Tang Xiuguo: China's equipment manufacturing industry should have a long-term vision in the development of globalization

On November 20-22, 2015, the 2nd China Enterprise Globalization Forum was held in Sanya, Hainan.The theme of the forum is "Globalization of Chinese Enterprises: New History, New Stage".

Tang Xiuguo, President of Sany GroupAttended and participated in the panel discussion "Plenary Session 1 China as a Global Investor: New Trends for Acceleration and Strengthening".From the perspective of enterprises, the experience and lessons of the equipment industry in the process of globalization were shared.

Tang Xiuguo said that the construction machinery, engineering equipment or larger equipment industry may not become the most profitable company, nor will it have a market value of 5661, but it is the "backbone" of the industry. Now the price of Sany's overseas sales is higher than in China, and Sany's export scale and overseas manufacturing and sales have achieved very good results. But we are increasingly realizing that true globalization is localization. The renminbi has fallen 2.6 percent against the dollar this year, but the South African rand has fallen more than 20 percent against the dollar, and the Brazilian dollar has fallen more than 40 percent against the dollar. If asset capital manufacturing cannot be localized, there is no way out of doing business, which means that the more business you have, the greater the loss.

Therefore, if the equipment manufacturing industry wants to be globalized, it is necessary to have a long-term vision and a feeling. Sany participated in the rescue of the Chilean mining disaster and the Fukushima incident in Japan, and in such a large global rescue activity, the drilling rigs of the United States and China were usedcrane, South Korean equipment. It shows that Sany equipment manufacturing has reached high performance, which reflects China's manufacturing status.

China's development model has gradually been recognized by many countries, which has brought great help to Sany to find development opportunities along the Belt and Road. Trinity U.S. wind power investment, lawsuits even to the U.S. government's President Ma, have reached a full settlement. In this process, there are lessons and experiences, and in this process, Sany has learned how to respect the laws and regulations of the local country and region.

The following is a transcript of Tang Xiuguo's speech:

Tang Xiuguo: Thank you, Minister Long. First of all, the topic you asked me is relatively high, because as an enterprise, we are standing in the micro perspective, we emphasize that the most is to determine the advantage of products, the service of the more than the first, the use of the model, of course, in the process of globalization, we do have some experience, first of all, thank you, thank you President Wang, you all go to Sany to guide the work, today Sany has achieved certain results, all of which are related to your guidance.

As you just said, engineering equipment, we have a sentence called the machine that we provide work for the world, construction machinery, engineering equipment or a larger equipment industry It is changing the world, it may not become a profitable company, it will not have a market value of 5661, I have seen, when Amazon was listed, the market value of a few days exceeded the market value of GE for decades, you can't say that GE has no status as a company.

But equipment is indeed the backbone of industry, so today any country, including developed countries, developing countries, if we Sany want to invest, they are very happy, but not all kinds of countries are worthy of our investment, today Sany can provide 40,000 machines to the world a year, about 10,000 units sold overseas in China, a quarter of which are sold overseas, and sales account for one-third, which means that the price of overseas sales is higher than that of China. Among them, 5,000 units of equipment are manufactured overseas, so in recent years, we have an export scale of about 10 billion yuan through trade, through investment in the United States, Germany, India, Brazil and the acquisition of Putzmeister in Germany, as well as a company, mutual cooperation and participation, we have also achieved 10 billion overseas manufacturing and sales.

Is such an enterprise a global enterprise, especially what opportunities do we have in the Belt and Road Initiative? From the comparison of global enterprises, if General Electric and Komatsu are global companies, we are more and more similar to them, there was a saying in the past, called we aim at a fixed target, then one shot can be two shots, today can not hit, can be tomorrow, and tomorrow, we are more and more like, but in fact, the real globalization, with today's experience, is indeed localization, a very simple question, this year the yuan against the dollar, we fell 2.6%, but the South African rand fell more than 20% against the dollar, Brazil's Brazilian dollar has fallen by more than 40% against the dollar, how do we do business with it, if our asset capital production cannot be localized, there is no way out of doing business, because the more you do business, the greater the loss you may have. In this process, I think that if we want to do globalization in the equipment manufacturing industry, we must have a long-term vision, and we must also have a feeling, because the equipment manufacturing itself wants us to achieve high performance, and it is not to do business with overseas Chinese, for example, when the Chile mine disaster, the Fukushima incident in Japan, participated in the rescue, we are proud of it, we feel that in such a large global rescue activity, the United States drilling rigs, Chinese cranes, South Korean equipment, there is a part of our China, What is China's manufacturing status, this is China's manufacturing status.

Of course, I also very much agree with the point of view put forward by Chairman Wu just now, that is, in terms of knowledge and professional talents, if there is a lesson today, there is a third-one, we have invested in the United States, Germany, Brazil to this day, not every company is profitable, Germany so far, in fact, there is no profit, this is related to our acquisition of Pusmeister in Germany, because after the acquisition, we handed over all the business to Putzmeister, and Germany is equivalent to a second venture. But we are very good in the development of Indian companies, especially after Moody's new government organization, he proposed manufacturing India, skills India, information India and clean India, and even the Indian Minister of Energy personally proposed to us, China's second-hand equipment can go to India, two years ago I could not imagine, so China's development model is also recognized by many countries, which has brought us great help to find development opportunities in the Belt and Road Initiative. This is the growth of China's national strength.

There is another case of Sany, which may be of more interest to you, that is, we have an investment in wind power generation in the United States, and then the lawsuit went to the US government Obama, and of course a comprehensive settlement has now been reached. In this process, I think of what Chairman Wu mentioned, that is, how to respect the laws and regulations of local countries and regions, in this process, it should be said that we have learned lessons, but we have also gained experience, by applying American laws, by using American intermediaries, and by using better lawyers in the United States, in fact, the US government Obama also thinks that it is okay, as long as we make sense. Because he said that our equipment is affecting his national security, this is not true, we must make this matter clear.

Second, our equipment cannot be sold in the United States, and if it cannot be produced here, we can change it, but he will not allow us to change it, and now we can fully reconcile it. So we don't have much to lose in terms of economic interests, and it also proves that we don't affect the security of their country.

In this process, Sany has been in this process, so many years, we hope to communicate, communicate and learn from more enterprises in the future, and do it according to international practices, so that Sany can better go to the world, and the future road will be smoother. Thank you!

Appendix: Introduction to the 2nd Forum on the Internationalization of Chinese Enterprises

2015 : The 2nd Forum on the Internationalization of Chinese Enterprises

November 20-22, 2015

Following the great success of the first China Enterprise Internationalization Forum, the second China Enterprise Globalization Forum will be held in Sanya, Hainan Province on November 20 this year. This forum will focus on the new progress made by Chinese companies in the process of globalization – many companies are starting to focus on the industry and adjust their strategies to achieve their goals.

President Xi Jinping first put forward the strategic concept of "One Belt, One Road" in 2013 and gradually put it into practice, which is of great significance for promoting Chinese enterprises to go global. The "One Road" traverses the Eurasian continent and the "One Belt" connects the South China Sea, the South Pacific Ocean and the Indian Ocean, aiming to create a 21st Century Maritime Silk Road. In order to promote China's economic growth again, the Belt and Road Initiative will establish a $40 billion Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB). The Belt and Road Initiative will create a wealth of new opportunities, especially in the infrastructure sector, and will also indicate that China and its member states will establish broader and closer economic and commercial ties in the future.

In the coming years, China's outbound investment will continue to grow faster than FDI, and its position as a net investor will be more firmly established – China has become the world's third-largest foreign investor. With the expansion and diversification of the scope and breadth of Chinese companies' outbound investments, Chinese companies have increasingly established themselves as global investors, and the economic, financial, and technological impact that accompanies this trend should not be underestimated. However, Chinese companies are also recognizing that there are many issues and challenges that need to be addressed to succeed in outbound investment: such as improving their internal capabilities, how to recognize and deal with cultural differences, and the increasingly complex challenges ahead.