For many years, there has been a discussion and even controversy surrounding the reform of state-owned enterprises, that is, whether or not state-owned enterprises can do a good job under the conditions of a market economy. For a period of time, the dominant view was that state-owned enterprises and the market economy were not compatible, and reform was to gradually withdraw state-owned enterprises. As a typical old state-owned enterprise, Weichai has become a model for the reform and development of state-owned enterprises from the verge of bankruptcy to the revenue exceeding 100 billion yuan, which also gives everyone reason to believe that state-owned enterprises will be able to do well.
On March 26, 2024, at the academic seminar on reform, innovation and development in the 20 years of Weichai Power's listing, Tan Xuguang, chairman of Weichai Power, made a wonderful report on the theme of "Growth, Value, and Future", sharing the achievements and development logic of Weichai Power in the past 20 years since its listing. The following is the full text of the speech:
Growth, Value, Future
——The results of reform, innovation and development in the past 20 years since Weichai Power was listed
Keynote speech at the symposium
Tan Xuguang
(26 March 2024)
Honorable Director Shao Ning, President Peng Huagang, Director Man Shengang, Secretary Liu Yun, Vice Mayor Meng Hao, Secretary Liu Lei, Professor Li Daokui, Professor Ning Xiangdong, Chairman Jin Haitao;
Leaders and experts;
Dear colleagues and friends,
Today, we gather in Weifang, the kite capital of the world, to participate in the academic seminar on the achievements of reform, innovation and development in the 20 years since Weichai Power's listing. First of all, I would like to express my heartfelt thanks to all the leaders and friends who have come from afar and cared for and supported the development of Weichai for a long time!
The theme of my presentation is "Growth, Value, and Future."
In the spring of 20 years ago, I rang the bell for Weichai Power's listing on the Hong Kong Stock Exchange. At that moment, my heart was full of emotion and tears welled up in my eyes. In the face of the difficult choice of listing at home and abroad, we chose Hong Kong without hesitation and danced with the international capital market; in the face of the threat of the SARS outbreak, we chose to take responsibility without hesitation and race against time; in the face of internal and external doubts, incomprehension, and even opposition, we chose to persist and fight against all obstacles. Under tremendous pressure, many veteran leaders and colleagues here stood firmly with us to support, take the lead in, and participate in reform. The crisp bell completely cleared the fog that had been shrouded in Weichai's progress for a long time since the end of the last century, and allowed Weichai to truly embark on the global stage from Weifang, Shandong. Since then, Weichai Power has embarked on a sunny road of leapfrogging in 20 years.
——Over the past 20 years, we have jointly created the Weichai model of the global capital market that has shaken the industry
On March 11, 2004, with the approval of the Shandong Provincial Government and the State-owned Assets Supervision and Administration Commission of the State Council, and with the strong support of the China Securities Regulatory Commission, Weichai Power landed in the Hong Kong capital market and became the first company listed in Hong Kong in China's internal combustion engine industry, raising US$170 million, oversubscribed by 928 times and oversubscribed by 52 times in international placement, refreshing the historical record of IPOs in the H-share market on the main board of Hong Kong after 1998, and opening up the road of capital internationalization. On April 30, 2007, with the help of the strategic opportunity of the reform of equity division in the mainland securities capital market, it innovatively put forward the "inverted triangle" absorption and merger plan, completed the share swap and absorption of Hunan Torch and successfully listed on the Shenzhen Stock Exchange, which is the first domestic enterprise to achieve "H to A" dual listing through share exchange and absorption merger, and is known as the first merger and acquisition case with the most innovative value by the global capital market. In 2023, we successfully replicated the "Weichai Model" in the global capital market, enabling Ferretti Yacht Group, a subsidiary of Weichai Group, to become the first company in the world to achieve dual listing in Hong Kong and Milan, Italy. Today, Weichai Power has a total market value of more than 140 billion yuan, an increase of 30 times compared with the beginning of listing, and the highest market value has increased by more than 40 times compared with the beginning of listing.
——Over the past 20 years, we have jointly innovated the unique Weichai model of global industrial transformation
Twenty years ago, we were soberly aware that it was difficult for a single engine company to survive independently. In 2005, when the Delong crisis broke out, we seized the opportunity and defeated the opponent with the determination of "aiming to win", and won the Hunan torch with 1,023.38 million yuan, which was the largest cash merger and acquisition case in China's securities capital market at that time, which caused a huge shock in the global capital market and the automobile industry. What has a more far-reaching impact on the global industry is that we have integrated Weichai power engine, Fast gearbox and Hande axle in parallel with systematic thinking and subversive ideas, creating the world's first golden powertrain integration model, leading the world's first-class brands for 12 years. Reverse integration of Shaanxi Automobile heavy truck, Lovol agricultural equipment, Lovol construction machinery and other industrial resources, so that the engine "long legs, brains, wings", built a unique concentric radiation industry ecosystem in the world. At present, Weichai ranks first in the world in sales of heavy-duty engines and heavy-duty gearboxes, Shaanxi Automobile heavy-duty trucks and Sinotruk complement each other and develop together, and the sales volume of heavy-duty trucks ranks first in the world, and the sales of agricultural equipment and axles rank first in the country. We use capital to leverage industrial resources, so that Weichai Power has grown from a single engine enterprise to an industrial equipment group with the whole vehicle as the leader and the power system as the core, building an unprecedented strong product competitiveness, industrial synergy and industry leadership, and becoming an important pole of the global industry map!
——Over the past 20 years, we have jointly achieved a 100% successful Weichai model of global resource integration
In 2008, the financial crisis swept the world, we keenly grasped the strategic opportunity of international resource integration, focused on national strategy, industrial shortcomings, technical bottlenecks, brought their own "passbook", and kept in mind the global "going out", from the "European trilogy" to the "North American duo", from Baudouin in France, Ferretti in Italy, KION and Linde Hydraulics in Germany, Dematic in the United States, PSI, Hittis in the United Kingdom, Ballard in Canada, Odyssi in Germany, Vidis in Austria, 11 global high-tech enterprises such as Switzerland Feisu have successively entered the Weichai family. It has made up for the technical shortcomings of Continental in the fields of large-bore high-power-density engines, high-end hydraulics, CVT powertrains, fuel cells, etc., and has all realized the implementation of domestic industrialization, and has newly built two golden industrial chains of smart logistics and marine transportation equipment. We promote industrial integration with cultural integration, break the "77 law" of cross-border mergers and acquisitions, and all cooperation has achieved 100% success, and Weichai Power's transnational index has reached 48.57%, realizing the grafting of international resources with Chinese power, amplifying the industrial value with multiplication effect, and calming cyclical risks with diversified layout, playing the strongest voice in the global power industry chain!
Over the past 20 years, we have jointly built a world-class Weichai model for the governance of China's state-owned enterprises
In 2002, we broke the shackles of old ideas, old systems and old ecology, and innovatively established a multi-regional, cross-cultural and diversified equity structure. The equity incentive for key core technical talents has been implemented in accordance with the law, expanding from 24 at the beginning of the listing to 73 people, and then adding 693 people in 2023, establishing a long-term incentive mechanism for risk sharing and achievement sharing. We continue to seek innovation and change in the cruel competition of full marketization, innovate and integrate the state-owned enterprise platform, market mechanism and global model, build a Weichai characteristic operation and management model with WOS as the core, form a group management and control system of "strategic unity, coordinated development, resource sharing, and independent operation", and accumulate the governance idea of "transparent system, effective supervision, fair service, above rate and cultural guidance". It was selected as one of the "Top Ten Management Benchmarking Models" and "List of World-class Demonstration Enterprises" by the State-owned Assets Supervision and Administration Commission of the State Council. In the past 20 years, we have completed the magnificent transformation from a traditional state-owned enterprise with a planned economy to a modern company with a market economy, and completed a major transformation from factory management to a globalized multinational group governance!
——Over the past 20 years, we have jointly created a value sharing Weichai model with high growth, high returns and high expectations
In the past 20 years, Weichai Power's operating income has increased from 6.2 billion yuan in 2004 to 214 billion yuan in 2023, an increase of 33 times, with a cumulative revenue of 1.87 trillion yuan, and the net profit attributable to the parent company has increased from 540 million yuan in 2004 to 9.01 billion yuan in 2023, an increase of 16 times, and the cumulative net profit attributable to the parent company has reached 93.6 billion yuan. Weichai Power's comprehensive strength, investment value and brand influence in the world have been highly recognized by the capital market. We coordinate the dynamic balance of the company's development, performance growth, shareholder returns, and employee achievements, with a cumulative dividend of more than 28 billion yuan in 20 years, and the average annual income of employees has increased by 9.3 times. High-quality development has brought huge returns on the value of state-owned assets, shareholders and employees.
After 20 years of ups and downs and 20 years of vicissitudes of life, Weichai Power has seized the golden opportunity of China's rapid economic take-off and the vigorous development of China's capital market, and created brilliant achievements in the industry.
We will never forget that the three important instructions and instructions provide a fundamental basis for the development of the company.
We will never forget the concern and support of the successive Shandong Provincial Party Committee and Provincial Government, Weifang Municipal Party Committee and Municipal Government and Party committees and governments all over the country for the development of Weichai.
We will never forget that the majority of investors, partners, customers and friends have always unswervingly believed in Weichai and chose Weichai.
We will never forget that 100,000 Weichai people around the world have no regrets and passion for the development of the enterprise. It is precisely because of you that Weichai Power is there today!
Over the past 20 years, generations of management teams at all levels have carried dreams and relay inheritance, faced challenges together, overcome difficulties together, created miracles together, and cultivated Weichai Power into a towering tree with hard work and sweat.
Especially today, so many old leaders, old friends, old colleagues, come to see Weichai thousands of miles away, our hearts are full of touch, gratitude, gratitude, no matter where you are, your contribution to the development of the company, the love for Weichai, we will always remember in our hearts. On behalf of the Board of Directors, I would like to express my heartfelt thanks to all of you!
Over the past 20 years, Weichai Power has moved from victory to victory again and again, and the fundamental reason is that we have always followed the "four development logics".
——The two-wheel drive of "product management + capital operation" is the logic of Weichai Power's industrial take-off to become stronger and bigger
Product management and capital operation are the two wings of Weichai Power's rapid take-off, and they complement each other and are indispensable. Product management is the foundation of an enterprise, without good products, everything is zero, capital operation is a powerful weapon for enterprises to achieve rapid industrial expansion and enlarge competitive advantages. At every critical moment of transformation and upgrading, we have made forward-looking layouts, made bold moves, accurately used capital leverage, and built a new industrial ecology. With every merger and acquisition, our products have been upgraded, technology has been advanced, and the industrial chain has been strengthened, and the industrial structure, growth engine, and development model have achieved a fundamental change, and a strong momentum for future development has been reserved!
——Honestly planting one's own "field" is the long-term strategic logic of Weichai Power
No matter what kind of situation we face, we are always not moved by temptation, not afraid of difficulties, not disturbed by noise, insist on not doing non-main business, low value-added products, and repetitive scale expansion, focusing on strengthening China's power heart, and laying an unshakable leading position in the global power field. It is with the distraction of "making a good product for a lifetime" and the strategic adherence of "focusing on the main business and pursuing the ultimate", we will sell the engine more profitably than real estate, make the engine the first in the world, and lead China's internal combustion engine industry to truly stand up and become strong on the international stage!
——Having the key core technology that others can't take away is the global competition logic of Weichai Power's eternal striving for the first
What does it depend on to win the global competition? It depends on first-class products, first-class science and technology, and first-class talents. From the world's first powertrain to four breakthroughs in the thermal efficiency of global diesel engines, from the traditional powertrain leading the world to the comprehensive layout of new energy, from the low-end "involution" of the value chain to the breakthrough of the global high-end market, we have always regarded science and technology as the "number one project" and straightened our backbone in the global market competition. Practice has proved that it is unsustainable to rely on hype concepts, exaggerated publicity, and packaging in the capital market, and technology is the last word!
——The synergy of large groups is the chain and win-win logic of Weichai Power's value multiplication
Weichai's biggest advantage is that it has an aircraft carrier battle group with a high degree of strategic consistency, efficient resource coordination and full value sharing, and has built an industrial pattern of coordinated development of Weichai Power System, Shaanxi Automobile Heavy Truck, Lovol Smart Agriculture, Lovol Construction Machinery, German KION Smart Logistics, Italian Ferretti Yachts and other businesses. The collaborative research and development of the industrial chain allows us to extend the leading advantage of the power system into the core competitive advantage of the whole industry chain and the whole field. The integration of the global system has allowed us to release the huge synergistic effect of "1+1>N". The integrated product portfolio solution allows customers to have more and better choices. Synergy has brought a huge value gold mine to the large group enterprises, synergy has provided the most satisfactory value enjoyment for global customers, and synergy has brought real appreciation space to the capital market!
20 years of concerted efforts and win-win cooperation have laid a solid foundation for cooperation between Weichai Power and global partners. Growth, value, and future are our biggest concentric circles.
Growth is to realize the dream of a world-class enterprise!
We will adhere to the genes and logic of 20 years of development, the power system will lead the global industry, new energy and new technology will accelerate the overtaking in corners, commercial vehicles will move towards the world-class together with Chinese partners in the global "competition and cooperation", agricultural equipment and construction machinery will accelerate the jump to the first echelon in the world, and smart logistics will fully consolidate the leading position in technology and brand in the global industry. Growth is the biggest strategy, without growth, everything is empty talk, not fighting for the first is in the mix!
Value, is to become a respected international strong enterprise!
It is our common pursuit to build Weichai Power into a responsible, warm and respected international enterprise. We will unswervingly adhere to the principle of self-reliance and self-improvement in science and technology, practice green and low-carbon development, and lead the global industry to a new peak of science and technology, unswervingly adhere to the purpose of customer satisfaction, provide value-added products for global customers, unswervingly adhere to the concept of sharing and win-win cooperation, and provide shareholders with a steady stream of value returns, unswervingly adhere to the employee-oriented, work in Weichai, and be happy in Weichai.
In the future, it is to let Weichai Power write infinitely wonderful!
We will take the initiative to challenge the extremely complex era of global changes with greater courage, cooperate with the best international partners with a greater mind, and embrace the world, deepen the world, and lead the world with greater wisdom. In the future, Weichai Power will become the industrial heart of the world, the source of power to drive dreams, and a century-old brand with evergreen foundation!
Tomorrow's Weichai will have unlimited vitality, unlimited potential, and infinite surprises, and will always be worthy of your expectation and always worthy of your following!
Thank you!