Weichai Power: inside the Chinese diesel engine giant
The arguably equally astonishing story of Weichai Power is rooted in China’s economic miracle, an organization that grew from servicing steamboats in the 1940s to powering industry across the world today. .
While more recently we have seen the proliferation of globally recognized tech and internet giants dominate discussions of China’s modern economy, Weichai Power’s evolution to its current market dominance, innovation and the growth is apparently synchronous with the development of the Chinese economy over the past seven decades.
What does Weichai Power do?
Weichai Power is China’s largest manufacturer of commercial vehicle engines. Its huge business of manufacturing and selling diesel engines and powertrains continues to grow today. However, it has also diversified into the manufacture and sale of trucks, various heavy-duty automotive components, forklifts, warehouse machinery, new energy transmission systems and supply chain solutions.
The company is listed on the Hong Kong Stock Exchange (HKG: 2338) and the Shenzhen Stock Exchange (SHE: 000338).
It has a market capitalization of approximately US$150 billion and employs more than 80,000 people in its various business units and subsidiaries around the world.
Weichai Power Profit
In calendar year 2021, Weichai Power recorded annual profit of US$1.4 billion and revenue of US$30.4 billion.
Weichai engines – powering China and the world
The name Weichai Power may not be known around the world, but chances are you have come across Weichai’s diesel or gasoline engine technology in one way or another during your life.
In 2020, Weichai sold 981,000 motors to customers in over 100 countries.
It manufactures more than 100 different types of diesel engines and a smaller number of gas engines for the following categories of vehicles and machines:
- Includes tractors, heavy, medium and light trucks, heavy, medium and light dump trucks, heavy, medium and light special vehicles.
- Highway buses
- engineering machinery
- Includes loaders, forklifts, cranes, bulldozers, graders, rollers, excavators, small multi-function machines, disinfection machines, mechanical aerial work platforms.
- Agricultural material
- Understand silage machines, corn harvesters, wheat harvesters, peanut harvesters.
- Marine engines
- Electricity generators
- Industrial generator sets
To support its global engine footprint, Weichai has established more than 6,400 service centers around the world, including approximately 6,000 in China alone.
Weichai has an extensive ongoing research and development program which has seen the development of many world-first engine innovations.
It spends hundreds of millions each year on research and development, which has mostly allowed the company to keep up with changing vehicle emissions requirements and maintain its dominant market share.
Weichai operates the following research and development institutions in China:
- State Key Laboratory of Internal Combustion Engine Reliability
- National Research Center for Commercial Vehicle Powertrain Assembly Engineering Technologies
- National Strategic Alliance for New Energy Power System and Construction Machinery Industry Innovation
- National Crowd Innovation Specialized Space.
He emphasized engine lightness and fuel efficiency.
In 2020, the Company launched the world’s first commercial diesel engine with thermal efficiency greater than 50%. The engine is said to save a single truck approximately US$235 in fuel costs per 10,000 kilometres.
While Weichai’s core engine technology is based on diesel power, the company recently started manufacturing gas engines and said in its 2020 annual report that it conducts ongoing research to improve engine reliability. natural gas and zero-emission diesel engines.
Weichai business units
Weichai is built on the foundation of its Power Systems business, which includes the company’s crown jewel – engine manufacturing – as well as the manufacture of other powertrain components such as transmission, axles and hydraulic systems. .
In addition to the aforementioned motor sales, in 2020, the Power Systems business also sold 1.86 million gearboxes, 1.09 million axles and recorded high-end hydraulic product sales of RMB 500 million. .
The main brands under which it sells Power Systems products are Weichai Power Engine, Fast Gear, Hande Axle and Linder Hydraulics.
The commercial vehicle segment controls the subsidiary, Shaanxi Heavy-Duty Motor Company Limited.
Based in Xi’an, Shaanxi province, Shaanxi designs and manufactures heavy duty trucks and off-road vehicles which are sold under the SHACMAN brand in approximately 100 different countries.
Weichai said the subsidiary sold a total of 181,000 heavy-duty trucks in 2020. It maintains a dominant market share in Asia, Africa and the Middle East markets for coal transportation, tractors ports, sand and gravel transport and truck cranes.
Along with diesel trucks, Shaanxi has recently started manufacturing all-electric trucks.
In 2012, Weichai Power acquired a majority stake in German forklift manufacturer, Kion Group AG. Kion is currently the largest European manufacturer of forklifts and heavy warehouse equipment.
Through Kion, Weichai Power also controls Dematic, the largest supply chain solutions company in North America.
Kion Group and Dematic make Weicai Power one of the top three global warehouse and supply chain solutions companies.
In 2020, Weichai reported forklift sales of 198,300 units and said Dematic’s smart logistics business contributed about RMB 64,979 million to its revenue.
History of Weichai Power
Weichai Power’s history dates back to 1946 when the Weihai People’s Armed Forces established a company called Jianguo Ironwork Cooperatives to manufacture guns and repair steamships.
Soon after, in 1948, the cooperative started manufacturing low speed diesel engines in 1948 and in 1953 was renamed Weifang Diesel Engine Works as the manufacture and development of diesel engines has become its primary focus.
Over the following decades, the company would become the main supplier of engines for the Chinese fishing and military industries and begin to develop world-class engines for other applications. Global demand for its products has been buoyed by the tailwinds of China’s economic transformation.
In 2002, the company was restructured with Weichai Holding Group Company incorporating a subsidiary, Weichai Power Company.
Weichai Power was then listed on the Hong Kong Stock Exchange in 2004 as it embarked on a global expansion. In 2007, it also listed A shares on the Shenzhen Stock Exchange to facilitate access to shares for residents of the Chinese mainland.
It has now become one of China’s most diversified global conglomerates.
The future of “new energy”
The Weichai Power business will undergo a major transformation over the next two decades. The company is currently conducting vigorous research and development on low-carbon technologies, including battery electric and hybrid machines and power generation.
He said he expects his new energy business to lead the company’s development by 2030.
Ownership and Key People
Public enterprises Weichai Holding Group Company and its parent company Shandong Heavy Industry Group is the majority shareholder of Weichai Power. In total, the two state-owned companies own 41.94% of Weichai Power.
Other major shareholders include institutional fund managers, Brandes Investment Partners, Lazard Asset Management, Barclays, Morgan Stanley and Schroders.
President and CEO
The Chairman and CEO of Weichai Power is Tan Xuguang.
Tan Xuguang is a long-time employee of the company. He first joined in 1977 to work as an engineer in the Weifang Diesel Engine Factory when the company operated as Weifang diesel engine is working.
He holds a doctorate in engineering.
Tan Xuguang holds 58,842,596 A shares of Weichai Power, or about 0.67% of the company’s issued share capital.
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