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Sinotruk keeps on trucking

By Wan Zhihong (China Daily)
Updated: 2008-08-11 15:53

Each truck manufactured by Sinotruk contains a data chip, recording the type of the truck and dealer and customer's information. With this data the company can easily control each step of its heavy-duty truck manufacturing process from assembly to distribution and after-sale service.

For example, if a customer in the northwest Xinjiang Uygur autonomous region contacts the Sinotruk headquarters in Jinan, the capital of Shandong province, about replacing a part, the information on the chip enables the mechanic to better complete the repair, says Ma Chunji, chairman of Sinotruk. "This innovation saves us a lot of time and money."

Ma, previously the vice-mayor of Jinan was appointed as head of Sinotruk in 2000. At that time the company, which produced China's first heavy-duty truck model, Huanghe, was in great difficulty.

"In 1999 the company incurred a loss of around 10 billion yuan. Workers did not get their pay for several months," he says.

To make the company profitable, Ma took a series of innovation measures, including improving the production methods and technology and streamlining the management.

For production, the company changed from manufacturing according to its own plan to manufacturing according to clients' order. "The previous mode of manufacturing always resulted in surplus production, which is a big waste of work and money. By changing it to production by order, we can make the best use of our resources," says Ma.

Technological improvement was another important step for Sinotruk. In 1983 Sinotruk introduced Austrian technology to produce the Steyr series of trucks. The company also launched the Howo series of trucks, and now Howo is Sinotruk's best selling model.

The company has also paid a lot of attention to its intellectual property protection. It owns more than 650 patents, the largest number among China's auto companies.

"Innovation saved our company. Last year we produced over 100,000 units of heavy-duty trucks, 65.5 percent increase year-on-year. Our sales revenue achieved 37.7 billion yuan, with profits of 2.1 billion yuan," says Ma.

Now Sinotruk is one of the world's top five heavy-duty truck manufacturers. In the first half of this year the company produced over 70,000 trucks. Its sales revenue was 30.8 billion yuan, with profits of 1.28 billion yuan.

"This year we aim to produce 125,000 heavy-duty trucks and reach 45 billion yuan in sales revenue. We also plan to take one third of the domestic market by the year 2010, and upgrade one third of our products through technology innovation," says Ma.

Faced also with the rise in raw materials prices, Ma says the company is trying to reduce its manufacturing costs. "In making each unit of our truck, we have reduced the production cost by over 10,000 yuan annually in three consecutive years."

The truck manufacturer has signed a deal with China's largest steel maker Baosteel in order to have high quality steel at favorable prices.

The overseas market is also gaining importance for Sinotruk. "We plan to sell one third of our products to overseas markets by the year 2010," says Ma.

Sinotruk started its overseas development strategy in 2004. The company's exports achieved $323 million in 2005 and 2006. At present the company has four major overseas markets, the former Soviet Union countries, the Middle East, Southeast Asia and Africa.

In 2007, the company's exports accounted for around 60 percent of China's total exports of heavy-duty trucks. Ma attributed the good performance to the robust demand from the emerging markets.

In the first half of this year the company exported over 6,300 heavy-duty trucks, amounting to $260 million. The figure has seen a 35 percent growth year-on-year.

Sinotruk will also quicken its pace in setting up manufacturing facilities overseas. It has started a joint venture in Vietnam, and it was also in talks with foreign partners to establish some other facilities overseas, says Ma.