Shanghai GKN Drive shaft Co., Ltd. (SDS) is a Sino-Germany Joint Venture which manufactures sideshafts, propshafts and torque products and owns the all-round technical expertise in precision casting, mechanical manufacturing, heat treatment, surface finishing, as well as mould design and manufacturing .SDS is one of the first joint ventures in Mainland China which supply major automotive components.

Shanghai GKN Drive shaft Co., Ltd. (SDS) opened up in May1988 as a Sino-Germany Joint Venture. The main shareholders of SDS is GKN Automotive Driveline Division and Shanghai Automotive Industry (Group) Corporation (SAIC). SDS has made great achievements sixteen years from then on. The annual average sales revenue has grown at the rate of 30.65%. The profit before tax has annually increased at the rate of 30.35% on the average with the asset volume at the annual rate of 22.4% on the average.

Along with its rapid development, SDS has accomplished the numerous No.1s in the domestic driveline division. It is the No.1 corporation to introduce the CVJ (constant velocity joints) driveshaft from GKN, which fills in the blank of the domestic CVJ driveshaft division By now it is also the No 1 that owns the manufacturing technology in the GKN’s CVJ driveshaft system products in China. Its market share, coverage rate and comprehensive economic benefit of the CVJ driveshaft rank top in China.

Additonal investment

With the rapid growth of the domestic auto market, the demand for the CJV driveshaft has been increasing. In order to enhance the manufacturing capability , SDS has successively added investment in the project at seven times since the year 1991 , which makes the total investment volume rise from$ 22,670,000 to $214,160,000 (all the additional investment comes from the undistributed profit ,namely, the shareholders do not need to add the new cash investment).

The SDS has adopted the way of additional investment in accord with changes in the auto market , which not only reduces the investment risks but also meet the market demand . The additional investment from 1988 to 2004 has experienced the three development stages.

The first stage is from 1988 to 1992 .The SDS had undergone the pioneering stage. Under the guildeline of “market-oriented, quality first”, the top management of the SDS had taken the advantage of the initial development of the auto market . By introducing the advanced the CVJs manufacturing technology from GKN, the SDS assembled the imported parts from the beginning and then moved to the domestic production which accomplished the first and second project investment in more than four years

The second stage is from 1993 to 2000. During the period the SDS had undergone the stage of growth. Facing the booming auto market and the development of the three auto blocs, the top management put forward the principle of “fully meeting the need of customers and contributing to the development of the society”

 and ushered in ISO9001, QW9000 and VDA 6.1 certificates of Quality System in order to occupy the middle-class auto market.

By adopting the sales strategy of “gaining the initiative by striking the first blow and locking in development of the whole workshop, the SDS designed many new types of drivelines in line with the requirement of customers through the acceleration of domestic production and established the cooperative and collaborative relation with many parties such as Shanghai Volkswagon, Faw Volkswagon, DPCA (Dongfeng Peugeot Citroen Automobile Company Ltd.), Shanghai GM and Guangzhou Honda. It has accomplished the third, fourth and fifth project investment in the past eight years. GKN Driveline has 60% by volume of the world market for constant velocity joints (CVJs). Production of CVJs now exceeds 400,000 from 60,000.

  The third stage is from the year 2001 to 2004, during which the SDS has also experienced growth. When more and more private cars have been sold instead of business cars, the auto industry all over the country enters into the period of rapid growth. Facing the fierce competition from the domestic and world market, it has grasped the opportunity to put forward the new principle and the goal of development as a world leader in the design and manufacture of driveline products, namely, the core value of the SDS --- “providing products in line with the requirements of consumers for cost and quality by struggling forward with the spirit of diligence and optimism”

The top management clings to the direction and goal of development and explores the market at full strength .By introducing the high-tech of the CVJ system products and pushing forward the programs, it has significantly enhanced the technology of products and strengthened the image of the enterprise in all-round way. The SDS has attained the new height by developing more than twenty new products. After the seventh project investment, the production of CVJ driveline shaft exceeded 1,400,000, with sales in 2003 of 1.28 billion Yuan and profit of over 300,000,000 Yuan. It has fulfilled the goal of the ten five-year planning ahead of time.

The sales revenue in the first half of 2004 reaches 801,000,000 Yuan, with the increase of 9.4% over that of last year.

Opening up the market

The SDS has fostered its potential customers through successively introducing products since 1970. Developing the new products with its customers by giving full play to its technological edge and accelerating its domestic production by using the advanced manufacturing technology, it has enlarged the base of the major customers. By the year 1995, the products of the company had been supplied to the famous domestic carmakers, such as FAW-VW, FAW, CITROEN, Beijing Jeep Corporation, which has taken up about one third of its production.

By the end of 1990s , the SDS have become the OEM suppliers of the main domestic carmakers, such as Guangzhouhonda, Shanghai Chery, Shanghai General Motor, CITROEN, Beijing Jeep Corporation, Jiangling Auto Group, Shenyang Goldencup, Jianghuai auto Group , Jinlong auto etc. At the same time, it developed the American GMT800 program in 1996 and became the OEM supplier of the world famous auto companies in 1999. In 2003 it has entered the American Ford supplier system, which at present accounts for more than 90% of the sales volume in the company.

The sales department has kept tapping the market potential in line with the development of the company as an auto component facility. Firstly, by understanding the development trend and scale of auto markets, especially the trend of the consumption model in the auto market from business cars to private cars around the year 2000, the sales department made the reasonable prediction about the market; Secondly, by getting hold of the planning, design and manufacturing of new-type vehicles in every carmaker, it has made preparation for opening up the markets ahead of time.

The SDS has taken a series of measures to open up the market in accord with the slogan of “the platform construction” put forward in 2001 and “strengthening the leading position in the market” in 2002.

1 .Marketing plays the key role in the process from the strategic planning to the planning control. The predictions about the market should be carefully segmented, which include customers, structures of commodities production, cost and specific demand of customers. The hard-won results of these years testify that the accuracy of our prediction reaches over 90% and won the applause of the foreign party, which guarantees the stability of the company and lays the foundation for opening up the market.

2. Strengthen the before-sale service. We acquire all kinds of information by making full use of GKN’s global resources, apply these information resources to the development of new products and markets and set up the service groups made up of staff from the product engineering department, the sales department and quality control department for the major customers. We also open up the seminars on technology at the regular periods. All make customers fully understand our products.

We make full preparation for our customers, even before they launch their programs. When formally discussing these plans, the customers are satisfied with our before-sale service.

Another way to open up the market is to participate in the programs of customers at the early stage. The time has long passed away that cars of the same type in China can be sold for many years. The carmakers keep pushing out new-type cars. In order to keep up with the new cars in the automotive factory, we send our engineers to countries such as Britain, Italy, France and Germany to design the driveline shaft in the process of car-making. The top engineers play significant role in opening up the market. We gain the competitive edge when more and more driveline shafts are used in the new cars. The market share grows steadily, which contributes enormously to the sales revenue.

As a leader in the domestic market, we aim to take part in the global competition, which is the goal of our market in recent years. After becoming a OEM (the North American GE) supplier, we have grasped the chance of global supply by Ford and signed the agreement exporting 200,000 driveline shafts to Ford in March 2003. On November 10^th 2003, Ford formally informed that we have obtained the program. We will earn foreign exchange of more than $10,000,000 by the end of 2004 after supplying these stock, which paves the way for further opening up the global market.

Excellent workmanship

In the process of production, we have achieved “excellent workmanship” in price, cost and advanced management.

Driveline shafts have been produced in the small-scale and multi-type model in line with the demand of markets. We stick to the principle of “excellent workmanship” according to the order and manufacturing capacity of our customers.

We have different plans, such as quarterly predicting plan, monthly plan, weekly supply plan and daily assembling plan and so on. Through the IT system, all up-to-date information about production and stockpile can be shared in network of sales, logistics, supply and production so that all stock can be timely supplied. 2. The principle of “excellent workmanship” is mirrored in efficiency, that is, improving productivity and renovating. In the past two years, the workshops have set up the efficiency groups which do scientific research on efficiency and the working rhythm to improve productivity. By 2004 the quota of working time has been shortened by over 20% and productivity improved by 20% in every workshop of the SDS.

3. The principle of “excellent workmanship” is reflected in the aspect of consumption of resources, namely, to cut down the consumption and lower the cost of production.

In the past years, we have actively pushed forward the domestic production of driveline shafts, for example, the GI and the UF (CVJ) in last year to assure the growth of economic returns in the SDS. On one hand, concerning the blade tools, we have domestically produced them to lower the cost of procurement. On the other hand, we apply the new coating technology to some tools and blades to improve their life span and lower the cost of production. Between 2001 and 2003 the cost of production in the company has been respectively lowered by12.67 %, 16.38%, 10.67 %. By 2004, our goal is 10%.

 4. The principle of “excellent workmanship” shows itself in the management of facilities. We adopt the precautious repairs for facilities, namely, the TPM of facilities which keeps 98% facilities intact. The ratio of usage is 90% while that of standstill is 0.8%. Since 2003, we have launched the TPM movement to improve productivity in CELL of RF by adopting brainstorming which encourages the staff to put forward advices to improve productivity. The outstanding case is that time for the change of the big CELL model has been shortened from 371 minutes to 240 minutes, which has greatly improved productivity.

5. The principle of excellence workmanship is also embodied in the quality control. We adhere to ISO9000, QS9000, VDA6.1, Q1 and TS16949 certification for quality control which ensures the quality management of the company and is line with the demands of customers. It decreases waste products and reduces return goods and refunds.

At present, the booming auto industry not only brings opportunities but also incurs great pressure from the cut-throat competition for the SDS. Owning the management of sixteen years and strong capability to open up markets, we put forward the new strategic goal for the next five years, namely, to realize the large-scale production under the premises of keeping cost, quality and efficiency. The SDS will take part in the global division of labor through its excellence workmanship and fine service to become the leading designer and manufacturer in the driveline shaft in China and even in the world.