2022 is a year of ups and downs. With the recurrence of the COVID-19 and the dramatic changes in the economic environment, the downward pressure on China's construction machinery industry has increased sharply after five consecutive years of upward cycles. Under the background of overlapping times, how can each participant in the value chain of China's construction machinery industry go through the cycle of industry and macro environment to achieve sustainable win-win development? How to redefine the value of the industrial chain and rebuild the business model?
2022 China Construction Machinery Marketing&Post Market Conference was officially opened on September 15. This conference gathered influential people from China's construction machinery industry, built a high-level communication platform, talked about "going through the cycle", and looked forward to the future with colleagues.
On the morning of September 16, at the post market development forum, Xu Shenghui, chairman of Xiamen Haifu Leasing Co., Ltd., made a wonderful sharing with the theme of Thinking and Exploration from Agent Sales to Lease Operation.
On February 12, 2001, I founded Xiamen Henglixing Machinery Co., Ltd., which is the agent of Hitachi Construction Machinery in Fujian Province and southern Jiangxi Province. So far, more than 5000 excavators have been sold. The highest market share is 22%, but now it is 1.5%. To tell you the truth, this business is very difficult now, which can be said to be the darkest time. In 2013, the excavator leasing business was started. At present, there are more than 100 sets of excavator leasing fleet, and the original value of leased assets is more than 100 million.
My university is a mechanical major, and I was engaged in after-sales service and design after my entrepreneurship. In 2017, I founded Xiamen Haifu Construction Machinery Co., Ltd., committed to the research and development, production, sales, after-sales service, technical training, etc. of full hydraulic wheeled excavators. Over the past five years, HF100W-5 and HF135W-5 models of Haifu Construction Machinery have been mass produced. Next year, it is planned to enter the research and development field of new energy products.
The third project, we also switched to the mine labor contract construction project, which is one of the transformation of agents. In 2016, we took over the business of a customer. At present, the mine has entered the stage of large-scale mining, with stable and sustainable development. This business has played a very significant role in improving the company in the past two years.
In 2017, after the feasibility study, we officially entered the field of aerial work platform leasing. In 2018, Xiamen Haifu Leasing Co., Ltd. was established. Now, the fleet size exceeds 2000, covering 14 outlets in Fujian, Jiangxi and Guangdong provinces.
The market share of domestic brands and imported brands had a scissors difference in 2017. In 2006, the market share of domestic brands was only 16%, while that of imported brands was 84%. After 15 years, it became 80% and 20% respectively.
In 2013, the market continued to decline, and our agency of foreign brands was also very painful. The car could not be sold, and the creditor's machine, the legal machine and the old for new machine needed to be handled as soon as possible to reduce losses. So I switched to excavator leasing. After 2015, the company gradually increased its size, leased some large excavators, and subsequently converted them for cash. After 2018, we will continue to purchase some new machines for lease, but the rental income over the years cannot even compensate for the subsequent decline in the price of these new machines. Therefore, the current comprehensive loss of leasing business is not the result of operation, but the result of equipment failure to maintain its value.
In 2017, I saw that 43% of the equipment stock of the United Leasing Company in the United States was aerial work platforms, and the stock in North America was six to seven million, while in China there were only 40000, so I began to try to rent aerial work platforms.
When considering the transformation, we took into account the survival environment of the agents, which is "vicious competition from competitors, more choice of customer brands, strong bargaining power of suppliers, fewer entrants to industry barriers, and domestic brands replacing imported brands". The agents are like rats in the bellows, with both sides under pressure.
In the profit pool formed by the whole life cycle, the profit from equipment leasing accounts for about 43% of the overall proportion. The profit contribution of equipment leasing is outstanding, and the leasing market is huge.
Therefore, after "balancing external conditions and measuring our own strength", we consider leasing as a breakthrough point to drive the transformation of the company to post market services.
We conducted a "SWOT" analysis.
Our advantage is the business philosophy of "change comes into being"; High brand awareness of agent products; Excavator leasing is getting better; Human resources, professional skills and experience; Service network advantages.
Our disadvantages are: lack of service awareness; Self brand building awareness needs to be improved; Unstable cash flow; The customer management is not refined enough.
Our opportunities are: new infrastructure and new urbanization; The labor force population decreases; Improve the requirements for emission standards; The potential development space of the post market is large; The gross profit of leasing business is considerable.
Our threats are: slowing economic growth; Both manufacturers and users have high bargaining power; Homogeneity of products and technologies, fierce competition in the same industry; Constraints on resources and environment.
At the beginning of the transformation of leasing, we should first outline the strategy. It is necessary to build a strategic wheel in eight aspects: business strategy, marketing, service+security training, finance+legal affairs, informatization, human resources, organizational structure and corporate culture.
In terms of business strategy, we choose dry leasing, which makes it easier to achieve scale. Refer to McDonald's manual for standardized formulation and comprehensive leasing solutions based on customer needs. Based on the 150 km radius and our own actual strength, we will carry out the network layout and deepen the local regional market.
In terms of marketing strategy, based on 4P, provide a full range of products; Promotion for new regions, new products and new project models; Price flexibility should be flexible, depending on the low and peak seasons and project influence; Carry out multi outlet construction, realize the alliance between peers and upstream and downstream industries, and then fight against large-scale group leasing companies.
In terms of service+safety training, it is necessary to consolidate the service foundation of factories, outlets, vehicles, tools, personnel, training, testing equipment and other hardware. Service quality standards should be formulated, process control should be carried out, and attention should be paid to safety training. Safety is the cornerstone of business, because aerial work platforms are closely related to human life. There should be a remedy mechanism and a replacement system for customer downtime. The most important point is to extend the service life of the equipment, because this means long-term profitability of the leasing business.
In terms of corporate culture, it is very important to build a common mission and vision. Under the competition of some renters with high salaries, it is definitely not enough to talk about money alone. It is also important to realize the unification and implementation of values in terms of habits and codes of conduct at the level of employees and partners.
In terms of human resources, I am a disciple of Drucker. The essence of management is to stimulate goodwill and release potential, which is very important.
In terms of finance and legal affairs, especially in the leasing field, the balance of cash flow must be well done. It is very important that the risk prevention lines of functional departments and business departments must be separated, because their positions are different.
In addition, the identification of risk and debt control is very important. In the financial field, we should consider the problem based on ROE (return on equity), TOC (total process cost of ownership) and receivables turnover days. The former reflects the operating efficiency, while the latter reflects the asset turnover efficiency.
The last point is informatization. Once the fleet size reaches two or three hundred, it must be on the informatization system. We have now realized electronic informatization of processes such as contracts and entrance and exit bills, which will significantly improve efficiency.
