Reform and restructuring for a new CHTC

By+Zhao+Zihan

As the “aircraft carrier” of domestic textile machinery industry in China， CHTC is a deservedly industry leader on the road of developing advanced equipment manufacturing industry and promoting the manufacturing industry from big to powerful. The group is equipped with world-class advanced technologies and industry-leading R&D direction in various fields of textile machinery manufacturing， winning an important position for China in the world textile machinery manufacturing industry.

During the 12th Five-Year Program period， CHTC enjoyed satisfactory achievements based on own adjustment and transformation. Moreover， CHTC has been adhering to the development strategy of “changing its single business mode of textile machinery for a related multiple-line operation”， witnessing various degrees of development in the fields of textile machinery， textile trade， new fiber materials， commercial vehicles and engineering machinery， financial investment， culture， real estate， and asset management.

At the upcoming 17th ITMA tak- ing place from 12th to 19th November 2015 at Fiera Milano Rho in Milan， Italy， CHTC will organize its domestic and overseas textile machinery manufacturing enterprises to participate in the exhibition together with exhibits covering such fields as cotton， chemical fiber， dyeing and printing， weaving， and non-woven， fully displaying CHTCs strength in the textile machinery field. In this respect， Zhang Jie， President of CHTC， received the interview from China Textile， making an analysis of CHTCs performance in the 12th Five-Year Program period as well as the future development of Chinas textile industry， and focusing on a detailed elaboration on the reform and restructuring of the Group.

CHTC has 22 secondary subsidiaries and 5 listed companies at home and abroad. During the 12th Five-Year Program period， CHTCs textile machinery business was expanded from cotton spinning and chemical fibers to dyeing and printing through purchasing of Fongs， and to the nonwoven business through acquisition of Autefa Solutions Germany GmbH. Thus， CHTC has been growing into an enterprise of the largest business size and the most complete varieties of textile machinery in the world.

As we all know， textile industry， as Chinas important livelihood industry， matters a lot whether it is under a healthy and sustainable development. In this regard， Mr. Zhang said： “As a large-scale central enterprise， CHTC cannot just pursue a maximum of profit， but must undertake certain social responsibilities； otherwise the textile enterprises will have to bear the pressures. If only CHTC can keep a healthy development， well raising the banner for Chinas textile industry.”

In recent years， CHTC has seen a lot improvement in manufacturing capacity and innovation ability of textile machinery， well supporting the progress of Chinese textile enterprises； however， it has not enjoyed optimistic profitability in its main textile machinery business. In this regard， Mr. Zhang believed that CHTC must insist on doing the right thing and the main textile machinery industry can be financed from other areas. At present， the most important thing is to carry out industrial layout and structural adjust- ment， which reflects not only the ability of a state-owned enterprise to resist risks， but also the responsibility of such a company to undertake.

Elaboration of reform

For the needs of Group strategy

Mr. Zhang summed up the threestep development strategy of the Group：“go complete”， “go excellent”， and “go powerful”. The first step is to recreate a CHTC which will see a change in growth from quantity to quality as well as a transition to professional management. The key of the second step is to pay attention to the intrinsic quality， and to this end， the Group put forward a change from three major business sections with six business units to “One Body with Two Wings”. As for the third step， Mr. Zhang believes that“The Group will go powerful as long as the resources are well integrated and the internal businesses are straightened out.”

China Textile Machinery （Group） Co.， Ltd. was established as a future operation management platform to include all of the textile machinery business in CHTC. According to Mr. Zhang， CHTC textile machinery business goal is to be the most powerful globally from the biggest in size in the world， and now the Group has basically reached this goal.

For the changes in the development of the industry

“Please do remember the year of 2015. It is a year in which textile industry is going towards a higher degree of industrial concentration from the full competition in a traditional way.” Mr. Zhang continued emphasizing that “The transformation today is different from the past when the focus was on volume ris- ing， aiming to a higher level and a larger scale. For example， in cotton spinning industry， so many enterprises are suffering no orders， however， the supply of orders to CHTC fall short of the demand. Why are so significant differences under the same competitive pattern？ The largescale enterprises would like to use the equipment of the best performance ratio based on the current pattern of changes， and the practice has proved that those who adopted CHTC set equipment and technologies will establish a better competitive advantage and enter a good momentum of healthy development. CHTC has achieved a complete flow scheme of the industry， greatly improving production efficiency and saving energy costs. CHTC has also seen changes in the mode of service， ranging from installation and after-sales service to the future maintenance service. In addition， there are also supporting financial and market services. In order to enhance the overall capacity of coordination in all aspects of the services， there is an urgent need to put all aspects together.”

For the overall requirements of adapting to the following international development

CHTC is now equipped with “a strategy of one body with two wings， supported by a triunity management and control model”.

The so-called “triunity” consists of three parts： directors & supervisors， managers， and shareholders. Centering on such five core functions as human resources， strategic management， budget management， risk control， and information construction， and focusing on core business while developing the strategic businesses， CHTC has conducted allocation of resources to the strategic goals as well as the short-term， medium-term and long-term objectives in line with the Groups long-term development. Subgroups are created from the individual business areas. The performance evaluation criteria are established from the four dimensions of EVA， business and market share， labor productivity， and technological innovation to help them fully participate in market competition， achieving profitability and asset value enhancement as well as brand and social value promotion. As for the business strategy between the Group and the sub-groups， the directors and supervisors of the sub-groups are appointed by the headquarters， while the professional managers are hired by the sub-groups themselves， realizing a parent-subsidiary company governance and control system.

“One Body with Two Wings” refers to the high-end manufacturing as the body and the financial and cultural industries as the two wings.

High-end manufacturing contains three main businesses： textile machinery， new energy vehicles， and new industrial materials， of which textile machinery is to became the most powerful in the world from the largest in size globally， which is also an unswerving goal of CHTC.

“3 dimensions” escort Chinese textile industry

As an industry leader， how does CHTC better enhance the international competitiveness of Chinas textile industry while practicing its own development strategies？ Mr. Zhang stated that it depends on the following three dimensions， the same as the challenges that this industry is facing.

“The first dimension， also the most important one， is technical support. It is a must for CHTC to attach great importance to technological innovation to improve industrial competitiveness for better and more powerful six business units.” Textile machinery manufacturing is the main industry of CHTC， directly affecting the overall competitiveness of Chinas textile industry. In subsectors， CHTC is equipped with the manufacturing capacity in the sectors of cotton spinning， dyeing and printing， chemical fibers， and non-woven fabrics. Enhancing industrial competitiveness is required to start from the industrial demand. In the future， CHTC must focus on providing digital and intelligent equipment that can better satisfy the industrial development.

The second dimension is to undertake industry responsibility to accelerate development of new materials. CHTC owns the best chemical fiber equipment manufacturer， and has more practical experiences in the production of new materials. Currently， CHTC is actively increasing new materials development， focusing on the development of the three products of Lyocell fiber， lignin fiber， and polylactic acid fiber.

At present， Lyocell fiber costs lower than the conventional viscose fiber by 20% to 30%， and most importantly， the former is free of chemical reaction and pollution， enjoying broad industry prospects.

Polylactic acid fiber can be suitable for various fields for its functions of natural degradation， inflaming retarding， acid and alkali resisting， good warmth and moisture absorption.

Lignin fiber has brought a new approach to the development of low-cost raw materials. Mr. Zhang made a calculation that： “In China， corn cobs only are able to be converted into almost 8 million tons of fiber， which doubles the yield of cotton. Moreover， the maize straws are three times of the corn cobs， and if the inside lignin fiber can be used for carbon fibers or other fibers， thirty million tons of fiber will be made only from the maize straw. How large the figure is！ China is a large agricultural country， and textile industry is big with wide range of materials， if the grass and branches can be recycled for further development， Chinas textile industry will suffer nothing in raw materials.”

For the development of new materials， CHTC has already invested several hundred million yuan， and facing various queries， Mr. Zhang fervently believes that the path is correct. “In fiber field， the enterprise strength is not strong enough at present. But what CHTC is focusing on relies on technological innovation capability， aiming to provide greater potential for the development of enterprises.”

The third dimension is brand innovation capability. Currently， CHTC has founded a national fashion creative center in Songzhuang， with a purpose of not only serving the brand， design and marketing of textile industry but also going to deliver the profound meaning of Chinese culture and the concept of CHTC. “China needs such a platform and carrier like fashion creative center to gather people engaged in cultural creative in the world， for the integration of the industrial chain and innovation of the industry brands.”