source：China Non-ferrous Metals News
China Zhongwang is the largest industrial aluminum extrusion product developer and manufacturer in Asia and China, with a particular focus on the transportation, machinery equipment and electric power engineering sectors. According to the Boston Consulting Group, China Zhongwang is the world’s second largest manufacturer of industrial aluminium extrusion products in terms of sales volume recorded in 2009. China Zhongwang processes a 125MN oil-driven dual action extrusion press which is currently the largest of its kind in China and one of the most advanced in the world. These facilities enable the Company to produce large-section and high-precision industrial aluminium extrusion products tailored to its customers’ needs. These products are widely used in the transportation sector such as cargo and passenger carriages, metropolitan railway, aviation, vessels, automobiles, as well as machinery equipment and electric power engineering sectors.
China Zhongwang’s Emerging Competitive Strengths
According to related figures, the net profit of China Zhongwang in 2010 reached RMB2.6 billion. However, with the anti-dumping and countervailing duties investigation initiated by the US government, a decline in net profit were recorded while there was an increase in gross profit margin in compared with last year. Mr. Lu Changquing, Executive Director and Vice President of Zhongwang said, “Following the US government’s announcement of the final determinations which cleared the uncertainties surrounding exports to the US, Zhongwang will continue to focus on high-value added products with the aim to develop an even more diverse and solid customer base. The domestic PRC market will be our key focus supplemented by overseas export markets. While our business focus will remain on industrial aluminium extrusion products, we will expand into high-end aluminium flat-rolled products to form a new growth driver. According to our five-year development plan, we will pursue our goal of becoming the world leading producer of high-end processed aluminium alloy products by reinforcing our core competitive edge for industrial aluminium products, strengthening R&D capabilities, intensifying market development efforts and expanding into high-end aluminium flat-rolled products.”
Mr. Vincent Cheung, CFO of Zhongwang said that the Group’s development plans and strategies will remain unchanged despite the US anti-dumping and countervailing duties investigations. Its capacity expansion plan has been ongoing as scheduled. A total of 18 sets of large-scale extrusion presses of over 75MN will be installed at its manufacturing base in the coming two years. Recently, two sets of 75MN presses have commenced production. In addition to the 125MN extrusion press which is currently the world’s largest in operation, the group will add three more sets of the same kind soon.
Currently, Zhongwang is also equipped with the world’s leading tilt smelting facilities and operates Asia’s largest special industrial aluminium die design and production centre. These aluminium alloy smelting and die design facilities enable Zhongwang to “offer either unique or excellent products unmatched by any other competitor”. The integration of product development, smelting, die design, extrusion and the seamless operation of other steps of production formed the cornerstone of Zhongwang’s operations and competitive advantages, enabling it to fully satisfy the diverse needs of customers in different sectors.
According to Mr. Lu, going forward, Zhongwang will continue to hone its smelting and die design strengths to offer processed aluminium products in finished or semi-finished forms. Zhongwang has already completed the construction of a high-speed train compartment workshop designed for production of high-speed train compartments that have been welded and processed. These products offer higher gross margins than the company’s extrusion products and are expected to contribute to Zhongwang’s business growth next year.
Focus on High Value-added Products as Fundermental Driver
In addition to strengthening production capacity, R&D and market development, Zhongwang is also seeking new growth drivers. Zhongwang has been setting its eye on a new business with the exponential growth potential for over a year. The new business plan, which is a key development of Zhongwang in 2011 and going forward, was unveiled in its 2010 annual report - Zhongwang plans to leverage its current technology, customer and market resources to expand its business to the manufacture of high value-added aluminium flat-rolled products.
According to a report by the Boston Consulting Group, of a range of aluminium flat rolled products, the consumption of medium to high thickness aluminium plates alone in China is expected to grow at a CAGR of 12% from 2005-2010. China will be the largest market for such products by 2015.
Mr. Lu added that Zhongwang has been all along moving up the industry chain to high value-added products, first from construction aluminium extrusion products to industrial products, now to flat-rolled products and processed finished goods which have already started exporting to the US. These transformations are centered towards one mission – to fuel Zhongwang’s growth with high value-added products.
Aluminium flat rolled products, mainly consisting of medium-to-high thickness plates, high-end foils and sheets, are widely applied in aerospace and aviation, marine vessels, rail transport, metallurgy, machinery, packaging and electronics sectors. The production of these high-end products requires advanced technology and in return offers higher profit margins. Even more attractive is the enormous market potential – China alone imports 600 kilotons of such products a year to satisfy its needs. Meanwhile, global economic recovery has also drive the demand and applications of aluminium alloy plates, leading to a widening gap between demand and industry capacity. The rising demand internationally offered Zhongwang a golden opportunity to capitalize on export opportunities. Expansion into high value-added product category enabled Chinese manufacturers counter the negative impact of the anti-dumping and countervailing duties levied on Chinese exports.
According to related research institute, Zhongwang is going to be the first company to introduce the whole series of world’s leading aluminium flat rolled product production lines and equipment in China. The designed capacity will be as high as 3 million tons, and construction will begin this year. When the whole project is in operation, it is believed that Zhongwang will not only reshape the competition landscape of the global market of aluminium flat rolled products but will also become a top player in it, and so will its industrial aluminium extrusion products.
Zhongwang’s Industrial Aluminium Extrusion Products Competete in the Global Market
The latest report issued by the American consultancy company IHS shows that Chinese products account for 19.8% of the world’s total output, slightly higher than the 19.4% of the United States. The above phenomenon is even more obvious in the industrial aluminium extrusion industry. Zhongwang Group remains the largest industrial aluminium extrusion product manufacturer in China while becoming the world’s second largest in the world. With 21 sets of world’s leading large-scale extrusion presses of over 75MN in the pipeline which are ready for full operations in the coming two years, Zhongwang will undoubtedly become an industrial aluminium extrusion product manufacturer with the largest amount of large-scale advanced equipment in the world. The company will be ahead of its major competitors with the world’s largest production capacity.
Mr. Lu believes that the Chinese industrial aluminium extrusion product company is a rising star compared to its international peers. Zhongwang’s foresighted strategic transformation and continuous investment in production equipment, research and development for high value-added production sessions have made it the world’s second largest industrial aluminium extrusion product manufacturer and the biggest in Asia. Good tools are the prerequisite to the successful execution of a job. In 2002, while most of the aluminium extrusion product manufacturers in China were still using extrusion presses of around 10MN to produce construction aluminium extrusion products, Zhongwang ordered the world’s largest 125MN aluminium alloy dual action extrusion press which aroused the attention of the world. The above extrusion press still produces aluminium extrusion products with huge cross-session at various size, its outputs are now widely used in railway, vessels, aviation and aerospace which become the pipelines of Zhongwang’s business in high-end large cross-section industrial aluminium extrusion products.
As revealed, Zhongwang Group plans to increase its production capacity to 1 million tons in 2014 and 1.2 million tons in 2015 in order to become the world’s largest industrial aluminium extrusion product manufacturer.
The year 2010 was an uncommon year for the Chinese industrial aluminium extrusion products companies in which Zhongwang had an especially profound experience. During April 2010, the United States commenced an investigation into Chinese aluminium extrusion product manufacturers pursuant to their anti-dumping and countervailing regulations. Although the investigation seriously hindered the exports of Chinese aluminium extrusion product manufacturers including Zhongwang, it did not affect Zhongwang’s defined development strategy in the industrial aluminium extrusion product market.
Expanding national demand, transformation of economic growth, improving industrial structure are the fundamental means in response to China’s economic crisis. In view of the above, urbanization in villages and town are in faster pace with larger investment on national infrastructures particularly on transportation and new energy which promotes the applications of industrial aluminium extrusion products. According to Zhongwang, it is common for a company to experience market dynamic and risk during its development. The anti-dumping and countervailing investigation may not be something negative for Zhongwang’s long term development as it encourages the company to adjust its pace in the development of higher-end products and the global markets. In the meanwhile, Zhongwang has strengthened its efforts in developing the Chinese domestic market. Leveraging on the capability of Zhongwang, the company has received orders from Changchun Subway, Haerbin Subway and Chengdu Subway for several large-scale high-speed rails projects.
