ZPMC’s Era of Heavy Industry

                                           -Interview with Mr. Chen Gang, Vice President of     Shanghai Zhenhua Heavy Industry Co., Ltd and ZPMC

The No. 1 Port Machinery Manufacturer in China 
Journalist: ZPMC products cover 80% of the world market of container machinery, surpassing its competitors in South Korea and Germany. What do you think are external and internal reasons for ZPMC’s success? 
 Chen Gang: As for external reasons, large-scale container machinery is a product both technology and labor-intensive. Peers in US, Japan and Germany have much higher labor cost although they have better technology. Too much labor cost will make them lose in market competition. In other aspect, for developing countries, although they have lower labor cost, their technology is backward. It is better for countries having advantages both in technologies and labor costs to produce this kind of product. Thus, we choose this market.
For the internal reasons, as we know, a company must have solid power to stand firmly in participation. From the beginning of our company, we focus on improving our solid power.
For example, we built our manufacture base along the river and sea. Our product is very large in size and cannot be carried by road and railway. It can only be carried by water transport. In Year 2001 we had 3.5 kilometers coast line at Changxing Base at the Yangtze River Mouth and 1.1 kilometers of them are for the heavy industry terminal which can hold 2000T crane and can install and debug 20 bridge cranes at the same time. We summarized our ten years experience, design our configuration process and build a large steel-structured workshop of 400 meter long. By doing these, we improve our productivity to a great extent. In the meantime, we have our own fleet to carry the whole equipment. Our six 60MT ships can carry our “Steel Giant” worldwide timely and costly. All these make us become competitive. In addition, we have a team of professional and devoting personnel so that we can accomplish large projects efficiently. 

Journalist: At the initial period of ZPMC, your chairman makes a vow to distribute ZPMC products to all world container ports. This vow has come into true within a dozen more years. And this must be a process full of challenges and progresses.   
Chen Gang: Definitely it is true. ZPMC won all the orders by fierce competition with peers. Initially, we faced a lot of difficulties when taking part in the international bidding. We were refused to enter the Singapore market. Nevertheless, we stack to our plan to open the international market for us until we enter Vancouver Port in Canada finally. After this, we entered Miami Port in US. We value every opportunity and treat every order carefully. We manufacture such a large equipment as we are making a handicraft. With high quality, every product in the market is our advertisement and we won biddings one after another in the international market.   
In Year 2001, ZPMC entered 4 European countries, Germany, Holland, UK and Spain. 6 European terminals have ZPMC’s 36 bridge cranes. Entering Germany is most difficult because Germany is a hometown for crane. We won one bid in Hamburg, but one short bridge in Hamburg hamper us to transport our large equipment. We thought it over and over and finally we passed it successfully. Entering German market is one breakthrough for us. Why? German crane brand name was once unconquerable.  
  After conquering German market, it is much smoother to enter other countries. Now ZPMC products have entered 73 countries in the world. 
      
Journalist: What is engine for ZPMC to make so many progresses?
Chen Gang: ZPMC is ambitious. ZPMC take “We work for China” as the guideline in its whole industry process covering design, manufacturer and delivery. Presently, ZPMC has a total of 45,000 staff members. This guideline of “We work for China” encourages all ZPMC staff members to overcome all difficulties to make progress. We face a lot of severe working conditions, such as heating temperature in Miami, US, storming rain in Hong Kong and extreme cold winter in Felixtow, UK. I can say that ZPMC brand name is a fruit of our staff members’ courage, perseverance, wisdom and diligence.

ZPMC’s Timely Restructure
 
Financial storm reduces port investment, resulting in the shrinking of ZPMC’s crane sales. Thus, ZPMC tries to restructure itself by seeking new economic growth point. In May 2009, ZPMC change its name to be Zhenhua Heavy Industry Group.
2008 Annual Report shows that ZPMC’s profits mainly come from container cranes, accounting for 72.73% of its sales revenue. Although ZPMC has a leading market percentage, its pricing advantage is not obvious so that the profit rate is only 10.39%. To maintain the current market shares, ZPMC give up its plan of price affiliation.

  Journalist: The change from “Zhenhua Port Machinery Co.,Ltd” to “Zhenhua Heavy Industry Group” is a key transfer. What considerations have been made for this service shift from port machinery to marine heavy industry?  
Chen Gang: Until now, ZPMC accounts for 80% of world crane market. It is unrealistic to account for 100%. It is necessary to explore new market for a company’s development. Marine heavy industry is related with our previous services. Compared with port machinery, marine heavy industry has a larger market potential with its function of exploring ocean petroleum. We need to make efforts in this aspect by developing the products such as derrick barge, pipe laying barge and drilling platform.

Journalist: Not long ago, Zhenhua Heavy Industry Group delivered the first completely self-built large pipe-laying barge. This indicates a crucial step after Zhenhua’s restructure. What’s the next step of Zhenhua?
Chen Gang: Pipe-laying barge can has filled in China’s blank in building pipe-laying barge by itself. We built the large pipe-laying barge, which has saved China’s cost in importing marine oil equipment, also made solid basis to develop a series of China-made products including marine pipe laying equipment and floating derrick equipment. Presently 4 pipe-laying barges are under construction and we have signed the framework contract with overseas ship owners about the order. In future, Zhenhua Heavy Industry will be mainly engaged in three marine engineering projects including marine engineering ships, drilling platform and high-technology marine components. Pipe-laying barges will be on batch production and sales. Offshore platforms will be on trail production this year and will be on small-scale production. We will try to achieve batch supply of high-technology marine components.

    End: The world famous products and brand name enables the successful shift of ZPMC to Zhenhua Heavy Industry. In July, 2009, Zhenhua won an order of 2.2 billion US dollars which is the largest sum of marine industry sales contract, putting Zhenhua in the spotlight of the whole industry. It is known that ADHK company in Spain purchased 10 drilling platforms, 7 drilling machines and 2 derrick barges and Zhenhua promised the cargo delivery within 3 years. Presently thanks to self innovation and combination of industry, school and research, Zhenhua has been equipped with solid power in some marine engineering equipment. And Zhenhua will make new steps on the road of self innovation with support of Shanghai municipal government and its own power in design and manufacture.