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Breaking Away from Involution and Building New Productive Forces: Discussing CIMC Vehicles' Breakthrough Approach

2024.07.18

In the past two months, reporters from Special Purpose Vehicle magazine visiting major semi-trailer manufacturing hubs in Liangshan, Mengyin, and Zhumadian have observed that the specialty vehicle market is divided to two factions: on one side, small and medium-sized specialty vehicle enterprises are "surviving with amputated arms", and on the other side, leading enterprises are "maneuvering freely", ruthlessly reshuffling the industry.

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Strategic Adjustments Behind the Proactive Approach?

The most notable feature of the current specialty vehicle industry is involution. Li Guiping believes that the root cause of the current industry involution lies in the massive production capacity of inefficient semi-trailers formed during the previous highgrowth stage. On the one hand, China's semi-trailer production volume has increased tenfold in the past 20 more years. In terms of production volume, it was not only ranked first in the world, but also equivalent to the total production of North America and Europe, resulting in severe overcapacity. On the other hand, the actual inventory of semi-trailers that met the new standards was far below expectations, and the elimination of overloaded and overweight semi-trailers was a daunting task.

To this end, CIMC Vehicles, leveraging its forwardlooking strategic vision, launched its "third venture" in 2023, with the "Star-chained Manufacturing Network" as a symbol, focusing on the structural reform of semi-trailer production organizations. The essence is to improve the intercontinental operation process and significantly improve the efficiency, thus better promoting the high-quality development of semitrailer intercontinental operations.

In Li Guiping's view, China's economic development has entered a new normal, and the semi-trailer industry is also beginning to construct a new development pattern, focusing efforts on technology, organizational structure, and the allocation of production factors to innovate the design and production technology of semi-trailers, promote the structural reform of the production organizations of leading semi-trailer enterprises, and reallocate the surplus production capacity resources within the industry through internal and external circulation.

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"Our Company (CIMC Vehicles) of over 10,000 people is like sailing on a vast sea full of unknowns and crises," but Li Guiping firmly believes that only in this way can CIMC Vehicles fundamentally break free from the industry's involution and lead China's semi-trailer industry into a new development pattern.

The Path to Breaking Through and Building New Quality Productive Forces

As an industry leader, CIMC Vehicles did not choose the easier option of a price war to squeeze the survival space of its competitors. Instead, it looked inward, optimized its internal organizational structure and reorganized external resources, built an agile operational system, and "recreated CIMC Vehicles" through its third venture.

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Based on the roadmap for CIMC Vehicles' third venture as revealed in its previous annual report, the first stage was the "Star-chained Manufacturing Network", which comprehensively promotes the implementation of the star-chained based high-end manufacturing system, achieving a leap in semitrailer business in the domestic and "Belt and Road" markets, and realizing high growth in revenue and production efficiency. The second stage was the trial phase of new energy tractors and trailers, with the Champion Tanker Business Group entering a high-quality development stage, and the integrated new energy tractors and trailers forming an incremental business. The third stage was when the external circulation business entered a highquality development phase, and the new energy tractors and trailers entered the external circulation, leading to a leap in external circulation business.

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The steadily advancing "Star-chained Manufacturing Network" has enabled CIMC Vehicles to construct a brand-new organizational production model. By integrating the resources of 7 semi-trailer factories, it has streamlined the procurement, production, circulation, distribution, and consumption links, leading to a leap in market share, sales, and profits. This has positioned CIMC Vehicles a benchmark for supply-side reform, a model of high-quality development, and an example of a dual-wheel drive approach.

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While innovating the production technology and organizational structure of semi-trailer vehicles, faced with the complex and severe international environment, as well as the "going global" trend of Chinese enterprises, CIMC Vehicles is also fully utilizing its global "Light Tower Manufacturing Network" to re-optimize the coordinated tactical capability and cost control capability between the domestic and overseas markets. Building on the "second venture" of intercontinental operations, CIMC Vehicles has persisted with the " Intercontinental Operation, Local Manufacturing " strategy. Taking the global supply chain system and the global semi-trailer core component production organization as the two core focuses, it has created a highly efficient and coordinated new organizational model for overseas and domestic markets, serving semi-trailer manufacturing both domestically and internationally, and achieving a higher level of production efficiency.

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