2018-03-20 Promote High-quality Development with the Three Reforms

    On March 7, General Secretary Xi Jinping participated in the deliberation of the Guangdong delegation, and remarked that Guangdong should lead the nation in building a mechanism for promoting high-quality economic development, building a modern economic system, forming a new pattern of comprehensive opening up, and building a social governance pattern characterized by co-building, co-governance and co-sharing. “General Secretary Xi's speech was brilliant, far-sighted, broad and profound, showcasing deep love for national people and the style of the lead of a major power. It profoundly reflected Xi’s earnest expectations and love for the reform and development of Guangdong, and pointed out the scientific direction that led the reform and development of Guangdong. Besides, it boosted the enterprises’ confidence to develop real economy and promote the high-quality economic development.” Zeng Qinghong, NPC Deputy and GAC Chairman said in an exclusive interview, “on March 9th, through on-site and teleconferences, the spirit of Xi’s important speech and the instructions given by Li Xi, Secretary of Guangdong Provincial Party Committee were spread to GAC.


    The report of the Nineteenth National Congress points out: China's economy has shifted from a high-speed growth to a high-quality development. It is now in the crucial period of transforming the mode of development, optimizing the economic structure, and transforming the growth momentum. As the vanguard, pioneering and experimental area of reform and opening up, Guangdong has not only scored achievements in the high-quality development, but also provided experience for the entire country in terms of institution and mechanisms.

  

    Zeng Qinghong said, as the general secretary remarked, the establishment of an institutional mechanism that promotes high-quality economic development is a systematic project. In order to achieve a high-quality economic development and middle to long-term planning blueprint, GAC Group shall make achievements and take lead in the three key aspects of quality reform, efficiency reform, and the reform of driving force, and make new due contributions so that the auto industry in Guangzhou and Guangdong can be outstanding in the whole country.





First, make innovations in quality reform


    “To achieve high-quality development, we shall not compromise quality while pursuing speed. The enterprise's product and service quality must meet expectations of consumers. ” As an entrepreneur, Zeng Qinghong reiterated. During GAC Group’s “Thirteenth Five-Year Plan” period, among the enterprise’s development main line of “One Center, Stick to Two Principles, Three Transformations”, “One Center” means “focusing on quality and return  and promote healthy, sustainable and rapid development.”


     "From the birth of GAC's own brand Trumpchi in 2010 to emerging as a name card of Made in Guangdong and Made in China, it reflects the high-quality development pattern," said by Zeng Qinghong. According to Initial Quality Study released by J.D.Power, an authoritative U.S. market research company, GAC Trumpchi ranks first among Chinese brands for five consecutive years and is placed ninth in the whole industry. Among them, Trumpchi GS4 again ranked first in the compact SUV segment of Chinese brands and jumped to third place in the industry. 


    Quality reform is not only reflected in the improvement of product quality, but also in the ability to innovate, technology say and brand confidence. Behind the high-speed growth of the Trumpchi brand, it is the continuous improvement of the R&D and innovation capabilities of GAC Group. Through years of development and experience accumulation and with the domestic leading and internationally advanced R&D facilities and first-class development, trial production and testing capabilities of vehicles and key parts, GAC R&D Center was placed top 1% during the 2015 evaluations on over 1,100 national-level enterprise technology centers in various industries nationwide. 

  

    With the continuous progress of its own brand technology and product strength, GAC Group’s technological say in Sino-foreign joint ventures has also been continuously improved. From 2017, GAC began to introduce new energy models to joint ventures. This is the first time that a Sino-foreign joint venture introduced brand and technology from its Chinese shareholder. It indicates on one hand the recognition of independent technology and self-owned brands by foreign investors, and exhibits on the other hand the improvement of the initiative and say of the Chinese shareholder. “There is no brand without product, and brand is the lifeline of the company.” Zeng Qinghong regards the brand as the lifeline of enterprise development. Among GAC Group’s “13th Five-Year” development main line, “Three Transformations” refers to the “transformation from manufacturing to creation, from speed to quality, and from product to brand.”



Second, provide experiences in quality reform


    General Secretary Xi stressed, it is necessary to comprehensively promote the innovation of institutional mechanisms, improve the efficiency and efficacy of the allocation of resources, and promote the concentration of resources to high-quality enterprises and products. For the enterprise, efficiency is the lifeline of the enterprise, and the fundamental issue of the enterprise management is efficiency. 

  

    In terms of management efficiency, GAC Group vigorously promoted the innovation and reform of the state-owned enterprise management mechanisms, streamlined the management level and improved the management efficiency on the basis of ensuring compliance with laws and regulations. The Group’s leadership team has been streamlined from more than 20 to 11 persons and reduced from over 40 departments to over 20. Such streamlining has enhanced the management efficiency. At the same time, GAC also actively explored the promotion of market-based hiring, professional managers, mixed ownership, employee shareholding, etc. The company deepened and supported the market-oriented reforms in selecting and employing people at all levels of enterprises. Besides, GAC has established the enterprise managers and high-level talents remuneration system adapting to varied recruitment methods, including market-based selection. The market incentive mechanisms have also been put in place. Such institutional innovations have given full play to market vitality and talents’ enthusiasm and initiative.

  

    Regarding research and development efficiency, GAC Trumpchi established a global R&D network focusing on GAC R&D Center and supported by GAC Trumpchi Technological Center, global leading suppliers and R&D institutions. The company created a cross-platform modular architecture (G-CPMA) and set up A/A0, B/C vehicle platform and powertrain platform. It also formed a complete set of advanced interdisciplinary R&D processes and systems and established a R&D talent team with a reasonable structure and specialized skills. To take model development as an example, the adoption of advanced simulation design and tests and other R&D measures has helped improve R&D quality. At the same time, product development cycle of Trumpchi has been reduced from the traditional 36 months to 22 months, which has greatly enhanced the market competitiveness of the products.

  

    With respect to production efficiency, GAC Group has created a GAC production method on the basis of joint ventures cooperation. Its core is to integrate production and sales through pull production and ensure highly flexible production of GAC Trumpchi. The company intends to turn out high-quality products at low cost to meet the ever-changing market demand. Such move has ensured the cross-platform, cross-model, and cross-time quality consistency of GAC Trumpchi and greatly increased production efficiency. At present, with the production efficiency of up to the assembly of one car per 57 seconds, the company not only breaks the capacity bottleneck, but also secures the first-class product quality in China.

 

    In terms of service efficiency, the current automobile consumer market is fiercely competitive. Those who win the trust of consumers will take a preemptive move. The importance of “after-sales services” is increasingly evident. GAC adheres to the service concept of “professional, thoughtful, innovation, and trust”, and the tenet of “customers first”. Apart from more meticulous car use services to vast consumers, the company continuously provides to the market the medium and premium quality supply of the world-class products and services and creates a highly satisfactory car life. According to the results of the 2017 China Automotive After-sales Customer Satisfaction Survey (CAACS, known as Cass's survey), GAC Trumpchi ranks top among the industry brands with a score of 87.74. It has been CAACS’s champion among Chinese brands for three consecutive years.



Third, achieve upgrade in the reform of driving force


    The reform of high-quality development driving force is the change from factor-driven to innovation-driven. When attending the deliberations of the Guangdong delegation, General Secretary Xi emphasized, if the innovation-driven path is not followed, China cannot be truly powerful without the shift of driving force.

  

    At present, the auto industry is in a period of profound historical changes with shift of driving force. New energy and intelligent connected vehicle are the trend of automobile development. Only by insisting on innovation as the primary driving force for development and closely following the frontiers of the industry can we achieve high quality development in the future. Zeng Qinghong told reporters that GAC was actively deploying in this area.

  

    Last April, GAC‘s Industrial Park for Intelligent and Connected New Energy Vehicle started construction. The total planned area is about 500 hectares. The total investment is expected to exceed RMB 45 billion, and the planned capacity is 400,000 units. Phase I project with the capacity of 200,000 units is expected to be put into production by the end of this year. Last July, GAC New Energy Automobile Co., Ltd. was officially incorporated. Since the launch of pure-electric SUV GE3, its sales volume has continued to grow and it has been rated by the media as 2017's most popular new energy SUV. It is estimated that by 2020, GAC Group will have up to over 20 new energy models, accounting for 10% of the Group's vehicle production and sales scale. Recently, GAC New Energy has made bold innovations centering on the internet. The “25-hour Life Experience Center” has successively opened in many cities such as Beijing, Shanghai, Guangzhou and Shenzhen. It aims to build a user-centric marketing service eco-chain and build a fully open, real-time service experience center.


    In addition, GAC has also actively cooperated with such enterprises as Huawei, Tencent, NIO, China Mobile, iFlytek to accelerate the R&D and application of intelligent connected vehicles. In-depth cooperation in the fields of cloud computing, big data, smart driving, and telematics services has been conducted. 


    In terms of autonomous driving, GAC Group adheres to independent research and development. In 2013, it developed the first autonomous driving car with propretary intellectual property rights and mastered a number of autonomous driving technologies. In November 2017, GAC’s autonomous driving car WITSTAR II won the second place in the “Intelligent Vehicle Future Challenge” and DISCOVERY, co-developed with Xi’an Jiaotong University won the first place.


    “As General Secretary Xi emphasized, development is the top priority, talent is the primary resource, and innovation is the primary driving force.” Zeng Qinghong said, development depends on innovation and innovation relies on talents. To promote the three reforms above and fulfill  the development blueprint of GAC Group, substantive measures shall be taken in terms of production factors such as talents, funds and institutional mechanism. 



    Zeng Qinghong introduced that in terms of talent development, GAC Group attaches parallel importance to “introducing in and reaching out”. Apart from recruitment of external talents, the company has in place the sound internal promotion mechanism. Through deepening structural reforms on the supply side, we will accelerate the development of premium manufacturing such as intelligent connected new energy vehicles, autonomous driving and ridesharing, and modern industrial systems such as Internet+ and new materials. In step with the high-speed development of self-owned brands and increasing proprietary intellectual property right and core competitiveness, GAC’s talent team is also growing.


    In order to further enhance its core competitiveness, GAC Group issued non-public A-shares valued at RMB 15 billion in 2017, mainly used for the development of intelligent connected vehicle, new energy and forward-looking technologies, key components and self-owned brands. Such move will forcefully make GAC Group more excellent, stronger and bigger.

 

    More importantly, GAC Group has strengthened innovation driven and enhanced competitiveness in areas such as management mechanisms, talents and examination incentives, and technological research and development. In the 11-year development, GAC R&D Center has grown up with the rapid rise of GAC’s own brand “Trumpchi”. Since its establishment in 2006 with only 30 or 40 R&D personnel, GAC R&D Center boasted nearly 4,000 staff by the end of 2017, including technical elites with such titles as “Recruitment Program of Global Experts” (known as “the Thousand Talents Plan”), and "China's Auto Industry Outstanding Technological Talents". Last year, GAC Group also held the first large-scale overseas talents recruitment in Silicon Valley, Detroit, and Boston, attracting nearly 700 talents from North American cities to participate. Such move helped provide talents for the Group's international business.

  

    Zeng Qinghong also introduced: “GAC encourages everyone to participate in innovation.” The IGC campaign sponsored by GAC is just one example to motivate employees’ initiatives to conduct innovation and improvement. The scope of this campaign covers the five major sectors of GAC Group, from product development, parts procurement, manufacturing, business logistics to financial insurance and aftermarket services, integrating the entire process of vehicle production and operation. For 12 years after the initiation, more than 367,000 people participated in the event, resulting in over 3.38 million proposals for improvement and RMB 4.68 billion of direct economic benefits.


    “From 2015 to 2017, the car production and sales volumes in Guangdong Province were respectively 2.47 million, 2.88 million, and 3.08 million units, rising to No.2 from No.3. We are confident that we will continue to lead the industrial reform in the future.” Zeng Qinghong said, “General Secretary Xi’s ‘ lead in the 4 fields’ and ‘Three firsts’ provide us with strong belief support and endogenous motivation. As the largest state-owned enterprise in Guangzhou, GAC Group will use the three reforms to draw a blueprint for the future development strategy. In 2027, the 30th anniversary of the establishment of the Group, it will strive to become a top-100 enterprises in the world; in 2037, the 40th anniversary of the establishment of the Group, it will become a world first-class enterprise with global competitiveness. GAC Group is dedicated to making contribution to the innovation and development of the auto industry and the real economy in Guangzhou City and Guangdong Province and Guangdong's blueprint of ‘taking the lead in the 4 fields’.”

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