Understanding the Major Tasks of Automobile Industrial Development
-------- An interview with ShaozhuLi, the Vice President of China’s Dongfeng Motor Corporation
How to resolve the paradox of automobile industrial development and environmental preservation? What will be the developmental tendency for the automobile industry in the future? What are the challenges facing China’s automobile industry? How does Dongfeng Motor Corporation, one of the largest automobile groups in China,handle these challenges?
If anyone knows the answers to these questions, it would be our interviewee:
Li Shaozhu: Currently he has been working as the member of the standing party committee, vice president of China’s Dongfeng Motor Corporation and the president of Dongfeng Passenger Vehicle Company. He received his bachelor of engineering from Tsinghua University, MBA from Zhongnan University of Economics and Law as well as researcher-level senior engineer. Dongfeng Motor Corporation, First Automobile Works and Shanghai Automotive industry corporation (Group) are considered as the three automobile enterprise groups of the strongest comprehensive strengths in China.
Globalization, Autonomation and Informatization
1. Joy Communications(Joyc.Biz): How to thoroughly understand the three strategies of Dongfeng, namely, “Sustainable Development, Open and Autonomy , and World-orientation”?
Li Shaozhu: Dongfeng has been developing itself with the characteristics of autonomy, internationalization as well as sustainability in the opening to the outside world, which are indispensable. With the objective of sustainable development, autonomy is the prerequisite for globalization so as to become stronger and world oriented.
We insist on holding to and employing three strategies: globalization; autonomy; and informatization. Globalization means that Dongfeng seeks its own orientation from the perspective of the globe. The Chinese market is quite good, but how to achieve globalization? What aspects of global positioning need to be explored? We need:
Ⅰ. To recognize trends in the global automobile industry;
Ⅱ. Be global-oriented and expand the market;
Ⅲ.Allocate resources around the globe. Understand our counterparts by mastering, absorbing and understanding the foreign market, technology, management, and culture etc.; and
Ⅳ. An understanding of ourselves, by recognizing our own position in history.
Autonomation refers to the autonomous innovation of Dongfeng. Since over 30 years’ reform and openness, China has gradually moved towards to marketization and internationalization. From the perspective of the four factors of industry, i.e., market, resource, technology and capital etc., China has a huge market with 1.3 billion in population and abundant resources. The cost of human labor is low due to the great number of rural migrant workers in cities. Although there are a lot of natural resources, environmental resources and ecological resources, the price is underestimated. Along with market internationalization, the Chinese market and resources plus foreign technology and capital creates MADE IN CHINA. This forms a pattern of foreign technology, Chinese resources, Made in China goods, and worldwide consumption.
Among the four industrial factors at the current stage, the Chinese market is still quite large, the value of Chinese resources is increasing and the capital is available as well. The technology, however, still needs to be improved.
China is a large automobile-manufacturing country with a production and sales volume of 18 million vehicles nationwide in 2010, ranking it first in the world. However, the fact is that China resources have been used for China manufacturing and consumption, but with few automobiles for exportation. Therefore, autonomation is indispensible.
Scientific and Technological Innovation, Technological Autonomation and
Occupying the Hi-end Industry Chain .
2．Joy Communications(Joyc.Biz): Where are Dongfeng’s consumer markets? What kind of challenges does Dongfeng face now?
Li Shaozhu: Dongfeng sold 2.66 million vehicles in 2010 with sales revenue more than $330 to $340 billion, including passenger cars and commercial vehicles. It exported over 30,000 vehicles valued more than $600 million to South America, Africa, Southeast Asia, Russia of Eastern Europe, the Middle East and so on.
Dongfeng sells 25% commercial vehicles and 75% passenger cars, accounting for 14.89% of the national auto market. The problem that confronts Dongfeng and the national automobile industry now is how to solve the problem of scientific and technological innovation, technological autonomation and occupying the high-end of the entire industry chain.
3. Joycommunications.Biz: In your opinion, what path should the China automobile industry take in the future?
Li Shaozhu: Still adhere to three strategies. Globalization: Let China's automobile products go out. Like other countries, China also has developed and less developed areas, so in other countries around the world there are also consumption spaces. Putting Chinese automobiles on the global stage, we may find that our technology is expecting further improvement, our market and resource require globalization, and our technology needs autonomation.
The biggest issue in the present and future development of China's automobile industry is how to solve the problem of scientific and technological innovation, technology independence in the process of autonomation. Contemporary development requires improving management and efficiency, including the integrated management of information flow, value flow, logistics in the whole industry chain (business systems), and to achieve a quick response to the market.
Strategically, we need to consider what kind of business should be developed to deal with the market? What are business strategies? What products should be produced and what brands should be created? At the same time, support the strategic planning through science and technology development.
From the perspective of operation, we should efficiently manage the supplying chain, manufacturing system and marketing network. When it comes to management, we should take finance, human resources, system, mechanism,proceeding, and corporate culture, etc., into consideration. In terms of the relationship between human beings and society, we should establish positive social value, moral value, and healthy value trends.
A corporation is supposed to be an entity that pools resources (integration) and gives out energy (researching and developing commodities and services). We need to deal with all issues presented in the industrial chain mentioned above through highly effective strategy, operation and management, and thus communication of our commodity and services to our customers.
The view, proposed by Communique of the 5th Plenum of the 17th Central Committee of the Communist Party of China, should be echoed: dealing with the issue of China’s development mainly relies on technology and talents, that is, the conception of innovative development, instead of propping up economic development just by destroying the ecological environment, we need to depend on the innovation of the technology system and business mode; importance should be attached to livelihood issues, highlighting the environment upgrading and energy-saving.
If China decides to lead the trend, she must handle the issues regarding technological innovation and autonomation. And this means another technological and economical social revolution.
IT + ET + LCT = AT
4．Joy Communications(Joyc.Biz): What will be the global automobile industry development trend in the future? How will we deal with the contradiction between the automobile industry production and ecology?
Li Shaozhu: The traditional automobile industry focused on standards, technologies and products. Technologies basically included four: steps-stamping; welding; coating (painting); and assembly.
Modern and future automobile industry: AT (Automobile Technology) = IT (Intelligent and Information Technology) + ET （Energy Technology）+ LCT ( Low Cost Technology)
IT: automobile intellectualization means the overall intelligent of vehicle interface and vehicle body, which include chips, logic software, sensors and key technologies. Informatization refers to the communication among people, vehicle, family and society. Products will reflect informatizationand intellectualization.
ET: energy saving and environmental protection, which means full use of bio-energy, photovoltaic energy, solar, nuclear and wind energy. To develop electric vehicles, battery energy storage technology should be solved. It is the core point, and also the key technology.
LCT: saving resources and reducing technological costs.
The overview of future automobile development trend and the solution for production and ecology problems are:
------- China cannot follow in America’s footsteps. She is supposed to develop rail and airline transportation as much as possible. The rail transportation consists of three facets: one is metro which eases the congestion of the main areas in the city; another is light rail train which eases the congestion between city and village; last one is bullet train which eases the congestion between cities. As long as the network of rail transportation is improved to perfection, there will be no need for such large numbers of private cars.
-------- It should be examined from the point of the needs of car’s economical development rather than the industry itself. Instead of getting rid of the issues related to industry, we should handle the ones in regards to social and economical development.
------Solving problems should focus on traffic itself, and cities should make room. For instance, we need to solve problems occurring at the distance of driving small electro-car to the subway station; or driving small electro-car to stops, then driving big automobiles to the high-speed way.
The ratio of urbanization in china will get over 60% in 2020, and obviously, rural and undeveloped areas across the globe still need the automobile industry to develop their economy. It is not, however, a simple reiteration, but a spiral advancement.
Expanding Overseas Markets in Next 5 Years
5．Joy Communications(Joyc.Biz): How does Dongfeng attract high-end talent？What plans for the next 5 years have been made？
Li Shaozhu: Dongfeng has introduced 6 talents from the “Thousand Talents Program “of China. The returning of talents is not a problem, and what is more important for us is to use and settle them appropriately. Since the Reform and opening up started 30 years ago, there have been more than 1,200,000 people who went abroad for future study, and among of them, over 20,0000, were authorized associate professors, but have not returned china after achieved their academic successes.There will be 40,000 leading high-end talents in need when the China well-off society comes in 2020.
Besides, we also attach importance to internal cultivation of talent. However, at the moment, everyone prefers to boost themselves in the officialdom and business rather than in the science and technology field. No changes have happened on the social structure yet，but it is necessary to make changes.
In the next 5 years, we will go abroad to build plants. We have launched a marketing program called “Dongfeng Fengshen, A Quality Travel”, the core theme is that automobiles made in China run across the world and conquer all five continents in the future.