Recently, Zeng Guang’an, Party Secretary, Chairman and CEO of Guangxi Liugong Group Machinery Co., Ltd., accepted an exclusive interview with Guoxin Fund’s new media to talk about Liugong’s choices under the new system and new opportunities.

About Liugong

For more than 60 years since its establishment in 1958, Liugong has always been a leader in China's construction machinery industry, and has gradually led the industry. What is the key node in the development of the enterprise that impressed you the most during this period?

Zeng Guangan: Liugong, who started in the early days of New China, is a pioneer of Chinese loaders. In 1958, Shanghai Huadong Iron and Steel Plant transferred some personnel and equipment to Liuzhou, Guangxi in order to support the economic construction of the southwest, laying the first foundation of Liugong in a wasteland in the west of the Liujiang River. In 1966, China's first state-issued wheel loader was born in Liugong, opening a new chapter in Liugong's development. In the late 1980s, Liugong used technology introduction, listing, and joint ventures with international advanced companies to make the loaders continue to grow. In 1993, Liugong's stock was listed on the Shenzhen Stock Exchange, becoming the first listed company in the construction machinery industry and Guangxi. After 2000, Liugong started the "eastward" and "northward" journey, realized spanning operations and product line expansion, began to produce road rollers, and then expanded to excavators, bulldozers, mining trucks, etc., and now has 19 complete machines. Product line, 33 kinds of construction machinery products in six categories.

Since the new century, the key node of Liugong's development also includes the historical breakthrough of Liugong's monthly production of 899 loaders in April 2002, which opened Liugong's business forge ahead in the new century. As the board of directors put forward the strategic concept of building an "open and internationalized Liugong" that year, Liugong's global business has been advancing leaps and bounds for more than ten years. From 2015 to 2017, more than 30% of Liugong's annual sales revenue came from overseas markets.

The major milestone in the development of recent years is undoubtedly the mixed ownership reform. This is another major reform of far-reaching significance since the founding of Liugong in 1958. It is also a major historical opportunity and challenge for all Liugong's strugglers. After continuously exploring the specific implementation plan for the new round of deepening the reform of state-owned enterprises since 2014, in 2019 the company clearly changed from the mixed to the breakthrough point of the corporate system and mechanism reform, and successfully introduced seven high-quality strategic investments including China Merchants Capital and Double White Fund. A total of 3.415 billion yuan was raised, laying a solid foundation for Liugong to form a new environment, new mechanism, new resources and new advantages after the mixed reform.

Starting from the launch of the first wheel loader in 1966, through continuous efforts and innovation, Liugong now has 19 different product lines. What is the relationship between the core product series now? In the process of updating from generation to generation , What is the difference between "change" and "unchanged"?

Liugong firmly holds on to the "bull nose" of innovation, focuses on technological innovation and plays a good "first move", leading the development of the industry with new products and new technologies, and building Liugong's core competitiveness.

Liugong's 19 product lines have formed comprehensive solutions for earthwork and construction projects, including mining machinery and modern agricultural machinery for market segments. Among them, the comprehensive strength of earthwork engineering machinery is the strongest, and the technical level of prestressed products is leading domestically. In terms of earthwork products, we have the only national "earthwork engineering machinery research center". Loaders and excavators, the two core products of earth-moving equipment, have become increasingly prominent in the market. Among them, the market leading edge of loaders has been expanding, and the market share of excavators has increased year by year, ranking the forefront of domestic brands. Liugong 8128H loader is the largest loader with completely independent intellectual property rights and represents the highest technology in the domestic industry. Following the United States, Sweden and Japan, China has become the fourth country with a 12-ton shovel load wheel loader, breaking the world The brand's monopoly on large-tonnage shovel equipment. In terms of prestressing technology and products, "super-deep and uniform thickness cement-soil mixing wall complete construction equipment and technology research and development and application", "500-meter span steel tube concrete arch bridge key technology project" and "concrete structure non-contact inspection evaluation and efficient reinforcement and repair "Key Technology" won the second prize of the National Science and Technology Progress Award in 2017, 2018 and 2019 respectively. The prestressing industry leader Ohm Company under Liugong has participated in national super projects such as the "Sky Eye" and the Hong Kong-Zhuhai-Macao Bridge, setting a number of world records.

In Liugong's R&D and innovation practice, what "changes" is the continuous satisfaction of technology, market and customer requirements. We carry out research on cutting-edge technology and achieve breakthroughs in the fields of unmanned driving, intelligent shoveling, and remote control. In 2019, Liugong took the lead to release the country's first commercial 5G smart shovel remote control loader; in 2020, Liugong released smart shovel loaders, intelligent remote control loaders and unmanned road rollers, leading its peers to market. In response to the country's "14th Five-Year Plan" strategy and "dual carbon" requirements, we have incorporated carbon peaking and carbon neutrality into our development plan, and fully supported the high-quality improvement of products in terms of energy conservation and environmental protection. For example, compared with traditional fuel vehicles, the self-developed 856E-MAX electric loader can reduce customer use costs by two-thirds and reduce carbon dioxide emissions by about 33 tons/year. It won the "2021 China Construction Machinery Annual Product TOP50 Technology Innovation Gold Award". It has given strong support to major national construction projects such as the Sichuan-Tibet Railway, Qingdao Undersea Tunnel, and Green Port.

What is "unchanged" is the long-term continuous investment in R&D resources. Liugong’s main business income in the past five years is nearly 100 billion yuan, and the five-year investment in R&D expenditure exceeds 3 billion yuan. It continues to maintain a R&D investment intensity of more than 3%, and reaches 3.23% in 2020. The sales revenue of new products accounts for the proportion of the main business income. Up to 56.64%.

What is the current situation of the construction machinery industry and what is the international pattern? What role does Liugong play in it?

Zeng Guangan: Generally speaking, 2000-2010 is an era of opportunities for rapid growth of China's construction machinery industry, which is in a straight upward pattern; 2011-2019 is a period of industry adjustment and reshuffle, which is a V-shaped trend. I personally predict that the industry will enter an era of volatility from 2020 to 2030, and market demand will be further specialized and segmented, gradually evolving to the characteristics of the European and American markets, and at the same time possessing Chinese characteristics. From the perspective of the global industry structure, China, the United States, the European Union and Japan are the largest and most important markets. The top 20 industries also come from these regions. The Chinese market and the role of Chinese companies have gradually approached the center of the stage. According to the analysis and forecast of the global construction machinery industry market from 2005 to 2024, the Chinese market has become the market with the largest sales of construction machinery in the world; compared to 2004, the global sales revenue of Chinese construction machinery companies in the world’s top 50 accounted for the past 16 years China has increased by nearly 10 times.

Looking to the future, supply chain reorganization with large enterprise groups as the core is imperative. The integration of traditional technology supply chains and the control of new technology supply chains will become the focus of competition. At the same time, technology will become a key factor in the reshuffle of the industry. Intelligence, industrial Internet, big data, new energy, and 5G technology applications will be widely used in the industry and become the core competitiveness of enterprises. Liu Work is among the top four in China's construction machinery industry and is one of the beneficiaries of increased industry concentration. From the perspective of R&D and innovation, we firmly grasp the pulse of industry technology and the future development of the market.

How to understand the sentence "all excellent equipment exists only for the needs of customers"?

Zeng Guangan: For Liugong, what the company has always adhered to is the consistent expression of "adhere to market and customer orientation". We start from research and development, and there is a good tradition of integrating the product manager system into the research and development process. The product managers of each product line timely pass on the market conditions and customer needs to the R&D department, and use the market to guide product development. The other is to adhere to the development of market segments. In the past five years, Liugong has successfully developed more than 20 sub-fields to promote product customization to meet the unique needs of customers, and at the same time stimulate the independent innovation capabilities of the R&D team. Liugong is an international company, so it pays special attention to the research on product adaptability in overseas markets. For the markets of different countries with different customer needs and policy environments, we will conduct research on product adaptability and regulations and policies in advance every time we enter a country, strictly abide by national laws and regulations on product restrictions in product design, and sell to the market in compliance with national laws and regulations. The requested product.

What is Liugong's "moat" in the construction machinery industry? What is the next innovation breakthrough point or direction?

Zeng Guang’an: Liugong has been deeply involved in the construction machinery market for more than 60 years. The company has always adhered to the mission of "committed to providing customers with excellent construction machinery products and services", and has continued to expand product lines, new technology research and development, core component development, Explore and innovate in brand building, international management, and management team building, forming a unique corporate core competitiveness and building a strong "moat".

One is that the company has built a rich product line of construction machinery. Loaders and excavators are "large quantity and wide range" categories. Among them, Liugong is known as the strong and leader of earthmoving machinery;

The second is that the company has always maintained excellent R&D and innovation capabilities. It has the only national engineering technology research center in the field of China's earth-moving machinery, providing support and services for the formulation of national standards for China's earth-moving machinery; it has a "national enterprise technology center", "national industrial design center", "engineering construction intelligent equipment technology country Local Joint Engineering Research Center" and China National Accreditation Service for Conformity Assessment (CNAS) Testing Center;

The third is the company's leading core component product system. It has successively established joint ventures with ZF of Germany and Cummins of the United States to develop and produce transmission system products and diesel engine products with technical and quality advantages, so that the company can always lead its competitors to introduce more advanced technology and higher quality products To ensure differentiated competitiveness;

The fourth is to deepen the expansion of international business. After nearly two decades of overseas development and operations, it has entered a stage of deep internationalization. Liugong's overseas business basically covers most of the countries and regions along the national "One Belt One Road" strategy, which is highly compatible with the country's foreign development strategy;

Fifth, Liugong is a brand image recognized by global industry customers. Through the creation of excellent product and service quality, the introduction of international advanced management technology, and cooperation with world-class parts companies, the company has created a world-class brand with excellent reputation;

Sixth, the company's international management team has rich experience. Liugong is the only "Four Goods" leading enterprise in the industry that has been commended by the Organization Department of the Central Committee and the State-owned Assets Supervision and Administration Commission of the State Council. The company has gathered from core leaders, high-level teams to a large number of professional managers at home and abroad with corporate governance concepts, international vision, global work experience and global operation capabilities.

In the face of the "14th Five-Year Plan" and the longer future, as a leading manufacturer of construction machinery in China, it has the ambition to further become a leading global construction machinery company. For Liugong, we believe that the implementation of the strategy of "full internationalization, comprehensive solutions, and comprehensive intelligence" is the inevitable choice for Liugong to go to the world for the forefront of Chinese construction machinery companies and to be at the forefront of the global industry. In addition, facing the domestic and international markets, Liugong will make more diversified business layouts in a new historical stage. Focus on the development of strategic emerging industries such as mining machinery, agricultural machinery, and aftermarket, and accelerate the application of research and development in new technology fields such as intelligence, new energy, big data and industrial Internet.

Liugong has now gone through more than sixty years and is running fast toward a "century-year-old enterprise." In your opinion, compared with the initial stage of its business, what are the obvious changes in all aspects of the company's current stage?

Zeng Guangan: In 1966, Liu Workers overcame the difficulties of having no skills and no experience and successfully trial-produced the first wheel loader Z435, which opened a new chapter in China’s independent research and development of loader. After that, Liugong has experienced ups and downs, from weak to strong, from technology introduction to independent research and development, from "bringing in" to "going out", and Liugong's body has continued to grow stronger. Now Liugong has overcome the disadvantages of being located in the southwestern border and not outstanding resource conditions, and has become an enterprise with strong research and development, many products and a wide market. However, in the past 63 years, we have been relying on our own profit accumulation to develop, and the slow capital growth has led to insufficient capital strength in the current competition. Today, the global market competition in the construction machinery industry is becoming more and more obvious. To become an international company, more resources and mechanisms are needed to support global investment and operations. In the past, Liugong has always been a pioneer in reform and innovation. Our own practice has proven how dare to innovate and openness and tolerance can promote the reform and development of enterprises. Therefore, we have made efforts to introduce strategic investment in the mixed reform in the past two years. Another main purpose of the mixed reform is to deepen the reform of the mechanism and system, enhance the development vitality of enterprises, and improve market competitiveness.

Looking forward to the change after the mixed reform, the most fundamental thing is that Liugong's main company will change from one shareholder's governance to a diversified shareholder governance. The system and mechanism will undergo tremendous reforms and changes. Therefore, one of the internal challenges brought about by the company is diversification. Whether the shareholders can form a joint cooperation challenge: On the one hand, the diversified shareholder structure brings multi-faceted resources and support to the company; Put forward higher requirements. Under such a structure, the company's management and all employees must form a consensus with shareholders, the strategic objectives must be clear, the reform and development awareness must be enhanced, and the management capabilities must be further improved. The second challenge is whether personnel at all levels can accept the conflict of interest brought about by the reform: the company will implement a number of internal mechanism reforms, which will bring pains and conflicts of interest in the conversion process of the new and old mechanisms to the key managers and employees at all levels. It is necessary to fully mobilize employees to actively participate in the reform, reposition themselves in the new system and mechanism, and work with the company to unswervingly advance the reform and achieve the goal.

What do you think is the key technology that restricts the further development of the construction machinery industry? How long do you expect to break this situation?

Zeng Guangan: The key factors that determine the industrial status and influence of the construction machinery industry are technology, supply chain, and comprehensive competitiveness including marketing and aftermarket. The maturity of traditional technologies and new technologies are the key motives for the reshuffle of the industry and become the core competitiveness of enterprises. At present, new technologies such as intelligence, industrial Internet, big data and new energy are widely used in the industry. In the next ten years or even less, China’s construction machinery industry must accelerate the application and development of new technologies such as intelligence, industrial Internet, big data and new energy, and further improve the value chain of traditional technologies (mechanical, hydraulic, electronic, etc.) Competitiveness, forming our technological competitiveness to catch up with and surpass the world's first-class industry companies. In the next ten, twenty years, or even longer, China's construction machinery industry will not lack space and hope for development. What we need are tenacious beliefs, long-term strategies and rational actions.

How did the "899" spirit formed by Liugong's hard work be effectively inherited and carried forward with the double-hundred action implemented by the State Reform Office and the three-year reform of state-owned enterprises?

Zeng Guangan: The story related to the spirit of "899" took place in 2002. At that time, the proactive fiscal policy implemented by the state was constantly waking up the dormant infrastructure market. Although the competition in the industry is still severe, Liugong's senior leaders through a large number of surveys and visits, foreseeing that the market is about to usher in a blowout, and the annual demand for Liugong's loaders may reach 6,000 units. This is a once-in-a-lifetime opportunity. If production capacity cannot be adjusted in time, let alone missed growth, even the number one position in the loader market will not be guaranteed. Therefore, another important change in Liugong’s history

It's the beginning-to achieve an increase from 400 units to 900 units per month in April 2002-in order to take care of everyone's "emotions", the final goal is set at 899 units. Behind the simple digital upgrade are the large-scale mobilization and transformation of the manufacturing system, the close coordination and collaboration of the supply chain system, and the "campaign-style" support of the company's operation and management system, and even the full mobilization of the corporate propaganda system. On April 29, 2002, Liugong successfully rolled off the 899th loader ahead of schedule. This is the famous "decisive battle 899" in Liugong's history, which formed Liugong's "899" spirit.

The spirit of "899" embodies Liugong's speed-up process, and more importantly, the acceleration of the ideological and behavioral consciousness of leaders and all employees. "There will be a mortal heart, no greed for life." The spirit of "899" tells us that if the company as a whole does not have a persistent belief or a fearless spirit of charge, then no development can be talked about.

In terms of inheriting the spirit of "899", reform means facing difficulties and being brave to innovate. Liu Work is a double-hundred enterprise. In the process of implementing the three-year action plan for the reform of state-owned enterprises, he kept in mind that General Secretary Xi Jinping emphasized at the meeting of the central leadership group for comprehensive deepening of reforms: Start well and end well, do well, keep the right direction, dare to take responsibility, do it personally, and do real work." We coordinate the various reform tasks in the three-year reform action plan, focus on the pain points of reform, and focus on problem solving and implementation. The Liugong Group’s three-year action plan for the reform of state-owned enterprises has formulated 33 tasks and 103 specific reform measures. There are not only key tasks to implement mixed ownership reform as a breakthrough, but also inevitable options for improving corporate governance and improving market-oriented operating mechanisms. There is also a reform action to comprehensively solve the "last mile" of historical problems. Through guidelines such as "solving difficulties, making up for shortcomings, promoting implementation, and seeking practical results", the current completion rate of reform measures is close to 70%. Our goal is to strive hard. In the first half of 2022, the comprehensive tasks in the three-year reform action plan of Liugong Group will be completed ahead of schedule. There will be several key reforms in the next battles, including the contractualization of the tenure system of managers, the improvement of the incentive system, and the completion of the subsidiary scientific reform actions. Implementing the spirit of "899", I believe that any reform task "is not impossible, only unexpected."

In the future, how will the company use reforms to implement what General Secretary Jin Ping mentioned in Liugong's "making the manufacturing industry more solid, better, and stronger"?

Zeng Guang’an: On April 26 this year, General Secretary Xi Jinping mentioned in Liugong’s inspection: “The high-quality development of the manufacturing industry is the top priority of the high-quality development of China’s economy. Without manufacturing, we must continue to work hard to promote industrial optimization and upgrading." Liugong earnestly studied and understood this requirement and quickly implemented the implementation plan.

In terms of overall thinking, we will firmly implement the strategy of “full internationalization, comprehensive solutions, and comprehensive intelligence”, empower high-quality development with reform and innovation, and strive to enhance the ability to integrate internal and external resources.

In terms of target setting, it is necessary to build one of the best product lines, achieve profitable high growth, and go all out to achieve the strategic goals of 50 billion yuan in operating income in 2025 and the construction machinery business to enter the top ten in the world.

In terms of implementation methods, first, continue to promote various tasks after the mixed ownership reform, comprehensively promote 12 reforms including R&D system, manufacturing system, supply chain system, domestic marketing, international business, salary and incentives, and corporate governance, and stimulate vitality through reforms ; The second is to actively integrate into the new development pattern of "dual cycles", make good use of the international and domestic markets, strengthen the global market position and profitability of construction machinery, promote global resource integration and business synergy, and in-depth implementation of international strategies, so as to create a comprehensive We will open up and develop at a high level, and jointly build and share the achievements of Liugong's internationalization of reform and innovation at a high level.

Become a member of Guoxin, "build a cooperation platform, multi-party empowerment and assistance"

Can you tell the story of the bond between Guoxin Fund and Liugong?

Zeng Guangan: In 2018, Liugong Group was selected as a state-owned enterprise reform leading group of the State Council "Double Hundred Action for State-owned Enterprise Reform" enterprise, and began to enter Guoxin's vision. At the beginning of 2019, Liugong Group clarified major reform measures to introduce high-quality strategic investors to implement mixed ownership reform as a breakthrough point, and began to formulate a mixed-ownership reform implementation plan. The National Reform Double Hundred Fund, as the first investor to actively engage with Liugong to invest in shares, also opened up the reform ideas and vision of the Liugong mixed reform team. In May and September 2020, I took the mixed reform team and met with the senior leaders of the Double Hundred Fund and the project team twice in Beijing to negotiate. From "just see what happened" to "knowing each other", it can be said that both sides highly agree with each other. . In the following due diligence, delisting, and shareholding process, Double Hundred Fund also showed a full understanding and overall view, so that in December 2020, it signed a contract with Liugong with six other investors. In my speech at the signing ceremony, I mentioned that the Double Hundred Fund is the "Dinghai Shenzhen" of the Liugong Group's successful mixed reform. It is not an exaggeration.

In addition to funds, what other aspects of Guoxin Fund's help to Liugong Group impressed you?

Zeng Guang’an: What impressed me the most was actually Guoxin Fund’s understanding of real companies. We also contacted many investment companies. However, because of the different industry sectors, it is sometimes difficult to reach a consensus on equipment, because equipment is a long-term persistence. Industries that see results.

Many funds are unwilling to invest in the equipment industry, but in the process of communicating with the Guoxin Fund, it was discovered that the Guoxin Fund not only understands the real economy, but also understands the characteristics of equipment and the industry. So from this point, we and Guoxin’s communication is almost barrier-free. We communicate with Guoxin in terms of development planning and strategic planning very smoothly. This has left a special deep impression on me.

Message to young people, "Pursue excellence and make continuous breakthroughs"

Please say a message to today's young people.

Zeng Guangan: I want to use the insights and summaries of the seven experiences in the life of Peter Drucker, the "Father of Modern Management", to enlighten young people-how can a person, especially a person who uses knowledge, make continuous breakthroughs ?

Drucker’s answer is to do some fairly simple things: first, establish one’s own goals or ideals; second, not be reconciled to mediocrity, abide by one’s own standards at work, and pursue perfection; third, take continuous learning as one This kind of living habit is to build a personal knowledge system; fourth, to develop a work habit of regular review and planning; fifth, the job, position or position has changed, and the requirements of the new job, new position or new position must be clearly thought out and done well. ; Sixth, insist on performance evaluation. Discover your strengths, what needs to be improved, changed and learned, and what you are not good at. You should let others do it. Seventh, only things that have changed other people’s lives are memorable, and you must make yourself more influential. .