ZD's fully-electric two-seaters roll off the production line in the Lanzhou plant in Gansu province, Jan 11, 2015.
Geely Automobile Holding has opted to sell its interests in micro-sized electric carmaker Zhidou, to enable the company to operate as an independent entity as a prerequisite to get listed in the nation's new energy vehicle catalog.
The Hongkong-listed Geely Automobile said in the news release on Friday that getting its products listed under the brand ZD is imperative for Zhidou's future, and will allow it to compete independently in the market. Under current regulations and conditions, the product can only be referred to as Geely ZD.
Geely Automobile announced a framework agreement on June 22 to sell part or all of its 45 percent interests held by two subsidiaries, Zhejiang Jirun Automobile Co and Shanghai Maple Guorun Automobile Co, in Ninghai Zhidou Electric Vehicles Co to a China-listed company. Detailed terms of the agreement have yet to be determined.
Jia Xinguang, senior analyst with the China Automobile Dealers Association, said: "The move could be a strategic adjustment made when Geely found the mini-sized electric car project might not be in line with its long-term plan. Another possibility is that Zhidou is growing stronger and seeking independence."
Zhejiang Geely Holding Group Co planned for new-energy vehicles to make up 90 percent of its sales by 2020, and about two-thirds of Geely's new-energy vehicle sales will come from plug-in hybrids and gasoline-electric hybrids by the end of the decade, with the rest coming from battery-electric vehicles.
Geely Automobile joined with Taizhou Xindayang Group Co to establish Xindayang Electric Vehicle Technology Co in January 2015 to manufacture ZD-branded electric cars in Lanzhou, capital of Gansu province in northwestern China.
Local media reports cited industrial data which indicated that the ZD brand failed to close a single deal in the first four months of this year, after registering 25,300-unit sales in 2015.
The ZD brand was expected to achieve an annual sales volume of at least 500,000 by 2020, 20 times that of ZD's 2015 sales, according to Hu Hesong, a partner in the venture capital fund GSR Ventures, one of the investors in Xindayang EV.
There are now two mini-sized two-seater models being offered by the ZD brand, the D1 and D2, with prices ranging from around 30,000 to 50,000 yuan ($4,600 -$7,700) taking national and local subsidies into consideration. The ZD car models are eligible for an NEV plate in cities where gasoline car sales and usage are restricted.
ZD brand's annual production capacity totaled 300,000 units, a figure that also accounts for the integration of Xindayang Electric Vehicle Technology Co and the earlier establishing of Shandong Xindayang, according to the company.
Xindayang EV took over Geely Automobile's Lanzhou plant after a 300 million yuan-plus upgrade in 2014, with the aim of obtaining a permit to manufacture passenger vehicles.
Fuyao Group boss says firm has long aimed at smart production
Industry 4.0 can only be successful when an enterprise has a solid manufacturing capacity, said Cao Dewang, chairman of Fuyao Group, the largest automotive glass supplier in China.
"Industry 4.0 is quite a popular concept at the moment. But my concern is that manufacturers may face the risk of failure if they don't have a strong manufacturing capacity. China's manufacturing industry is still not very advanced," said Cao.
The vision of Industry 4.0 is for "cyber-physical production systems" in which smart embedded devices work together wirelessly directly or through the internet of things. It is seen as the Fourth Industrial Revolution following the first three driven by steam engine, electricity and the personal computer.
Fuyao has adopted a slogan of "Make Industry 4.0 Take Root in Fuyao". The reason that Fuyao is ready for Industry 4.0 is because it has more than 20 years of developing strong manufacturing competence under a vision on intelligent production, according to Cao.
"I first came to the realization that intelligence is the future when one of my engineers reminded me that software would one day be more valuable than human power in 1988 when I first bought equipment from overseas," said Cao. "I have been aiming at a smart production process ever since."
Founded in Fuzhou in the eastern part of China in 1987, Fuyao Group (Fuyao Glass Industry Group Co Ltd) now has a 65 percent share of the domestic market. The company has manufacturing bases in nine countries, including the United States, Russia, and Germany.
Cao was named as manufacturing pioneer in China by Forbes magazine in 2015. It was the first on the 14-member list, followed by Dong Mingzhu, chairwoman of Gree Electric Appliances Inc, Liang Wengen, chairman of Sany Group, and Zhang Ruimin, chairman of Haier Group.
Fuyao's information technology and automation system have taken the lead among its counterparts in the world, according to Forbes.
It has formulated a sophisticated data system in purchasing, logistics, services and other value-added production links.
Fuyao's average use of robots is more than 200 robots per 10,000 workers. The level is 300 in Japan and 100 in the U.S. in automotive glass manufacturers, according to Cao.
"The key to success for Industry 4.0 is to design a system that suits the enterprise' production process. If you don't know the details in production like the back of your hand, how can you design the system that works the best?" said Cao.
Other factors for the success of Industry 4.0 include large production capacity, good management, the employees' quality, and high demand for the product. The demand for high value added automotive glass that is more environment-friendly, energy saving, intelligent and integrated is rising fast.
Fuyao is moving up along the value chain by developing intelligent glass of sound proof rate of 90 percent, heat insulating, low energy consumption and auto light adjustment.
It is also developing a windshield that can function as a dash board.
Fuyao realized revenue of 13.6 billion yuan ($2.1 billion) in 2015, a 5 percent increase from the same period in 2014. Its net profit stood at 2.6 billion yuan in 2015, up 17 percent from the end of 2014.
Shanghai Zhenhua Heavy Industries Co Ltd's booth at the China International Offshore Oil and Gas Exhibition in Shanghai.
ZPMC sees high-tech port terminals as the key to its long-term growth prospects
In less than 24 years, Shanghai Zhenhua Heavy Industry Co Ltd has developed into the world's largest port machinery manufacturer. Its plan for the next decade is to make automated container terminals a new growth engine of the company.
"ZPMC is now trying to focus a great amount of resources on automatic terminals, and we expect this sector to bolster our development in the coming decade," said Song Hailiang, chairman of ZPMC and vice-president of China Communications Construction Co Ltd.
According to Song, the future of terminals lies in unmanned technology. Through remote control, intelligent container terminals will have better performance and lower operational costs than traditional ones.
"ZPMC won't miss this great revolution. The development of automated terminals will be able to combine ZPMC's existing core business of steel cranes and related services with more diversified development," he said.
The Shanghai-listed company has already made its mark in the automated terminal sector as it is currently constructing the automated terminal project of Qingdao Port and the fourth phase of the Yangshan Deep-water Port in Shanghai.
In addition, the nation's first automated container terminal built by ZPMC at Xiamen Ocean Gate Container Terminal is under trial operation.
Furthermore, the company also received orders for automated terminals from Rotterdam World Gateway in the Netherlands and the Italian port of Vado Ligure, while 36 sets of port equipment went into service at the automated Long Beach Container Terminal in California in the United States in April.
"All the lifting equipment of the $1.2 billion investment LBCT automated port, including 14 quay cranes (shore bridges), 70 automated rail cranes, and five automated railway crane, will be delivered by ZPMC around 2019," said Song.
The firm's first order from Hamburg terminal CTA in 2000 for four cranes is regarded by Song as a landmark of the company.
All the achievements were made through persistent research and development. For more than two decades, ZPMC has kept allotting more than 3 percent of its revenue to its R&D department which now has expanded to more than 2,000.
ZPMC's reputation hit a peak during Premier Li Keqiang's trip to the China (Shanghai) Pilot Free Trade Zone in November 2015. The premier encouraged the group to realize breakthroughs and marketing promotion in automated port technology and grasp the opportunity of the national plan "Made in China 2025" issued to upgrade the country's industry.
In 1992, ZPMC was founded in Shanghai as a heavy-duty equipment manufacturer.
China's manufacturing activity rebounded to the highest level since last August in March, thanks to the government's continued structural reforms, official data showed on Friday.
The purchasing managers' index (PMI) came in at 50.2 in March, up from February's 49, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.
A reading above 50 indicates expansion, while a reading below 50 reflects contraction.
NBS statistician Zhao Qinghe attributed the rebound to the government's pro-growth measures, as well as the rising demand of manufacturing imports and exports.
The price rebound of major international commodities spurred purchases. Technology upgrades also contributed to improvement of manufacturing sectors, said Zhao.
The sub-index measuring production stood at 52.3, up 2.1 points from a month earlier, with that for new orders settling at 51.4, up 2.8 points.
The sub-index for imports came in at 50.1, up 4.3 points from February, the highest reading since December, 2013.
An iron and steel company in Lianyungang, Jiangsu province. E-commerce is expected to help steel firms avoid overcapacity and address low profitability concerns.
The China Steel and Iron Association and several industry partners joined hands to set up the Steel E-commerce Research Center on Monday, with an eye on upgrading and transforming the industry reeling from low profits.
The research center, initiated by the China Metallurgical Industry Planning and Research Institute, will conduct preliminary research for steel companies taking the e-commerce route and also provide suggestions to policymakers to help the industry develop in a healthy and regulated manner.
Li Xinchuang, head of the institute, said existing problems for the industry include vicious competition, inaccurate trading data and improper disclosure of customer information, all of which need to be solved and regulated urgently.
According to industry data, there are 178 steel e-commerce trading platforms at present in China, accounting for about 27.6 percent of the domestic online commodity trading platforms.
Last year, steel e-commerce platforms reported total trading volume of more than 60 million metric tons and transaction value of over 200 billion yuan ($32.34 billion), accounting for about 10 percent of the total steel traded in the country.
Wang Changhui, co-founder of Zhaogang.com, one of the leading steel e-commerce platforms in China, said his platform has about 40,000 monthly active users and they have created a huge database that can be used by other steel companies.
"The logistics cost of steel trading in China is much higher than in other countries," he said. "The platform will effectively cut logistics cost for steel traders by reducing intermediate links."
According to Wang, the platform had an average trading volume of about 3 million tons of steel every month. "We will provide reliable storage, processing, logistics and financing services for small steel traders, which will help them survive in the sluggish market," he said.
Nie Linhai, deputy director-general of the department of electronic commerce and information at the Ministry of Commerce, said China's e-commerce sector had embraced rapid growth in the past few years and it is time to consolidate the gains.
"E-commerce transactions have seen a 40 percent year-on-year growth from last year during the first quarter of this year. However, medium and small-scale steel companies still should do proper due diligence before they take the e-commerce route to avoid risks because innovation is easy to talk about but difficult to achieve," Nie said.
Gan Yong, vice-president of the Chinese Academy of Engineering, said taking the e-commerce route will help steel firms avoid the overcapacity situation and address low profitability concerns.
Closures, overseas investments illustrate plight facing local factories
Now is not a good time to be a Chinese factory owner. According to recent media reports, a growing number of local manufacturers are opening plants in the US as they seek to avoid the badge that comes with selling "Made in China" products.
Meanwhile, many other local factories are struggling with labor shortages, rising costs, overcapacity problems and thinning demand. In response to such pressures, low-end manufacturers are increasingly investing in Southeast Asia, where production costs are more competitive.
Both of these trends signal the need for change in China's manufacturing sector. Over recent decades, Chinese factories have become synonymous with low-quality, low-value-added products. Local manufacturers need to shake off this image by moving up the production chain. And with China's GDP slowdown weighing on the country's industrial sector, the need to advance is more pressing than ever.
According to reports, several of China's largest and historically most successful manufacturing enterprises have not been immune to the challenges brought by changing times. Silitech Technology Co, a major supplier for Nokia, has suspended production since November. At its peak, the Suzhou-based company had more than 10,000 employees, but has reportedly struggled since Nokia sold off its handset division to Microsoft last year.
In December, United Win Technology Co, also in Suzhou, Jiangsu Province, announced its closure due to a financial crisis. It had previously been a major supplier for Apple Inc and had also cooperated with Chinese smartphone brand Xiaomi. The company's closure is said to have left more than 2,000 workers unemployed.
Similar shutdowns are also said to be plaguing many of China's traditional manufacturing hubs - including Dongguan, Guangdong Province, and Wenzhou, Zhejiang Province.
Of course, not all of the worries facing factory bosses are bad. Improvements in Chinese labor laws have made workers more willing to fight for better pay and conditions. For instance, upwards of 2,000 workers at Yue Yuen, a shoe factory in Dongguan, reportedly protested recently in front of the company's gate for greater social security benefits. Yue Yuen is an assembler and producer for a host of big-name global brands, including Reebok, New Balance, Puma and Timberland.
But while China's manufacturing sector has been expanding at a rapid clip for decades, most local factories remain at the bottom of the technological food chain, where they subsist on rock-bottom unit pricing and outdated technologies. Without upgrades and reforms, producers will become even more marginalized. Those who cannot adapt will be weeded out by the market.
Chinese planners have suggested that the country's path toward a "new normal" pattern of development will necessitate greater innovation in the manufacturing sector. In a report issued Tuesday, research firm IDC described the agonies facing Chinese factory owners, while also putting forward predictions for the year ahead. During 2015, analysts at IDC foresee - among other things - the rise of intelligent factories, cloud computing and industrial robots (the latter of which could soon put many low-skilled Chinese workers out of jobs).
Chinese manufacturers will have to pursue these and other technological innovations if they want to stay in business. Fortunately, China is rapidly emerging as a research powerhouse. In 2012, the country overtook the European Union in terms of research spending as a percentage of GDP, according to a report issued in 2014 by the Organization for Economic Co-operation and Development.
The need to transform through innovation and research is particularly great among manufacturers focused on the highly competitive consumer market. If given the choice, many Chinese will purchase Japanese or South Korean-made goods. Such products typically carry high-price tags but are widely seen as being of higher quality than Chinese-made equivalents.
Chinese manufacturers need to focus especially on technologies that will help them become more specialized. They must also build brand value through higher-grade products. Ultimately, companies will have to choose development models that conform to their own conditions. Finding the right path forward won't be easy, but sitting still in changing times is a surefire way to fail.
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