imagined that in the case of a sudden downturn in the Chinese auto industry in 2004, it was natural that Weichai and Yuchai would win with their prices, and it was not impossible for both companies to seize part of the market in the hands of Cummins.
Comparison of recent sales of Cummins, Yuchai, and Weichai in recent years
Company Name | year 2004 | 2005 | year 2006 | In 2007 | Vision |
| Yuchai (billion yuan) | 107 | 121 | 141 | ≥180 | 200 (2008) |
| Weichai (billion yuan) | 100 | 170 | 240 | ≥400 | 1000 (2012) |
| Cummins China (US$ billion) | 11 | 11 | 12 | 17 | 30 (2010) |
| Cummins Global (US$ billion) | 84 | 99 | 114 | 130 | 200 (2011) |
When we think of the negotiation time and signing time of Xi'an Cummins and Foton Cummins (both after 2004), and when Cummins established China R&D Center (2005), it is not difficult to find that Cummins had actually been back in 2004. A counterattack was started, but the inertia of the Chinese auto market for Weichai and Yuchai did not come to mind. The market is not easy to find! At the same time, Weichai and Yuchai, who are advancing boldly in risk, are also not comparable to Cummins, who has made steady decisions on the board of directors. As a result, the gap widened again after 2004.
In 2005, Cummins’ first board meeting in China established a target of 3 billion yuan in 2010. This target can still defeat Weichai and Yuchai according to normal growth. However, Cummins still underestimates the energy of rivals and the Chinese market. “The development momentum of the Chinese auto industry exceeds our expectations. We could have been faster in terms of speed.†Wang Hongjie lamented. In the Chinese market where both opportunities and risks coexist, Cummins’s stability has made it an excellent opportunity to counterattack success.
Today, Cummins decided not to miss any opportunities. The strategy adopted by them is to continue the Chinese strategy, in particular to insist on winning the magic weapon while reducing the price difference and improving the reaction speed, especially the speed of decision-making and execution.
"To this end, Cummins has set up one of the world's four regional procurement centers in Shanghai, China. The center has been involved in the development chain since the completion of the Foton Cummins project, and has begun to control costs at the starting point. Cummins wants to move the full range of products. China is not only an engine, but also key parts. Only the key components are made locally, and the price difference can be further reduced.†Wang Hongjie told reporters.
“The decision-making method is generally not easy to change, because a mature multinational company has its own decision-making system: research, evaluation, business model, and negotiation. Even a fast-growing Chinese company is such a decision-making process.†Wang Hongjie said reporter. Since you can't change the mechanism, increase the speed. “The important thing is to change the management organization. Before, Cummins Group Vice President Steve Chapman, who is in charge of China, India and Russia’s three emerging markets, is working in the United States. Now he personally sits in Beijing, China, and radiates from China, India and Russia. The speed of response naturally increases!"
Not only is it a macro strategy and planning, but in some concrete and microscopic aspects, Cummings has also left his body to learn from the outside world, especially to Weichai and Yuchai. Xiao Wang is a staff member of Cummins China Marketing Department. One thing he went to work every morning was to browse domestic engine industry information, especially Weichai and Yuchai's webpages, and discovered the changes and quickly followed up. “Our product specifications will continue to improve, especially when we see Weichai or Yuchao’s fresh, simple and easy-to-understand language.â€
One has a wealth of competitive experience and diversified products. One has the advantages of local operations; one dominates the market through cooperation strategy with the region, and one creates a gold supply chain through capital operation. Obviously, this happens in the world and The first war between China is far from over.
Cummins VS Weichai: Heavy truck engine attack and defense
In 2004, when Cummins China’s sales revenue was US$1.1 billion, Weichai’s sales exceeded RMB 10 billion from the RMB 5 billion level and surpassed Cummins China in the same year.
In this year, Cummins officially opened the curtain of counterattack. Cummins signed an agreement with Dongfeng Company to set up a Chinese technology center and become the first foreign-funded diesel engine company to establish a China R&D technology center. Cummins has increased China's localized R&D. This is an important step for Cummins to fight back.
In 2005, Cummins Global’s Board of Directors was first held in China and announced that it will invest US$300 million in new investments in the next five years. The business volume in China in 2010 will reach US$3 billion. On March 11 of the same year, Weichai Power was successfully listed on the Hong Kong Stock Exchange, which eased the financial pressure on Weichai. Two days later, Weichai Power had completed trial production of 10 litre and 12-liter high-power Euro III engines with completely independent intellectual property rights. And will put into production, Weichai's product competitiveness can be greatly strengthened.
In May 2005, in order to continue to strengthen Cummins's strength in growth markets such as China, India and Russia, Cummins reorganized its organization and established emerging markets and business groups. Steve Chapman, who has extensive international market experience, served as vice president of the Group. He has worked in Asian markets such as China and India for 18 years. On November 18th, 283 ZL50C loaders equipped with Weichai engines were exported from Guangxi Liugong Machinery Co., Ltd. to Angola.
In October 2005, the strategic cooperation between Dongfeng and Cummins took another 20 years to reach a new level. The two sides began to cooperate in the development of 13L heavy truck engines in China. At the same time, Dongfeng and Cummins established a third joint venture - Xiangfan Fleetguard Gas Systems. On December 16, Xi'an Cummins Co., Ltd., a joint venture between Cummins and Shaanxi Auto, was established to produce Cummins 11-liter high-horsepower diesel engines. It plans to start production on August 8, 2007. At the same time, Cummins started negotiations with Foton to establish a joint venture of light diesel engines.
On April 22, 2006, Cummins and Wuxi Power further deepened their cooperation and jointly formed a second joint venture between the two companies - Wuxi Fanniwell Engineering Co., Ltd., to produce key components of the turbocharger. On August 8, the East Asia Engine R&D Center, the fourth joint venture between Dongfeng and Cummins, was officially launched. This is the first R&D institution established by a foreign-invested diesel engine company in China. On October 19, Cummins and Foton Motor signed a formal joint venture agreement. The two parties will establish a light-duty diesel engine company, Beijing Foton Cummins Engine Co., Ltd. with a 50:50 equivalent ratio. On December 18th, the ISZ13L heavy-duty diesel engine jointly developed by Cummins and Dongfeng Company was successfully ignited at the Cummins U.S. headquarters technical center.
On June 8, 2007, Cummins invested in the production of an engine fuel system in China. The Cummins fuel system plant in Wuhan Economic and Technological Development Zone was formally laid and it is expected to start production in early 2008. On July 4th, Chongqing Cummins and the US and Europe simultaneously introduced the latest fully electronically controlled high-powered engine platform. On August 8th, Cummins and Shaanxi Automobile Group established Xi'an Cummins Engine Co., Ltd. to hold an opening ceremony and formally launched Cummins ISM 11 litre all-electrically-controlled heavy-duty diesel engine.
In November 2007, Weichai's 250,000th engine was rolled off in 2007 to create a world-class new height.
In 2008, Cummins and Weichai's heavy-duty truck engine attack and defense are still continuing...
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