Editorial note: The serial report on the impression of Shenyang Machine Tool Group during “the 10th Five-year Plan”were published in China Industry Newspaper in succession from Feb. 27. It not only made a profound generalization that the Group had adhered to independent innovation along new type of industrialization and led the industry of machine tools in China to historical spanning since “the 10th Five-year Plan” but also greatly inspired the whole staff members of Shenyang Machine Tool. Today the serial report III is transmitted for readers.

　　 The purchase of SCHIESS, reorganizing Yunnan CY Group, and holding Kunming Machine Tool indicate that the enterprise has preliminarily realized equal attention to both intension and extension from simple intension type of growth, and realized strategic transform from local operations into multi-regional and multinational ones, from product operations into brand operations and capital operations. Shenyang Machine Tool Group implemented strategic purchase in succession within less than 1 year. It caused a sensation in both domestic and overseas industries of machine tools at the same time it opened more extensive space for the enterprise to develop. People have more association with the future of Shenyang Machine Tool.

　　 To activate potentials of the state-owned enterprises with great concentration and to try for growth of intension

　　 “The state-owned enterprises actually contain huge energy inside, only such energy has not been transformed into productivity as if it were embedded like underground oil and coal. Our task is to dig and release it. The cut-in point and respect should be persons at first, and the approach is to reform.” said CHEN Huiren when he took the post of President of Shenyang Machine Tool Group in 2001.

　　 In the same year Shenyang Machine Tool set about strategic reform and traced out a blue print for its operations and technical strategy: being absorbed in the industry of machine tools, walking along development of intension, and opening a new road with new mechanism, new clew, and new method for the state-owned enterprises to reform and develop so that everyone’s creativeness can fully flow, each creativeness can be fully activated, and each creativity can fully spurt.

　　 Based upon such rational analysis and judgment on traditional state-owned enterprises, the old mechanism of permanent employment of executives, a secure job, and extreme equalitarianism was totally smashed in Shenyang Machine Tool Group by reform and competitive mechanism. Respectively a new mechanism of employment depending on competitiveness, promotion depending on achievement, and income depending on contribution greatly inspire the cadres and employees with enthusiasm and creativity. All energy hidden behind the employees is spurting.

　　 2004 saw the huge change brought after 3-year reform. In 2004 the sales income and assets contribution rate were nearly 6 times of those in 2000; the sales income per person was 15 times of that in 2000; total output of machine tools was 9 times of that in 2000; and it rose to the top 15 of machine tools in the world in 2004 from the top 35 in 2002. During the short period, there were thorough changes in Shenyang Machine Tool Group. It has to be indicated that such changes fully depended on exploring inner potential to realize intension type of growth under the precondition that there was neither new investment in the enterprise nor new structure of an organization or external expansion and annexation. CHEN Huiren made an incisive judgment on these, “another new structure of an organization spread by a low-efficiency organization with careless management will surely be of low efficiency and dropping behind even more.”

　　 Shenyang Machine Tool succeeded. It not only realized its historical spanning from being weak to being strong but also becomes a new mark for domestic enterprises of machine tools to develop beyond doubt. It preliminary shows the track of rudiment development as an enterprise at the carrier level.

　　 Put forth effort to build up “the concentration of three large industries”to form a new pattern for future development

　　 At the beginning of 2004 Shenyang Machine Tool put forward that three strategic changes would be realized, namely equal attention to intension and extension from intension type of simple growth, strategic transform from local operations into multi-regional and multinational ones, and strategic transform from product operations into brand operations and capital operations.

　　 On Oct. 29 Shenyang Macine Tool Group solely purchased SCHIESS that had a history of 140 years. SCHIESS is a well-known heavy duty and large-sized brand in the world. In the news release conference to purchase SCHIESS, the executives of Shenyang Machine Tool Group indicated that it was a key step of long-term strategic objectives of Shenyang Machine Tool to purchase SCHIESS. It is of profound and strategic meaning: at first it can fully increase the service field and capabilities in research & development of Shenyang Machine Tool to a new level; secondly it builds up an international channel for Shenyang Machine Tool with regard to talented persons, technology, and market.

　　 On Dec. 30, Shenyang Machine Tool Group and Yunnan CY Group held a signing ceremony of strategic reorganization. Shenyang Machine Tool (Group) Kunming Co., Ltd. came into existence formally. Yunnan CY Group was the largest professional enterprise manufacturing lathes in the southwest of China, which is called “an export base for golden brands.” In the industry of machine tools at home it once had the good name, “Shenyang No. 1 Machine Tool Works in the north and Yunnan Machine Tool Works in the south.”

　　 On Sep. 17, 2005, Shenyang Machine Tool Group was formally in receipt of all stock rights of Jiaoda Kunming Machine Tool held by the Industrial (Group) Parent Company of Xi’an Jiaotong University and became the largest stockholder of Kunming Machine Tool. Kunming Machine Tool was the largest enterprise manufacturing boring and milling machine tools in the southwest of China. It had greater advantages in large-sized and high-precision boring and milling machine tools.

　　 The series of strategic expansions were too many to see in the industry, however the complete clew and careful plan are evident beyond doubt: that the purchase of SCHIESS was on the basis of zero starting point has quickly increased the developing capability in heavy duty and large-sized equipment of Shenyang Machine Tool and thus occupies a commanding point of technical development; to reorganize Yunnan CY Group and to hold Jiaoda Kunming Machine Tool is to seek for maximum market share through complementary advantages.

　　 With regard to the strategy of multi-regional and multinational operations, CHEN Huiren said, “We must expand within the frame of rational strategic objective without being blind, scattered, or passive. Actually we built up the concentration of three large industries during the past several years, namely giving priority to Shenyang, including the concentration of three large industries in Shenyang, Kunming, and Europe.” It is the most definite “strategic schematic layout”of Shenyang Machine Tool.

　　 Being devoted to development of national brand, and labeling “China”on the coordinates of machine tools in the world

　　 It looks as if the continuous extension gave an impression of “radicalness”, however looking back to the developing strategy of Shenyang Machine Tool during recent years, the enterprise took a cutting down strategy in the field of operations actually. Shenyang Machine Tool “cut off”such operations as real estate, movie and TV advertising, and biological pharmacy after 2001. “Shenyang has taken machine tools as primary service ‘with obstinacy’. It is a strategic choice after deep consideration. We will hold the line once it is decided.”

　　 They are devoted to development of national brand to label “China”on the coordinates of machine tools in the world. That the great and historical changes took place in Shenyang Machine Tool after several years’intension development with great concentration was just due to being absorbed in and obsessed by the industry of machine tools so that Shenyang Machine Tool was able to successfully expand.

　　 The Chinese and the German parties worked together in such fields as product development, manufacturing, and selling after new SCHIESS was established. The enterprise is developing well. Last year on the Chinese and European markets new SCHIESS sold 17 heavy duty and large-sized machine tools and got possession of 37 million Eurodollar order forms. On Feb. 2, 2006 Shenyang Machine Tool obtained the only Economic Prize awarded by Ascherleben to an overseas company. “The huge Chinese dragon saved the German company from different position.”It was so appraised for Shenyang Machine Tool to purchase SCHIESS by the Evening News of German TV Station II.

　　 The output and sales of Yunnan CY Group increased by 4 times as compared with those of last year after only one year’s strategic reorganization implemented by Shenyang Machine Tool, and it doubles the best level in the history. LI Xinhua, Vice-governor of Yunnan Province said, “We are right to choose the strategic co-partner, Shenyang Machine Tool Group.”

　　 So far the market focusing effect taken by the concentration of three large industries of Shenyang Machin Tool has been still apparent, which has great influence upon existing pattern for the industry of machine tools in China. At present the industrial concentration in Shenyang is reorganizing resources of manufacture through two large manufacturing bases under construction to realize reconstruction of business flow totally, increase product manufacturing levels, realize production and operation of numerically-controlled on large scale, and create future competitive edge .

　　 Whether the industrial concentration in Shenyang that shows completed framework or the industrial concentration in Kunming that has its framework basically built, or the industrial concentration in Europe under construction that centers on Germany, Shenyang Machine Tool has definite objective, that is to “create globally famous brand and set up globally famous company.”

　　 It is no doubt that Shenyang Machine Tool will realize RMB 10 billion sales income in the near future. Its product structure and market structure are being further optimized. Its capability in technical innovation is further increased. Shenyang Machine Tool will also realize new “its edition updating”, namely a world enterprise. Its quantitative index is to leap forward into the top 5 of machine tools in the world till the top 3 from the top 10 currently.

　　 There are also two necessities to understand the developing strategy of Shenyang Machine Tool, namely only an enterprise that has definite direction and an enterpriser who has the sense of mission can create a complete set of effective mechanism and route to lead the enterprise to an irreversible way of development.