Busting out

　　Editor's note: China's manufacturers have become a major force in the world economy as they churn out made-in-China products and export them to every corner of the world.

　　China Business Weekly is partnering with Sohu.com to look at China's leading manufacturers flexing their muscles both at home and overseas and climbing up the global value chain.

　　In this issue, we take a look at Zhengzhou Yutong Bus Co, based in Zhengzhou, capital of Henan province.

　　Following German-made Mercedes-Benz, China's top bus maker Zhengzhou Yutong Bus Co is quickening its pace towards internationalization.

　　"This year, we aim to sell 30,000 units of buses and generate 30 percent of our sales from overseas, up from the current 13 percent," Wang Wenbing, deputy general manager of Zhengzhou Yutong Bus Co, tells China Business Weekly.

　　In 2007, Mercedes-Benz sold 30,000 buses worldwide and was ranked the No 1 bus maker in sales volume. Snapping at the heels of the German-based heavyweight, Yutong sold 25,522 buses last year, with 3,319 exported to 30 countries and regions.

　　"In China's manufacturing industry, the bus sector is a little late to start internationalization. Yet, most bus makers possess self-owned brands and have the ability to compete in the global market. We keep moving up," Tang Yuxiang, Yutong's chairman, says.

　　In 2005, domestic bus manufacturers began to show a strong momentum on export, with 5,756 units sold in that year and 100 percent annual growth since then. In 2007, the overseas bus sales topped 32,000 units, about 1.5 times those in 2006.

　　Located in Zhengzhou, capital of Henan province, Zhengzhou Yutong Group Co is a large-scale enterprise covering bus making, engineering machinery and vehicle components. Yutong Bus Co has been the flagship in the domestic bus industry for years and its leadership status is being strengthened.

　　According to Ping An Securities, in the first half of 2008, Yutong sold 15,247 units, with the domestic market share reaching 16.43 percent, up about 3 percent year on year and 6 percent higher than the next follower, Xiamen KLM Motor Group Co.

　　"Previously we focused on the market in developing countries. At present, we are targeting developed regions and planning to compete in the European market next year," says Tang. "By 2009, our annual sales turnover goal is 18 billion yuan. Next year's goal is to gain one-fifth of the domestic market share and occupy 10 percent of the global bus market." In his 50s, Tang has been a workshop director in Yutong in the early 1990s and witnessed the company's fast growth.

　　Three leaps

　　In 1963, Yutong was just a small repair workshop in Zhengzhou. Grasping the opportunities of China's opening-up policy, in 1993, Zhengzhou Yutong Bus Co was established with joint-stock reconstruction. Since then, Yutong developed rapidly in three leaps.

　　In 1997, Yutong became China's first bus enterprise listed on the Shanghai Stock Exchange.

　　In 1998, with funds raised after being listed, Yutong's new plant opened, marking the largest coach-manufacturing base in Asia.

　　In 2002, Yutong Bus Company and Germany-based MAN Nutzfahrzeug Group jointly established Lions Bus Co. By adapting methods from its European counterpart, Yutong established a set of management systems, including CRM (customer relationship management).

　　All the company's efforts are reflected in its brand value. According to the World Brand Laboratory, in 2007, the value of the Yutong brand had grown to 7.487 billion yuan and has made Yutong the No 1 brand in China's bus industry for four years running.

　　Pick up the gold

　　Tang has described the overseas markets by saying, "There is gold here and there. It's your ability that makes the difference of whether you can pick it up or not."

　　For Yutong, the trump card is not low prices, but deep market research, customized products and responsive after-sales service.

　　For instance, in Russia, the climate is cold and the roads are usually covered with salt, which melts snow and ice but also erodes vehicle bodies.

　　To resolve the problem, Yutong became the first bus maker in China to coat vehicle bodies with an anti-rust chemical that can greatly increase a vehicle's resistance to erosion.

　　"When Yutong entered the Russian market in 2004, the clients there detailed more than 83 specific technique requirements. It seemed quite picky, but we manage to meet all the requirements," says Wang Feng, the company's overseas market director. "Later, we found that the requirements are similar to the standards in Europe. So, the Russian market helped Yutong accumulate experience to enter the European market."

　　Due to its reliable quality, in 2006, Yutong won the first Certificate for Product Exemption from Export Inspection in China's vehicle industry.

　　To date, Yutong has developed five strategic markets: Russia, North Africa, the Middle East, South America and Southeast Asia. (Occupying a 99 percent market share in Cuba, Yutong buses have been praised as "excellent" by former Cuban leader Fidel Castro for their low fuel consumption and high quality.)

　　There is a saying in Yutong, "If you haven't done well, it's because you stay too far away from the clients." Yutong now plans to set up seven overseas spare parts warehouses and one office in every foreign market district.

　　Like most other Chinese manufacturers pushing sales overseas, Yutong is doing its utmost to lower production costs to offset the disadvantage triggered by the appreciation of the yuan and increasing material costs.

　　Yutong has been cooperating with top multinational firms such as Accenture, IBM and Roland Berger, on human resource management, supply chain management and business development strategy. Related projects are scheduled to be fully completed by 2009.

　　Green Olympics, green drive

　　Chinese customers also applaud the merits of Yutong buses. Among some 5,000 official buses serving the Olympic Games in Beijing, Yutong produced 2,600 units. Equipped with the independently developed thermal management system on the engines, Yutong buses can lower fuel consumption by 5 to 10 percent compared to traditional bus engines.

　　Yutong has been investing heavily in innovation and competing to roll out new models. On average, about 4 percent of its sales revenue will be used for research and development annually. Yutong also created the first post-doctoral science and development research center in China's bus industry.

　　In July, Yutong developed an all aluminum bus. Compared with traditional buses, the new model can save fuel by reducing about 46 percent of the weight.

　　In the Olympic torch relay in July in Zhengzhou, three torchbearers were from Yutong. The company's deputy general-manager Wang Wenbing was one of them.

　　"Challenge is everywhere," he says. "To some extent, operating a company in the global market is similar to competing in the Olympic Games. The Olympics spirit of "higher, faster and stronger" is also suitable for companies, which pursue higher efficiency, faster feedback and stronger ability. Yet, running a business is an endless Olympic".

　　(China Daily 09/15/2008 page6)