Logistics and new highways could put trucks in fast lane

Production line at Baotou Bei Ben Heavy-duty Truck Co Ltd in Inner Mongolia autonomous region.

Sales of mid-sized and professional vehicles are expected to soar in China over the next five years due to the rapid development of the country's logistics and highway infrastructure, said a high-ranking official of Baotou Bei Ben Heavy-duty Truck Co Ltd in Inner Mongolia autonomous region.

The company aims to double its current production capacity of 100,000 units by the end of the 12th Five-Year Plan period (2011-2015). By that time, it hopes to generate more than 40 billion yuan ($6.35 billion) in sales revenue.

In the current five-year plan, the growth rate for the gross domestic product is set at 7.5 percent, significantly lower than previous years. This means that many industries will slow the pace of their development.

Su Ritu, deputy general manager of a truck assembly company owned by Baotou Truck Co, said the generally gloomy economic outlook will affect the development of the auto industry. However, this is not to say that there is no hope, Su said.

"At present, the industry in China is not developing well, especially with regard to heavy-duty vehicles," he said. "However, the demand will rapidly grow soon because the country will pay more attention to the construction of highways, large-scale projects and logistics infrastructure in the coming years, which will help the industry develop better."

Baotou Truck Co sold 118,197 vehicles during the 11th Five-Year Plan period (2006-2010), raising its market share to more than 5 percent in the country. It aims to sell 150,000 vehicles during the next four years, according to the company.

The company has sold vehicles to about 100 countries, including Russia, Egypt, Singapore, Mongolia and Thailand.

Su said it is a good time for the industry's transformation since opportunities and challenges exist simultaneously in the sector at the moment.

"We should seize the chance to expand into new markets by diversifying our products and technologies," he said. "The biggest challenge for our industry is the shortage of research investment."

He said the quality of domestically made core technology still lags behind foreign competitors, forcing the company to often go overseas to source key parts.

It spent about 1.3 billion yuan to introduce technology from Mercedes-Benz in the 1980s.

Su said he is nonetheless optimistic about China's future domestic research and development abilities.

The company is located in the Baotou Equipment and Manufacturing Industry District, which began construction in 2006 in Baotou, the largest city in Inner Mongolia.

More than 170 manufacturing companies and their supporting facilities are now in the district. An additional 52 projects will be developed in the area using combined investments totaling 10 billion yuan. As many as 45 of them are already operating, and the rest will start operation in June.

The park has become host to businesses from a variety of industrial sectors, including advanced equipment manufacturing and emerging industries like heavy-duty trucks, new energy, and railway and machinery equipment.

Li Xuejun, a local official in the city of Baotou, said the Baotou Equipment and Manufacturing Industry District will expand its industrial chain in the future to include such industries as nuclear energy, chemicals, environmental protection and special materials.

In 2011, the district had a total output value of 65.06 billion yuan, a 30 percent growth compared with the year 2010. The target of the district in 2013 is to reach 100 billion yuan in total output value.

dujuan@chinadaily.com.cn

(China Daily 04/10/2012 page15)