Zhou Yuxian: Accelerate intelligent transformation and the transformation of innovation outcomes to drive the upgrading of the industrial chain.

Source: Date：2020-05-14

Last night, the second period of the "High-end Dialogue between Entrepreneurs Network Charity Event" jointly hosted by the Education and Training Center of the State-owned Assets Supervision and Administration Commission of the State Council, China Enterprise Federation and China Entrepreneurs Association was successfully held.

Chairman Zhou Yupian of China Building Materials Group attended the event and delivered a speech on the theme of "Facilitating Industrial Chains and Promoting New Development," highlighting the efforts and achievements made by China Building Materials Group in fighting the epidemic, resuming production and operations, and restoring and upgrading industrial chains.

The Alibaba DingTalk platform, Renmin Daily, Sina Finance, China.com, Baidu Finance, 21st Century Economic Report, China Enterprise News, and Enterprise Management Magazine conducted live streaming, and over 4 million people watched the event online, giving it rave reviews for its "packed with practical tips." Let's take a look back together.

"High-level Dialogue Video"

（視頻長2.5個小時，建議wifi環境下觀看）

Interview with Chairman Zhou Yuxian Hello everyone! My name is Zhou Yuxian, and I am the chairman and party secretary of China Building Materials Group.

Topic 1:

Maximizing Efforts to Resume Production and Unblock the Upstream and Downstream Industrial Chains

Just now, Mr. Zhu delivered a themed speech. I take this opportunity to also introduce China Building Materials Group to you all.

China Building Materials Group is a pilot enterprise for state-owned capital investment companies and the world's largest integrated building materials enterprise. As of December 31, 2019, the group's total assets exceeded 610 billion yuan, sales revenue exceeded 390 billion yuan, and profit attributable to equity holders exceeded 23.5 billion yuan, with 200,000 employees. Another feature is that China Building Materials is a global leading material developer and comprehensive service provider, with businesses covering the three combinations of basic building materials, new materials, and engineering technology services, and the most extensive industrial portfolio in the global building materials and materials industry. According to the 2019 statistics, China Building Materials Group has 44,000 suppliers and over 120,000 customers, with an annual coal consumption of 46 million tons and electricity consumption of about 35 billion kWh, and 7.5 billion cubic meters of natural gas. Overall, for a group like us, in the face of the COVID-19 epidemic, how to strike a balance between fighting the epidemic and resuming work and production is a high-difficulty task.

Urgent support for 72 anti-epidemic projects nationwide

China Building Materials Group has been following the unified deployment of the Central Party Committee, the State Council, and the State-owned Assets Supervision and Administration Commission (SASAC) in both fighting the epidemic and resuming work and production. In terms of epidemic control, because China Building Materials Group has a broad coverage of industrial chains and a strong synergy effect, we provided building materials products to 72 hospitals in 19 provinces and municipalities across the country, including Fuxingshan and Leishen Mountain hospitals, in the very first days of the epidemic outbreak. At the same time, we also provided more than 10 kinds of new materials for the frontline of the epidemic prevention and control. To date, we have donated a total of over 54 million yuan in cash and goods. In terms of resuming work and production, all of our more than 1,300 enterprises have achieved an operational rate of 99% or above, and from the first quarter's performance, our KPI indicators have exceeded expectations, with stable and standardized production for both basic building materials, new materials, and engineering and technical services.

At the quarterly economic operation analysis meeting of the State-owned Assets Supervision and Administration Commission (SASAC), the "three stable targets and four guarantee tasks plus one intensified effort" were put forward. China Building Materials Group strictly implemented and carried out the requirements of SASAC, truly acting as a leading enterprise in the building materials industry and making every effort to restore production and drive the upstream and downstream supply chains. In summary, we have carried out the following four aspects of work:

First, the basic building materials sector is making every effort to resume production and achieve full capacity utilization.

So far, it has supplied the basic building materials for 58 key national transportation infrastructure projects and key national projects, including the main project of the Asian Games, as well as the Beijing-Shanghai High-Speed Railway, the Chengdu-Lanzhou High-Speed Railway, and key nuclear power and hydropower projects. At the same time, it uses the function of cement co-disposal to dispose of hazardous waste, household waste, and solid waste in 11 provinces across the country through 24 cement co-disposal production lines, with an annual disposal capacity of 2.42 million tons. During the epidemic period, it specifically coordinated the disposal of medical waste exceeding 60 tons.

Cement companies resume production to ensure infrastructure construction.

We also produce special cement, on the one hand, stepping up our technological research and development during the epidemic, and on the other hand, actively providing low-heat dam cement and oilfield cement for special projects, such as oilfield projects and dam projects, including the Baihezhan project and the Sinopec oilfield.

In summary, by providing materials, we can effectively ensure the stability of the supply chain for basic building materials and the smooth operation of the industrial chain.

Second, new materials enterprises have been thriving despite the downturn.

The glass fiber production line will continue operating without stopping during the Spring Festival holiday.

In fact, we have some materials that have been operating 24 hours a day continuously during the Spring Festival holiday period, without stopping production. In particular after the Spring Festival, we have actively ensured continuous production while taking preventive measures against the epidemic and ensuring the health of our employees. For example, carbon fiber, glass fiber, new glass materials, and battery separators, which are all products that are produced continuously 24 hours a day. Because we ensured production, from the first quarter's situation, the sales volume of glass fiber increased by 10%, the sales volume of carbon fiber and lithium battery separators increased compared to the same period last year, and we have completed our tasks well. The new glass materials fully utilize high-tech and intelligent management, truly achieving quality improvement through technology and efficiency improvement through intelligent management. With a staff configuration of less than 60%, the product quality rate is above 90%, and the first-quarter performance has increased significantly. Our information display enterprise Guoxian Technology also held a 150-plus supplier mobilization meeting online during the epidemic period, so that everyone could band together to keep warm and overcome the difficulties together. The new material enterprises that have continued production throughout the period have all achieved good performance in the first quarter.

Donate pharmaceutical glass bottles to vaccine research and frontline hospitals fighting the pandemic.

During the epidemic, due to the needs of the frontline anti-epidemic work, we also provided a number of new material products. Here are a few examples. For example, we provided 200,000 units of 5.0 neutral borosilicate pharmaceutical glass tubes, which are actually needed for vaccine research and the frontline hospitals. We provided more than 12,000 units of infrared thermometer lenses and temperature measurement glass materials to ensure the needs of epidemic prevention and control institutions and frontline hospitals. We also provided a lot of glass fiber filter paper that can filter 0.3 micron dust, as well as our flat filter units, which are used in hospital sterile rooms, air conditioning exhaust systems, etc. These new materials were all produced in the first quarter to meet the needs of the frontline epidemic prevention and control work.

Third, the engineering and technical services sector has been steadily advancing.

Completed Zhongshan Boai School in Yongshan County, Zhaotong City, Yunnan Province

In the field of cement and glass engineering technology services, our company has a market share of 80% in the domestic market, so whether our projects can be carried out smoothly during the epidemic directly affects the construction of cement plants and glass factories in our country. During this process, the entire group has made every effort to ensure the progress of the project, and has successfully completed a number of key projects. For example, during the epidemic prevention and control period, we completed the construction of a 4500-ton cement production line in Tibet ahead of schedule, and completed the construction of a 10,000-ton cement production line in Guangdong's Taipai on schedule. We completed the construction of a solar project in Zigong, Sichuan. We also built school buildings for poverty alleviation points in Yunnan Province using prefabricated buildings, and the environmentally friendly and comfortable schools have received thanks from the students. Not only has the overall operation of the project in China been good, but the situation abroad has also been smooth.

Fourth, alleviate the cash flow shortage difficulties of small and medium-sized enterprises.

During the epidemic prevention and control period, we reduced or exempted rent for small and medium-sized enterprises and individual businesses who rented our buildings or workshops in the first quarter, with a total reduction or exemption of 18.77 million yuan. We expect a total reduction or deferment of more than 32 million yuan in the second quarter, and a total reduction or deferment of more than 32 million yuan for the whole year.

On the whole, we have taken concrete actions by leveraging our own industries and the smooth operation of the supply chains and value chains of leading enterprises to drive the smooth operation of the entire industry's supply chains and value chains.

Topic 2:

Transforming and upgrading supply chains and industrial chains

Let me share with you some insights into innovation and smart manufacturing, based on the case of China Building Materials Corporation. In fact, China Building Materials is a high-tech company with 38,000 technical personnel and 26 research institutes. To date, it has obtained 12,500 patents and won five first-prize awards for national science and technology progress. Innovation is the core competitiveness of China Building Materials. Innovation drives development, and it is also one of the company's important development strategies. I would like to share with you our practices in four aspects.

First, continuously upgrade the basic materials.

Basic building materials include cement and glass. What should we do next? China National Building Materials' cement plant design and manufacturing technology is the most advanced in the world, with a market share of over 80% in China's cement plant construction market. We should continuously upgrade the manufacturing level of basic building materials using China National Building Materials' advanced cement manufacturing technology and glass manufacturing technology.

Cement Intelligent Loading System

What are the next trends in the basic building materials industry? They are digitalization, intelligence, and greenization. We will collect information on the entire process of cement production from mining to production to packaging and loading, and use data-based methods to collect it. After collection, we will use nonlinear, adaptive, and predictable intelligent methods to control and command the entire factory, which will greatly improve the labor productivity and stability of product quality. For example, 15 years ago, a cement production line with a daily output of 5,000 tons required 2,000 employees. However, 15 years later today, the same production line only needs 50 employees, and none of them are actual operators. They are all inspectors who sit in front of screens to observe. Our first intelligent production line was in Lai'an, Shandong, where the Lai'an production line achieved its intelligent goal and was named by the Ministry of Industry and Information Technology as the world's first new dry-process cement low-energy intelligent production line. After this production line, we went from Shandong to Guizhou, from Guizhou to Gansu, and from Gansu to Zhejiang, where we have implemented and promoted advanced intelligent production lines one after another. During the epidemic, we put into operation a 7,500-ton production line in Qiankan Southern, Zhejiang, where the labor productivity of this production line after its operation was 200% higher than that of the same production line last year, which means that the cost of producing one ton of cement could be reduced by 30 yuan. More importantly, it greatly reduced energy consumption, with dust emissions and emissions of sulfur dioxide, nitrogen oxides, and carbon dioxide far below national standards and reaching global leading levels. China Building Materials has built a number of factories in gardens, on grasslands, and in forests, making cement factories able to coexist with the environment.

Second, by innovation we will foster and nurture new materials.

We have won five national first-prize awards for scientific and technological progress, including high-performance carbon fiber, glass fiber, and ultra-thin glass, as well as three China Industry Awards, commonly known as the Oscar of the industrial sector, including glass fiber, gypsum board, and ultra-thin glass. According to the data from China Building Materials, not only is our science and technology leading in the field of new materials, but our actual achievements in terms of industrialization, management level, and the level of technology transfer are also leading. Glass fiber has not only achieved the highest sales volume but also the highest technical level, ranking first in the world in both areas. Its market share is also the first in the world. The glass fiber manufacturing base is not only in China but also invested in the United States, Egypt, and India. We are constantly using scientific and technological achievements in the field of new materials to transform them into industries.

The company's independently developed 1,000-ton T800 carbon fiber production line has achieved mass production and won the National Science and Technology Progress Award First Prize.

What about the future? We will continue to innovate and upgrade our existing products, such as carbon fiber, which is considered the "black gold" of materials. Our country's aerospace industry needs high-quality and high-performance carbon fiber, and China Building Materials Group has obtained the technology for high-performance carbon fiber through more than a decade of R&D efforts. In this process, we have gradually broken through the technological barriers for T300, T700, T800, and T1000. What's more important is that we will turn these achievements into industries. During the epidemic, we invested in a 10,000-ton high-performance carbon fiber production line in Xining, Qinghai, and actively sought to resume production. To date, the main building of the polymerization plant has been completed, and the carbonization equipment for T800 has arrived on site. By seizing the time, we will ensure a smooth start of production by the end of the year and contribute to the development of aviation composite materials in China. For example, our 8.5th-generation TFT-LCD glass substrate products with independent intellectual property rights have been steadily introduced into the large-size display industry chain and have become one of the eight priority projects supported by the National Key Basic Materials Area in 2020. There are also some new materials with similar achievements.

Third, cooperative innovation, joint upgrade.

We work together with other partners to innovate and upgrade. We have cooperated with COMAC on civil aviation composite materials, with Sinopec on new materials and core equipment, and with the Three Gorges Group on the protection of the Yangtze River and the wind turbine blade industry.

Sign a core strategic partnership agreement with Commercial Aircraft Corporation of China (COMAC)

Meanwhile, we are also cooperating with private enterprises. The group-affiliated enterprises are the largest cooperative partners of Huawei Group's enterprise business globally, placing over 4,000 orders online for Huawei in January-April to ensure stable business development, with a year-on-year growth rate of 6%. I also hope to have the opportunity to cooperate with FAW Group and Xiaomi Group.

Fourth, lay out new infrastructure and new business models.

In the area of new infrastructure, we have made breakthroughs in the technology of ultra-thin low-dielectric glass fiber used in the copper clad laminate (PCB board) for 5G mobile phone chips, and we have begun to implement it. We have also made breakthroughs in the technology of ceramic insulator pins used on our country's ultra-high voltage power grid, and this project was applied to several major projects of the State Grid during the anti-epidemic period in the first quarter.

On the whole, we not only lead the way with technology and innovation, but also more importantly, we can transform the results into industries and drive the entire industrial chain and supply chain upgrades from the industries.

Topic 3:

Maintaining the stability of international industrial and supply chains

China Building Materials Group is actually a company with relatively high internationalization level, a pioneer in going abroad, and a vanguard in participating in the construction of the Belt and Road Initiative.

On the one hand, due to China Building Material's leading global engineering technology in cement and glass, it has a market share of over 65% in the global cement and glass engineering market today, and we have 279 engineering projects underway worldwide.

On the other hand, many new materials we produce are highly competitive domestically and have the highest market share globally, so our products naturally need to be sold all over the world. Not only do we sell products, in fact, our capital deployment also revolves around our customers. Therefore, we have capital investments and layouts in the United States, Germany, India, South Korea, and many African countries. Overall, we are stabilizing our engineering and supply chains, not only to stabilize the global industrial and supply chains, but also to provide support for the stability of our own income.

We have 30,000 employees overseas, of which 10,000 are Chinese nationals and 20,000 are foreign nationals. The epidemic has actually had a significant impact on our overseas factories and business operations, with more than 40 projects affected to varying degrees. In such circumstances, how can we maintain the stability of the global supply chain and industrial chain? We have mainly done two aspects of work.

First, secure the project.

Indonesia's BAYAH Phase II Cement Project with Daily Output of 10,000 Tons

With so many engineering projects at hand, it is also a great challenge to complete them on schedule and according to the commercial contracts signed with the owners. For example, during the pandemic, we completed the second phase of the BAYAH cement plant in Indonesia, which has a daily output of 10,000 tons, 75 days ahead of schedule. We also completed projects on schedule in Algeria, South Africa and other countries. We also completed the construction of the first glass production line in Kazakhstan, enabling the country to achieve localization of glass production. We also completed the gypsum board project in other African countries, 15 days ahead of schedule. In summary, although more than 40 projects were affected by the pandemic, we have ensured the health and safety of our employees while trying our best to fulfill contracts and minimize the impact of the pandemic.

Second, ensure stable supply.

First, we have a considerable number of capital investments globally, meaning we have a number of manufacturing bases, overseas businesses, and online e-commerce platforms. During the pandemic, we have done everything in our power to keep production going and supply uninterrupted, ensuring the normal supply of basic building materials and new materials to the countries where we operate. For example, our industrial park in Zambia has been operating continuously without interruption, producing continuously to ensure the supply of basic building materials to the entire country of Zambia. This has been praised by the Ministry of Industry and Commerce, the Ministry of Health, and the President's Special Envoy.

The second is the outsourcing of some management. We manage 75 cement production lines globally, not those we have invested in, but those owned by foreign investors, but managed by us. We also provide spare parts supply and after-sales service for the construction of cement and glass production lines in 100 countries. During the epidemic period, including now, we have continued to make efforts in this regard. The operation of the 75 production lines and the spare parts, spare parts and after-sales service for 100 countries are also an important supply link.

Wind turbine blades shipped for export

Meanwhile, we also have a lot of products within the country that need to be exported, such as our wind turbine blades, which we have exported in eight batches to the United States, Australia, Japan, and South Africa so far this quarter. Because our market share of wind turbine blades is the first in the world and our scale is also the first, the quality is top-notch. We were able to ensure the continuous export of wind turbine blades during the epidemic, with a significant increase in exports compared to the same period last year. In addition, we have exported more than 200 sets of mechanical and control systems corresponding to engineering projects, which not only ensured the stability of the supply chain but also guaranteed the smooth construction of our overseas projects.

In addition to ensuring the overall supply of materials, we also guarantee imports. Because we have a lot of materials that need to be imported, we promptly formulated an epidemic prevention and control plan at the outset of the epidemic and increased the procurement of foreign sources of supply, changing the mode of transportation from sea transportation to railway transportation to ensure the import of large quantities of goods. For example, wood and OSB are imported by rail to ensure stable domestic market prices and the safety of the industrial chain.

Overall, China Building Materials has, during the pandemic, stabilized projects and supply chains, truly creating a global leadership role in stabilizing the industry supply chain and upgrading the industrial chain.

A Sentence to Ponder

Thank you for giving China Building Materials this opportunity. In one word, that's my own experience. The future competition is the competition of innovation level. Innovation is a broad concept, not only technological innovation, but also management innovation, business model innovation, and institutional innovation. Only by innovation can we enhance the comprehensive competitiveness of our enterprise, only by innovation can we fulfill the tasks assigned by the State-owned Assets Supervision and Administration Commission (SASAC) and other shareholders, and only by innovation can China Building Materials become a world-class materials industry investment company. Thank you!

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Zhou Yuxian: Accelerate intelligent transformation and the transformation of innovation outcomes to drive the upgrading of the industrial chain.

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