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From nothing to a profitable wholly owned foreign investment enterprise in RunZhou, Zhenjiang, China in 250 days. PowerPoint PPT Presentation


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From nothing to a profitable wholly owned foreign investment enterprise in RunZhou, Zhenjiang, China in 250 days. Propulsys Inc Holding Company. World Headquarters Hopkinsville, Kentucky, U.S.A. Gerotor Hydraulic Motors Low speed High Torque A lot of power in a small package

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From nothing to a profitable wholly owned foreign investment enterprise in RunZhou, Zhenjiang, China in 250 days.

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From nothing to a profitable wholly owned foreign investment enterprise in RunZhou, Zhenjiang, China in 250 days.


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Propulsys Inc

Holding Company


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World Headquarters

Hopkinsville, Kentucky,

U.S.A.


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Gerotor Hydraulic Motors

Low speed High Torque

A lot of power in a small package

+/- 80% efficiency

Hydraulic Brakes

Integrated with the gerotor hydraulic motor

Stand alone operation

Production demands precision engineering

Very tight tolerance machining typical 2/10,000 inch

(40 times smaller than the thickness of a typical black human hair).

Core Products


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Hydraulic Gerotor Motors


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Hydraulic Brakes & Integrated Motor Brakes


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Where are these motors and brakes used?

Mobile Equipment is the largest sector.

It is hard to go through a day where our products have not had an impact on your life in some way.


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Aerial Work Platforms


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Agricultural Equipment


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Concrete & Paving Equipment


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Construction Equipment


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Cranes, Winches & Utility Vehicles


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Lawn Care Products


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Chinese domestic demand:

Already the largest market in Asia

Forecasted to double in size in the next 5 years

Industrial & Service infra-structure support

Chinese competitors were already emerging

Why China?


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4 key strategic reasons for Propulsys to opening a company in China:

Participation

Access

Capacity

Expected

Propulsys – China Strategy


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Acquire an existing Chinese company:

Hard to find a good one that wants to sell right now!

Who are the current owners?

Takes a great deal of time and will not necessarily fit!

Establishing a company in China


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Form a Joint Venture partnership:

Very difficult- many cross cultural issues cloud the opportunities

We tried……

We established a supply agreement with a Chinese manufacturer.

We established a good relationship…

We greatly exceeded forecasts.

18 months of dedicated and supportive negotiations to establish a J/V to manufacture additional new products.

Failed….January 17, 2005

Failed because the Chinese major stake holder did not want the control of the shares and votes and investment….

But, wanted control of his “destiny”…wanted to do it his way!

Establishing a company in China


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Create a new company in China

Challenging in a country with such a long cultural history.

Administrative challenges

Language barriers

But, we had learnt a lot

Establishing a company in China


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Critical factors to be considered :

Resource availability:

Industrial Land

Skilled work force

Good infra-structures

Energy supplies

Attitude of the local government to new businesses

THIS MOST IMPORTANT

Where do you begin?


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Why RunZhou, Zhenjiang, Jiangsu?


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Location of Zhenjiang City and the district of RunZhou.


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Yangtze River delta is one of the machinery centers of both China and the world

Runzhou

Nanjing

Shanghai


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Zhenjiang has a population of 2.89Million


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Zhenjiang a city with over 3,000 years of history.


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Zhenjiang cultural heritage


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Zhenjiang Infra-Structure

Zhenjiang is pivotally located with a highly developed infra-structure, including a deep sea port.


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Bridging north & south China across the mighty Yangtze River


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UTILITIES

ABUNDANT SUPPLIES of ELECTRICITY, GAS and WATER


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Zhenjiang Education System

6 universities

9 professional colleges

14 adult education schools

Annually:

20,000 qualified technical graduates 210,000 student graduates


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Resource availability:

Industrial Land Highly available and well located

Skilled work force Plentiful & skilled at all levels

Good infra-structures Good and getting better every day

Energy Well planned energy resources, with daily availability.

Attitude of the local government to new businesses

We traveled China in search of the right location, Beijing…..Jinan…..Wuxi…..Suzhou..…Shanghai….. Ningbo….. Guangzhou…..Shenzhen and more.

Zhenjiang & RunZhou Governments offered the BEST new business investment environment.

Why Runzhou, Zhenjiang, Jiangsu?


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The key to success in China

Is not your investment

Is not your products

Is not your designs

Is not your production techniques

It is RELATIONSHIPS!

50% of your executive manager’s time will be absorbed in building and sustaining relationships

If you learn nothing else from my presentation….please learn this!


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Conclude negotiations with the Chinese authorities to:

Establish a Wholly Owned Foreign Investment Enterprise.

Target April 30, 2005

Maximize incentive and tax benefits for 5 years & beyond

Target April 30, 2005

Obtain Business License

Target April 30, 2005

Conclude Land Use Contract

Target April 30, 2005

Establish bank accounts and financial relationship

Target April 30, 2005

Selection and appointment of critical managers

Target May 15, 2005

Take “possession” of the land

Target May 31, 2005

Construction of 92,000 sq ft building to be completed by September 30, 2005

Commence production November 1, 2005

Key objectives established at 1st meeting with RunZhou District Government . Day 1 - January 24, 2005


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White (China) Drive Products Co. Ltd.

Business License issued April 28, 2005


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Ground Zero May 2005


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Foundation Stone Laying Ceremony June 8, 2005


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Unshakeable Foundations… like the Great Wall of China


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Progress….. Late August , 2005


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The building contractors have gone……October 2005


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WCDP Electrical Sub-station


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Heat Treatment


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Production EquipmentOperating 24/7


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Wash, Dry and Paint Operation


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QMS Equipment


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Test Lab and R&D Center


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The first BK10 Hydraulic Brake January 6, 2006


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Cost of Operating in China


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Utility costs

Electricity: $0.05/kw/h

Water: $0.28/m3

Gas: $0.30/m3


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Typical savings versus the same or similar material in USA

45+%

Because we are a Chinese company

Material Costs


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HUMAN RESOURCE COSTS PER YEAR

$10000+

$6500

$5000

$3000

$2000

skilled worker

technical operator

middle manager

design engineer

senior manager


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Conduct Research and Development, Manufacture and Sale of:

Advanced technology multi-disc integrated and non-integrated brakes.

New generation of gerotor motors using state of the art materials and process technologies.

New generation of steering units using state of the art materials and process technologies.

Company Vision


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WCDP will design, develop and manufacture

World class quality products

Sell them at competitive prices

Be the worlds lowest cost manufacturer of these products.

Company Mission


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Traditionally foreign investors make one of two choices in the management of their Chinese company:

Employ expatriates as their senior managers

Transfer the “corporate” management skills

Transfer good and bad habits

Transfer this is the way we do it in …….

Result:

An American managed company in China, and loss of gains to be made through synergies of Chinese and American techniques & management style.

Employ only Chinese

No transfer of corporate management skills

Only Chinese good & bad habits

Very poor inter-company communications

Result:

A Chinese Managed company with NO synergies

OR

You can choose to develop a cross cultural management team to take the best of both cultures!

Managing a Chinese Company


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Senior Managers

Jennifer Chen

V/GM Operations & Sales

Mike Yuan

Finance Manager

Dr. John Zhang

Engineering Manager

Paul Chen

V/GM Employee

Development


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WCDP takes the wonderful 5,000 years of Chinese culture and blends it with the best western practices and management techniques to create our own culture.

WCDP is different… unique.. Members of a new order.

The WCDP culture

Equal opportunity is given to every employee.

All employees are given the opportunity to develop and grow.

There are no limits… all employees can be as good as THEY want to be.

All employees strive every day to be the very best.

WCDP rewards those who make significant contributions

WCDP has established a team environment, with every team member accepting their responsibilities as members of the WCDP team.

Developing our company culture


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Customized and system controlled manufacturing, using state of the art ERP technologies

Lean manufacturing technologies to achieve a production velocity of 10 days.

Utilize new technologies and materials to achieve lowest total production costs

One piece flow – not just batch production, but meeting the needs of the customer

4 Strategies of Operational Excellence that position our Chinese plant as a world leader


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Integrate WCDP into corporate wide global ERP system and 24 hour 7 days a week intranet capabilities, using latest technologies and systems.

Access to all data bases in Mandarin to facilitate knowledge driven decisions.

Flexible hardware and software systems that are rapidly expandable and support double digit growth

Application of customized ERP technology to speed up the manufacturing cycle to:

Optimize equipment utilization

Minimize inventories

Maximize productivity

Quality Management integrated into the total ERP system

Information Technologies Strategies


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Manning Plan


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WCDP:

Current Plan

Has a well defined development and manufacturing program

Current Products

BK10 Multi Disc Brake

SB Multi Disc Brake

WR Motor


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Propulsys believes it is uniquely positioned:

Many companies including Fortune 500 companies recognize the need to be in China, but:

Lack the knowledge and skills to establish a manufacturing and or logistics operation in China.

Do not understand “how China works”

Do not have the government contacts

Are afraid of the unknown and distrust the Chinese

Top executives are not prepared to spend the time in China working through these issues

Have great concerns about systems integration

Future Plans….


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WCDP has the capability of addressing all of these issues and concerns.

Propulsys Inc. is prepared to invest more to expand and diversify when the opportunity arises.

WCDP has firm options with RunZhou Government that will triple the landarea.

Future Plans….


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WCDP will offer to third party companies:

Strategic Partnership Relationship to design, develop and manufacture:

Finished Products

Major sub-assemblies

Metric designs

Chinese materials and components.

Future Plans


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IfChina is in your future, now you have 2 new possible investment opportunities:

A strategic partnership with WCDP or,

Directly with the RunZhou Government

Can we help you?

What are your plans for the future?


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