solid faith

For the more than 7,000 employees of Xinyi Glass Company, the past year has been an extraordinary one. Under the unfavorable factors such as the rising raw material prices, the reduction of China's export tax rebates, and the recession of the automobile and construction industries in the entire glass industry, Xinyi Glass achieved growth against the market. In the first half of 2008, it achieved a turnover of HK$1.88 billion and a net profit of HK$402 million, an increase of 34% over the same period in 2007. Its net profit margin was 8.7 percentage points ahead of its major domestic competitors.

Alfred Sloan, who had been at the helm of General Motors (GM) for 20 years and was hailed as the first professional manager by management guru Peter Drucker, said while experiencing the 1920 US recession Past: "Recessions have the effect of weeding out the weak. Some people despair in the face of recessions, but I have never succumbed to recessions. I have always believed that the peak of the economic cycle will come, when we will have long-term and dynamic growth. . This kind of confidence and prudence controlled my mentality in 1920."

Faced with the financial turmoil that continued to penetrate into the real economy, Xinyi CEO Dong Qingshi was also full of confidence. He jokingly said: "The financial turmoil is like a wind chill. It has brought many bacteria and viruses. Fortunately, we have laid a solid foundation and done enough internal work. For example, Xinyi has strengthened its product market positioning and continued to invest in new product development. , to achieve vertical integration of the industrial chain, improve professional capabilities in many aspects, build a flexible production system, and achieve a reasonable allocation of fixed assets."

The savvy investment bank is also optimistic about Xinyi's business development in 2009. In the investment evaluation of other companies in the glass industry to reduce their holdings, JP Morgan maintained an investment rating of "overweight" in Xinyi.

Strong R&D Twenty years ago, Xinyi Company was established in Henggang, Shenzhen. The founder, Li Xianyi, focused his development goals on the automobile repair and replacement market. Dong Qingshi, who is also one of the founders, recalled that this positioning originated from the ideal in his heart. "We liked cars very much when we were young, and found that the glass of the car was broken and it was very difficult to replace it. Due to the very tight foreign exchange in the country at that time, 100% of the replacement glass for all foreign cars needed to be imported. We thought it would be better to do it ourselves."

15 Years later, the ideal became a reality. Since 2004, Xinyi has become China's largest exporter of automotive replacement glass (AGR), with a share of 15% and 36% in the international AGR market and the domestic automotive glass export market, respectively.

One of the key factors for success is the company's strong new product development capabilities. Not only in automotive glass, but also in architectural glass, especially in the field of solar glass used in energy-saving and environmentally friendly buildings, strong research and development have made great achievements.

Xinyi develops 2,500 new products every year. The main expansion direction is to innovate product performance, match the style design of new glass, and develop new products in response to changes in automobile weight materials. SOLAR-X heat reflective automotive glass is a typical product independently developed by Xinyi. Compared with ordinary automobile glass, it has the advantages of heat insulation, sun protection and high light transmittance, and can effectively reduce the energy consumption of air conditioners. According to estimates, a car equipped with this glass can reduce fuel consumption by 10% a year.

The project was established in 2005. After three years, Xinyi has concentrated a research and development team of more than 20 people to focus on this product and achieved a major breakthrough in the production process. Initially, Xinyi imported products from abroad, using the method of placing film in the middle of the glass sandwich. The film mainly absorbs the heat of the sun and has some effect on the temperature protection in the car. However, when the film is placed in the interlayer, it will be difficult to handle the edge of the glass with large curvature and difficulty.

Xinyi has taken a different approach, coating the surface of glass with silver. General companies can only coat one layer, but Xinyi can coat three layers to ensure that the visible light transmittance in sunlight is above 70%, and the maximum reflection of sunlight can be achieved. heat energy, and block 99.9% of ultraviolet rays.

Now, SOLAR-X heat reflective automotive glass has been exported to Europe, and it is widely used in some high-end cars such as Mercedes-Benz, BMW, Peugeot and other 2008 and 2009 models.

Since 2006, Xinyi has been increasing its pace in forward-looking research. Yang Jianjun, former deputy director of the Institute of Glass Science, China Academy of Building Materials, joined Xinyi to lead the company's R&D work, leading a 150-person R&D team, responsible for the research and development of various product series in Xinyi. At the same time, Xinyi invested 20 million yuan to establish a technology research and development center at the group level. In June 2008, a post-doctoral workstation was established, and the focus of research is on solar energy related to green energy.

Xinyi continuously launches new energy-saving and environmentally friendly glass products through technological innovation. For example, in September 2008, a series of high-series double-silver glass was successfully developed, and in 2009, 3-silver Low-E glass was developed. The product structure upgrade brought about by technological innovation creates new advantages for Xinyi's future development.

Vertical integration

Automotive laminated glass and energy-saving architectural insulating glass are deep-processed glass products, and the output and quality of their original float glass directly affect the quantity and quality of finished automotive glass and architectural glass. In order to solve the upstream raw material constraints, in February 2005, Xinyi was successfully listed in Hong Kong, and the first raised US$111 million was invested in the construction of the float glass production line. Now Xinyi not only achieves self-sufficiency in original glass, but also sells float glass products to other companies. In-house production of float glass has improved the efficiency of the supply chain and reduced costs. Xinyi's net profit margin increased from 18.8% in 2005 to 20.1% in 2006.

As a buyer within the group, Shenzhen Xinyi Auto Glass Company has also become one of the fastest beneficiaries. General Manager Cha Xuesong said: "In the past, it took two months to import float glass from abroad, one month's production and one month's shipping period; now we can get the raw material float glass produced by the Dongguan factory in 10-15 days. Arrived. This greatly reduces our inventory and accelerates cash flow turnover."

Xinyi Glass Industrial Park in Humen, Dongguan, has built a complete glass industry chain. It includes the three major industries of float glass, automotive glass and architectural glass. At the same time, a professional glass factory has been established for the automotive OEM supporting market and maintenance market.

Dong Qingshi is quite proud of this industry chain. He said that this industry chain has greatly reduced operating costs from three aspects. First, the ordinary packaging cost of one ton of glass accounts for 8%-10% of the price, and the transportation cost accounts for 8%-10% of the price. Xinyi has built the industry chain together, eliminating these two costs; Raw materials, glass specifications and sizes are easier to control, the cutting rate of glass will be higher, and waste will be reduced; third, the group's working capital is basically not occupied too much, and the inventory of float glass is the inventory of the group's processing plants .

In addition to upstream integration, Xinyi has also extended downstream such as adhesive strips, plastics and hardware accessories used in glass assembly vehicles, realizing complete vertical integration of upstream, midstream and downstream. As early as 2001, Xinyi established Xinyi Rubber & Plastic Products (Shenzhen) Co., Ltd. to develop and manufacture these products. This company is equipped with advanced instruments and equipment, a 3D design software platform and an FDX data exchange platform, which can smoothly exchange data models with domestic and foreign vehicle manufacturers, so as to conduct synchronous development with vehicle manufacturers. So far, a variety of adhesive strip products have been developed to meet the supporting requirements of more than 800 models in the market.

Professional Operation

In Xinyi, professional ability means specialized factories, strict certification of high-quality product systems, and one-stop quality services for customers. Lutheran people have experienced failures, and they are constantly achieving new successes in the summary of failures, and only then can they cultivate this ability.

The construction of the specialized chemical plant was not all smooth sailing. "In the company's original headquarters in Henggang, Shenzhen, the problems of production capacity and the site were very contradictory. At that time, we concentrated all the production of automotive glass together, and the quality standards could not be effectively distinguished, and the consequence was that the high-end products reached If the quality standards are not met, the low-end products cannot control the cost.” Cha Xuesong recalled, “For this reason, we have divided many factories in the Henggang base to distinguish the professional direction of the factories. Some factories supply car manufacturers in the high-end market in Europe and America, They pay more attention to quality standards, and some factories are cost-oriented, so that they can produce according to the requirements of different customers and different markets."

Shenzhen's experience has also been applied to the classification of factories in Dongguan, Wuhu, and Tianjin Industrial Parks in Xinyi. and building. "We set different factories to correspond to different markets, which helps our cost and liquidity turnover." Dong Qingshi said.

Today, Xinyi Auto Glass is exported to more than 100 countries and regions around the world. Clients include auto manufacturers and wholesalers of auto glass. The range of exports includes the high-end markets in the United States, Japan, and Europe, as well as emerging markets in African countries. To become a partner of automobile manufacturers and strive to develop into the supporting market is another important direction for Xinyi to become an industry leader. The requirements of automobile manufacturers for the product quality of supporting suppliers are much higher than those of the maintenance market.

“When we started to seek to be a partner of Ford at the end of 2003, we only did two preliminary quality system audits.” Zha Xuesong, who was the project leader at the time, still remembers the scene vividly. He went on to say: "Through this cooperation, we require workers to operate a piece of equipment with uniform actions and consistent setting of glass temperature parameters, effectively maintaining quality consistency. The level of quality standardization throughout the company has been greatly improved. ”

It took 3 months for Xinyi to receive Ford's certification to the first batch of products sold to Ford. Today, Xinyi has become one of Ford's major automotive glass suppliers in the world, especially in Ford's European market, where it performs well and occupies a larger share.

After obtaining the certification of the international high-standard quality system, Xinyi keeps knocking on the door of heavyweight customers. For example, automotive glass has passed ECER43 certification, US DOT certification and China 3C certification, and GM, Chrysler and Volkswagen have successively included Xinyi in the global supplier system. In China, Xinyi also provides supporting products for the rising auto manufacturers Chery, Yutong, Foton, BYD, etc.

"Being China's largest auto replacement glass exporter is the result of Xinyi's 20 years of hard work." Dong Qingshi said, "Xinyi Glass has more than 20,000 varieties of products. As a customer purchasing a variety of glass, we can To meet 98% of his purchases, other companies in the same industry may only meet 20% to 30% of his purchases, Xinyi provides customers with one-stop procurement and one-stop shopping to meet them.”

Flexible Production

In the repair and replacement market of automotive glass, in the past, customers demanded large quantities and few specifications, but the current trend is more varieties and small quantities. "In the past, a customer may order a container, a model, and now a container may involve dozens to hundreds of models." Cha Xuesong said, "We can make both large and small batches quickly because we A flexible production system has been established. For example, the speed of changing the film, the supply of materials, and the arrangement of logistics and transportation can all respond quickly."

In terms of the speed of changing the film, it turns out that one order is produced, from the first piece of glass. It took an average of 21.5 days to paint the last piece of glass, and now it only takes an average of 4 days. In the case of no increase in manpower, the production efficiency of the factory has been greatly improved. Compared with the past, without increasing investment in fixed assets and expanding factories, the production capacity of a factory is now five times that of the past. In terms of material supply, each company of Xinyi Group has a material supply team. Material procurement and production planning are coordinated and arranged by the sales executive. This approach broke the previous relationship of each department being independent and parallel to each other, and established the goal of material supply and production planning both serving sales.

"This model speeds up the response time to the market. Even before the order is confirmed, colleagues in the material supply team know that there may be such an order and will check which materials need to be purchased. Production colleagues Just know how flexible arrangements are needed to deliver to customers on time. In our company, quality control, R&D, production, procurement, and human resources all serve sales. "Zha Xuesong said.

Flexible production is not only reflected in the Xinyi factory, but also extends to the client. Xinyi has effectively reduced inventory by cooperating with third-party logistics companies. When the customer needs to supply, they will supply it through the time period specified by the third-party logistics company. No inventory is required in the customer's warehouse. This reduces the backlog of cash flow for both parties. "Since 2004, the sales of Shenzhen Xinyi Auto Glass Company have been increasing, but the inventory has been declining." Cha Xuesong said.

Optimizing Costs

In "My Years at General Motors," Sloan talked about the huge impact of fixed asset costs, production volumes and prices on profits. Dong Qingshi also knows the reason. In addition to the scale effect of building industrial clusters, he also has a unique method for controlling the cost of fixed assets.

His chosen entry point for control was to reduce design and maintenance costs. In 2003, Dong Qingshi personally participated in the planning and design of Xinyi Glass Dongguan Industrial Park. He decided that the planning, design and construction of the entire factory would be done by the Xinyi people themselves.

There are two advantages of doing this: on the one hand, the design cost is greatly reduced, and the investment in fixed assets can be effectively controlled; The park's product lines can be reasonably matched, laying a good foundation for the production of high-quality, multi-variety products.

Dong Qingshi clearly remembers that during the peak period of the construction of the industrial park, the number of preparatory staff reached 200, and everyone worked hard for a common belief. "We started from scratch to complete the planning and construction of the three major industries of float glass, automotive glass and architectural glass. The whole process only took two and a half years, and the fixed assets cost 2.5 billion yuan, creating a speed and efficiency in the industry. , grade and scale." The benefits of reducing maintenance costs, Cha Cedar deeply felt. "In October 2007, we acquired Benxun Company, the former CSG Group Automotive Glass Co., Ltd., and now we can achieve the same variable cost between Shenzhen Henggang Xinyi Factory and Benxun Factory, but different fixed costs. The latter Much higher than the former, this is due to the later use and maintenance costs of fixed assets, as well as different depreciation costs."

In addition to the reasonable structure of fixed assets, Dong Qingshi's financial principles also have an important one - prudent management. Even when the market is favorable, we should rely on our own accumulation to expand investment, rather than borrowing from banks to invest. Xinyi has less debt than its biggest domestic rival. Especially in the economic downturn since 2008, Xinyi can still maintain a positive cash flow and a relatively stable net profit margin, laying a good financial foundation for the start of the industry in the future.