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After consolidating its leadership in the container sector, China International Marine Containers (CIMC) is focusing efforts to become one of the world's top trailer makers in coming years.
"Our goal is to become the world's largest trailer maker in the next six to seven years in terms of sales and competitiveness," said the company's president Mai Boliang.
According to Mai's blueprint, Shenzhen-listed CIMC will produce 40,000 trailers this year, making CIMC the largest producer in China.
This figure will double in 2005, enough to make it the world's biggest producer, Mai said.
After that, CIMC will need another four to five years to consolidate its position and turn it into the most competitive trailer maker in the world, he added.
To fulfil the lofty goal, the company will continue to merge and acquire other trailer makers.
"We will not stop (mergers and acquisitions)," Mai said, without naming his next target.
The company has acquired Yangzhou Tonghua Special Vehicle Co, Jinan Kogel Special Automobile Co and China's largest trailer maker, Huajun Group. The stakes in the three companies are 75.53 percent, 48 percent and 51 percent respectively.
It also spent US$4.5 million on some trailer-related assets of the US-based HPA Monon in 2003.
Analysts believe CIMC's entry into the trailer sector is a wise move and will create more profit in the near future.
Trailer and other special-purpose cargo vehicles will replace the traditional open vans to become the major road freight carriers in the next five to seven years, according to a development outline released by the Ministry of Communications.
And the government has tightened a crackdown on overloaded transportation this year, which will urge transporters to use safer and more efficient delivery tools such as trailers and special cargo trucks.
"All this bodes well for CIMC," said Jin Yutang, an analyst at United Securities.
And there are still large profit margins for CIMC to improve in the next years, said Tang Jianhua, chief analyst of the transportation sector at Guosen Securities.
"Currently, the gross profit rate of the trailer business in China stands at 4 percent," said Tang. Compare this with 11 percent in developed countries, meaning China's trailer sector is potentially lucrative.
"CIMC has a starting advantage in the trailer sector," said Jin. "Its rich funds, management, experience and global presence will help it gain leadership in the trailer sector in five years."
Container and trailer business operations share many similarities in terms of manufacturing chains and marketing modes, he said.
CIMC defined the trailer business as a new profit engine two years ago and has been increasing investment in the sector.
According to its half-year report, CIMC notched up revenues in its trailer business to 695 million yuan (US$84 million) with a gross profit rate of 9.58 percent, making the company a major Chinese supplier of trailers.
(China Daily September 6, 2004)
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