Prime Mover Magazine

CIMC: think global, act local

Based on 22 international production sites, it is a key strategy of the CIMC Vehicles Group to establish a globalised brand sourcing expertise both in Australia and around the world. The foundation, however, is being laid in China.

At present, China International Marine Containers Co. (CIMC) is ranked among China’s 500 leading companies, setting up the goal of gaining a revenue and market value of 100 billion RMB ($15 billion) by 2013. Managing Director of the CIMC Vehicle division, David Li, though, does not see a reason to gear down.

Q: Mr Li, please tell us about your career path.
A: My personal story is interwoven with CIMC’s company history. In 1980, when China started opening up to the world, the company has been established in Shenzhen to trial the model of free trade. The company started off building marine containers, and I began working in the container division in 1987. Today, the core business still is container manufacturing. 30 years down the road, though, CIMC does not only manufacture containers; but also trailers, tank equipment and airport equipment, and we have just established a marine engineering unit. So I daresay we might be building entire ships someday. In a nutshell: I joined CIMC when it had less than 100 employees, and I accompanied the company’s development from humble beginnings to a global corporation.

Q: Why did you originally enter the transport industry?
A: In 2000, we’ve visited an exhibition in Melbourne, and we were quite impressed by the common Australian B-double combination. At the time, China’s trailer industry only produced simple skeletal chassis and flat bed variations. It was old fashioned, so we thought we should introduce a new concept to the Chinese market.

Q: Which work philosophy has left an imprint on you?
A: I have been influenced by the corporal vision to be a major player in the global market, serving the marine and trucking industry. I appreciate CIMC’s global concept, not only based on the marine sector, but also on road transportation, which, by tradition, is a local field, limited to a region. But we have chosen a new approach, daring to enter a foreign market like Australia.

Q: How is CIMC different to competing companies?
A: CIMC’s manufacturing and design process is not different to competing manufacturers. The real difference is the global approach, enabling us to share some sort of global wisdom regarding engineering and design. To serve the US market, for instance, we had to invent a complex logistics solution to distribute a variety of components, and we chose the same one that we applied in Australia.
The trailer design we have introduced to the Australian market under the name of Marshall Lethlean, for example, has been using our European division; and the manufacturing process we are applying in our Chinese factory is based in the layout developed by our European branch as well. We are able to interact globally and exchange ideas; we are crossing borders, geographically and mentally.

Q: Which position do you occupy in the global transport market?
A: In China, we already have a market share of 25 percent, but we want people’s undivided attention. In the USA we are fairly small, and in Australia we are still in a start-up phase. So we still need people’s attention to keep growing as an international corporation. Yet we don’t try to attract it by offering low priced products – and thereby upset the market – but by providing quality.
Quality is always a prime concern, but nowadays, even quality is not enough. A lot of people can provide quality. As a result, we have developed a lot of ideas in the past three years, utilising our global technological wisdom to offer increased value at the same cost, or the same function at decreased cost. By creating add-on value, we want to gain the respect of the global transport community. Growth is not only based on skill, after all, but also on innovation.
On the other hand, we try to recruit talented people around the globe. Thereby, we accumulate both capital and talent. People in different countries of the world help each other solving problems in local markets. It’s a global family.

Q: Based on pillars like lean management, global think tanks and international recruitment; where do you see the company in five years?
A: In the past ten years we rose from zero to a serious player in the global market; and I wish to continue this growth in the future. In five years, I want CIMC to be a mature global operation, regarded as a local force in every regional market. We are a global company, but we are acting local.

Q: How would you characterise the Australian market?
A: First of all, it is a very demanding market, especially with regard to the performance and reliability of a vehicle. It’s a very competitive market, and there are quite a lot of established companies. As a result of such competition, the market is experiencing an interesting evolution. But given the size of each company and the available resources to a run a sufficient R&D department to create a whole new design, the Australian market is relying on import. In order to bring a new deal to the Australian market, you need a global connection to generate innovation. We are using our global capacities to establish a new way of thinking, and our output can justify such a cost. The market is static, and the key players are well established; and without a force from outside, there will be no change, no progress, and everybody will stay in their comfortable zone. But will the customer be in a comfort zone as well? A static market is not necessarily good for the clientele, because they need to deal with a changing environment.

 

Q: Which challenges will the future present to CIMC and the transport industry?
A: I am confident that we are facing a bright future after the GFC, and I hope that we can maintain the positive atmosphere we have developed in the past. We want people to stick to the principles we have established. Everybody should contribute to the company’s future, the global innovation pool. Hopefully, we will not fall victim to arrogance or selfishness.
Besides, we need to avoid a mental one-way traffic. As we are constantly growing, we need to make sure that every new employee can gain the same understanding as the existing staff. That’s a challenge on a management level. We have to make sure that the global exchange is working. Therefore, we are changing our human resources policy to a rotating system, trying to educate CIMC’s international employees in China and in return send people from China to work in a different country. It’s a two-way traffic. I hope we can provide enough skill to manage such a global operation. The term international operation sounds great, but it also requires great skill.

Q: You have achieved a lot of growth both organically and by acquisition. Do you see the acquisition process continuing?
A: I am not a fan of acquisition; I like to see the business grow hand in hand with the people we employ. We will not search for a major acquisition target; we’ll try to carry out our growth in local markets in an organic way. If there is a bargain offering, though, we will take a chance. But we are not doing it on purpose, and we never did. Look at our container division, which generates over 50 percent of our revenue and 60 percent of our profit. CIMC built this division all alone. If we purchase a company, we will only choose one that is willing to adapt our philosophy of organic growth. I am not an investment banker.

Q: In which territories do you see growth occur in the future?
A: Australia will be one of the major regions to grow. In the past, we have achieved a considerable market share using little capital, so it’s time to offer the Australian marketplace a new deal. We want to bring in a new breeze. We have the capital, and we have the technology, so why not. If there is an opportunity, we will not hesitate. But of course, we expect a sound return due to this investment.