Dongfeng Chaoyang Diesel Engine Co., Ltd. (hereinafter referred to as Chaochai) is a large-scale diesel engine manufacturer in China. Since the beginning of this year, China's socio-economic development has encountered difficulties due to unfavorable factors such as increased inflationary pressures, rising raw material prices, exchange rate adjustments, and export difficulties. However, after a long period of hardships, Chaochao still has a relatively rapid development momentum.
Raise sales to deal with severe challenges
According to Zhao Zhuang, Zhaochao’s general manager, in the first half of the year, Chaochao’s sales performance was gratifying, with a year-on-year increase. In the second half of the year, with the increase in raw material prices and the full implementation of motor vehicle country III emission standards, companies are facing severe challenges.
Since this year, the benchmark price for iron ore has increased by 65%, and the prices of basic raw materials such as coke and diesel have also risen sharply. In addition, starting from July of this year, the motor vehicle country III emission standards have been fully implemented, engine research and development investment and production costs have increased substantially, and companies generally feel the pressure of rising costs.
Zhao Zhuang said that Chaochao’s sales growth in the first half of the year was largely due to the advance consumption of customers, so sales may decline in the second half of the year. He believes that engine companies can only guarantee profits if they reach a certain amount of sales. Therefore, although the increase in sales in the first half of the year offsets the pressure caused by rising costs, if the volume of sales declines in the second half of the year, the pressure of rising costs will gradually become more apparent.
Zhao Zhuang believes that engines that meet the National III emission standards can not only meet the needs of the country for energy conservation and emission reduction, but also improve product reliability. In addition, the added value of State III products is higher, and companies can strive for more profit. Therefore, Chaochai will work hard to strengthen management and reduce the waste of resources, thereby alleviating the pressure of rising costs to some extent. At the same time, efforts were made to coordinate with the vehicle companies to promote the advantages of the State III engine in order to increase the sales volume of the State III products and respond to severe challenges.
Money tightly affects the supply chain
Since last year, the People's Bank of China has repeatedly raised interest rates and bank reserve ratios. The cost of corporate financing has increased significantly. Some companies have difficulties in financing and are on the verge of bankruptcy. "The flow of corporate capital is just as important as the human blood circulation." Faced with the tight national currency policy, Zhao Zhuang expressed concerns about the survival and development of the company.
The tightening monetary policy has not caused much impact on Chaochao’s financial flow. However, the tightening monetary policy threatens the survival of the upstream and downstream companies, as well as the DPRK in the middle. According to Zhao Zhuang, if there is a problem with the flow of vehicle companies, engine sales must be affected. If it is difficult for a parts and components company supporting engine companies to survive, engine assembly will be difficult. The engine usually consists of many parts, and these parts take some time from design and production to stable delivery. Therefore, Chaochai will pay close attention to the flow of funds from the upstream and downstream enterprises, and strive to promote a virtuous cycle of capital circulation in the automotive industry chain.
In addition, exchange rate changes and interest rate increases also have a certain impact on Chaochao. Zhao Zhuang said that although North Korea’s diesel products are mainly based on domestic sales, exchange rate adjustments have affected the export of vehicle products, so engine sales have also been affected. The increase in interest rates has directly increased the cost of corporate financing, and the profitability of enterprises has further narrowed.
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Rising prices rise
Statistics from the National Bureau of Statistics show that the overall consumer price index (CPI) continued to fall in the first half of this year but remained at a high level. The pressure of rising prices has affected the lives of some employees. Zhao Zhuang said that as Chaochao has taken effective measures to deal with severe challenges, the living standard of Chaochai’s employees has not only declined, but has also improved.
According to Zhaozhuang's introduction, considering factors such as rising prices, Chaochao has not only raised employee salaries, but has also increased employee training, prompting employees to actively perform in terms of improving their labor skills, reducing production costs, etc. reward. This will not only reduce the company's production costs, but also improve the quality of employees. In addition, in order to ensure the quality of employee lunch, the company has run its own canteen and has given employees food subsidies so that employees can feel the warmth of the company.
Businesses call for protection of legitimate rights and interests
In recent years, China's manufacturing industry has developed rapidly. However, there is still a large gap between domestic enterprises and foreign well-known companies in terms of management mode. Chaochai actively studied the advanced management experience of famous companies such as Nissan and Toyota. Zhao Zhuang believes that due to the lack of systematic learning, domestic companies have discounts in understanding and implementing these advanced experiences. Therefore, how to digest and absorb the advanced management experience of well-known foreign companies, and then promote the progress of Chinese business management model is a problem worthy of discussion.
Zhao Zhuang believes that the country’s implementation of a tight monetary policy has, to a certain extent, inhibited the overheating of the real estate industry, but it has also affected the development of the automobile industry.
Zhao Zhuang said that the state's enforcement of motor vehicle country III emission standards is very beneficial to environmental protection and long-term development of the company. However, certain enterprises that do not meet the standard are evaded regulatory restrictions through informal measures, and are not suitable for enterprises that have already achieved product upgrades. Fair. Therefore, how to protect the interests of regular enterprises is an urgent problem to be solved.
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