Editor’s note:

       In 2019, steady progress was made in economy and significant progress was made in finishing the building of a moderately prosperous society in all respects, and China’s building material industry continued to develop. In this year, as a leading enterprise in the industry, China National Building Material Group successfully completed the leadership transition, continued to maintain high-quality development, and became the benchmark of innovation and steady development. Over the past year, what achievements has China National Building Material Group made, what successful experience has the Group accumulated, and what is the Group’s development plan for 2020? The answer of these questions is very important to the global building material industry, and it is also the focus that many Chinese building material enterprises pay close attention to on this special occasion. With these questions and expectations, the reporter of China Building Materials magazine interviewed Zhou Yuxian, Secretary of the Party Committee and Chairman of China National Building Material Group, and asked him to explain these questions in detail.

(I) Outstanding achievements

       Reporter: In the past two months since you became Chairman of China National Building Material Group, you have visited and investigated many subordinate enterprises. You used to be engaged in the building material industry, and what new feelings do you have when you returned to the industry?

       Zhou Yuxian: I used to be engaged in the building material industry for a long time. Although I left the building material industry ten years ago, I always keep an eye on the development of the industry. During my days as Chairman of China National Building Material Group, I successively visited South Cement, Nanjing Fiberglass Research & Design Institute, Beijing New Building Material, China Building Materials Academy, Sinoma International, Sinoma Science & Technology, Sinoma Advanced Material and other enterprises, which was both a research work and a learning process.

      In the past years, China’s building material industry has indeed undergone tremendous changes. For example, subordinate enterprises of China National Building Material Group are devoted to building resource-saving and environment-friendly enterprises. They are no longer large-scale extensive enterprises that destroy environment. In accordance with the new development concept that lucid waters and lush mountains are invaluable assets, they strengthen energy conservation and environmental protection in the selection of raw materials, production process and product application. They not only save energy and protect the environment themselves, but also consume a large amount of industrial waste and urban household waste, promoting the development of social environmental protection. Many of our cement plants are built in places where flowers bloom, creating a beautiful scene of harmonious development between man and nature.

       What’s more, previously, we purchased foreign technology and equipment to improve China’s building material industry and promote China’s environmental protection cause. Now, we serve the developing and developed countries with our own technologies, concepts and standards, and contribute to improving the technological and environmental protection of the global building material industry. From the importer to the exporter, from the learner to the teacher, and from taking root in China to blossoming in the world, this marks the revitalization of China’s real economy and its entrance into the world stage.

       Reporter: As you said, China’s building material industry has undergone tremendous changes, and China National Building Material Group has played an important role. Following the growth of the People’s Republic of China, China National Building Material Group has grown from small to large and from weak to strong. In recent years, China National Building Material Group has made great achievements in strengthening industrial strength, scientific and technological R&D and internationalization, making important contributions to the transformation and upgrading of the whole industry. Everyone is very concerned about the new highlights and achievements of China National Building Material Group in the past 2019.

       Zhou Yuxian: In 2019, with the support of all parties, all our staff worked together to overcome difficulties and carried out a lot of effective work. We have successfully completed all the goals and tasks of the year, made solid progress in the process of achieving high-quality development, and delivered outstanding results. This is mainly reflected in the following five aspects:

       First of all, our business performance has climbed to a new high. We have created the best performance in history. We ranked first among global building material enterprises in the Fortune Global 500 in 2019, and was selected by CCTV and People's Daily as “Model 100 Brands at China Brand Power Celebration” and “CBDI Top 100” respectively.

       Secondly, we have seen many highlights in innovation and transformation. We have won 3 National Award for Science and Technology Progress, 1 Chinese patent gold medal and 3 individual champions in manufacturing. An academician of Chinese Engineering Academy was added, and a total of 12,500 valid patents were granted. Continuous breakthroughs have been made in engineering and technical services and Belt and Road international cooperation on production capacity. The pattern of three pillars has been improved.

       Thirdly, steady progress was made in pilot reform. The pilot program for state-owned capital investment companies and the pilot program for deepening the implementation of the function and power of the board of directors were approved, bringing the number of pilot reform enterprises to seven. We have made steady progress in mechanism reform. We have implemented measures such as equity incentives, employee stock ownership, and sharing of excess performance, which have stimulated the vitality and creativity of our employees. The benefits of reform have continued to show.

       Fourthly, the results of management are obvious. we have worked hard to consolidate the foundation. We have steadily promoted streamlined organization, refined management and lean operation, and the "2422" reduction has achieved the desired results. We have continuously enhanced our ability to cope with uncertainties in the external environment continued to increase, and the overall quality of the enterprise has been significantly improved,

             The prosperity of enterprises depends on working in earnest. These achievements are not pennies from the heaven, but are created by all the staff of China National Building Material Group with diligence and wisdom. Older leaders such as Song Zhiping and Liu Zhijiang have made great efforts, and all the staff have made contributions quietly. Little by little, they promoted the great achievements of the Group.

(II) Drive development with innovation

Zhou Yuxian lectured on innovation at Communication University of China

       Reporter: Your recent speech in the open class of SOE leaders at Communication University of China was warmly received. In your speech, you said that China National Building Material Group attaches great importance to innovation, not just technology and product. From group strategy to enterprise operation, from corporate governance to SOE reform, and from organizational construction to cultural construction, innovation is everywhere. As the supporter of scientific and technological innovation in the industry, what’s the future innovation plan of China National Building Material Group?

       Zhou Yuxian: General Secretary Xi Jinping said, “Development is the top priority, talent is the first resource, and innovation is the first driving force”. As an innovative enterprise, China National Building Material Group always takes innovation driven development as the first strategy. In 2020, we will give full play to the role of innovation as the first driving force for development. Focusing on the goal of leading China and top in the world, we will make all-round innovation in technology, business model, management and system, so as to provide strong support for high-quality development.

       First, we should improve the technological innovation system. As the main force of scientific and technological progress in the industry, the Group should start from the main body, direction and organizational mode of innovation, strengthen top-level design and clarify the direction of innovation. We should promote the overall coordination of scientific and technological resources, establish the mechanism of feeding new material technological innovation with the profit of basic building material, and promote the high-end technology of basic building material. We should adhere to the unity of strategic and economic rationality, implement national strategy in a market-oriented way, and maintain and increase the value of state capital. To strengthen technological breakthroughs in the two markets, we need to focus on the national strategic needs, focus on the key technology of non-metallic materials and frontiers of science and technology, and do our best to strengthen technological breakthroughs, so as to provide strategic support for the scientific and technological progress of the country, industry and the Group. We should focus on the main battlefield of national economy, break through the key links of industrialization, and develop products with large quantity and wide range, so as to provide economic support for the sustainable development of the Group. We should promote openness and innovation, continue to combine the efforts of enterprises, universities and research institutes, link up the upper, middle and lower reaches, and promote the collaboration of small, medium-sized and large enterprises. By upholding central and local cooperation, common progress of the people, and integration of China and the rest of the world, we have accelerated the formation of a competitive advantage in integrated innovation.

       Second, we should build a world-leading industry innovation hub. Qiao Longde, President of China Building Materials Federation, expressed the hope that the Group could lead China's building material industry to the center of the world stage at the China National Building Material Group Working Conference 2020. To achieve this goal, we must build a world-leading industry innovation hub, and always seize the commanding heights of science and technology. We should be a global leader in terms of the comprehensive operating indicators of our main products, as well as in terms of innovation technologies and standards.

       Third, we should accelerate the industrialization of new materials. On the basis of consolidating the foundation of basic building materials, we should increase the Group’s investment in new materials, so as to form a sound development pattern in which old drivers of growth have been continuously replaced by new ones. We should increase investment in innovation, optimize industry layout, and highlight industrialization orientation.

       Fourth, we should strengthen innovation in business model and management. We will continue to promote the supply-side structural reform in the cement industry as always, unswervingly take the lead in off-peak production, limit the addition of new products, eliminate backward products, and maintain self-discipline of the industry, and strive to promote the "cement +" model, so as to be the mainstay of the healthy and orderly development of the industry. We will also continue to cultivate EPC services, cross-border e-commerce and overseas warehouse, testing and certification services, building materials household chain and other models to improve our system integration and innovation capacity and to create more value for customers. In accordance with the requirements of SASAC, we will carry out the “benchmarking first-class management promotion action”, accelerate the establishment of an indicator system that is more in line with the development strategy and operational reality, consolidate basic management, and improve the quality and efficiency of development. What's more, we should continue to streamline the organization. We should make constant use of distinctive management methods, such as lattice management and control and refined management. We should start early, refine measures, refine management, lay a solid foundation, igniting new drivers of growth through continuous innovation in management.

       Reporter: Among the new material businesses of China National Building Material Group, ultra-thin electronic glass, fiberglass and new building material have successively won China Grand Awards for Industry, the “Oscar” of Chinese industry. At the Innovation Achievement Exhibition of Central Enterprises, national leaders highly affirmed the achievements of China National Building Material Group in new material businesses, and praised that "China National Building Material can be called Chinese Material”. In the future, how will China National Building Material Group accelerate the development of new material and its industrialization?

       Zhou Yuxian: The new material business has been a key pillar in the three pillars of China National Building Material Group and an important support for the Group to build a comprehensive investment group in the building material and new material industry. General Secretary Xi Jinping pointed out that “major achievements in scientific and technological innovation are the most important and powerful weapon of the country”, and “only by keeping core technologies in our own hands can we truly seize the initiative in competition and development, and fundamentally ensure national economic security, national defense security and other security”. In 2019, the 8.5-generation TFT LCD glass substrate independently developed by us was successfully launched, and the national leaders instructed that “continue to work hard to form real advantages”, which was both an honor and a pressure. Taking new material business as the focus of business development at the present stage, we should continue to vigorously develop new material business and accelerate the formation of industrial advantages, economic advantages and leading advantages. This is not only an inevitable requirement for the transformation and upgrading of the Group and the succession of new and old drivers of growth, but also a mission requirement for central enterprises to shoulder national responsibilities.

China National Building Material Group has made great achievements in new material business

       The vigorous development of the new material business of China National Building Material Group is based on corporate expansion and strength. In particular, our cement business is profitable and can support the investment and development of our new material business. Meanwhile, we should also see that at present, our new material industry is generally in the investment period, with insufficient scale and profit support. As mentioned above, we should increase investment in innovation, optimize industry layout, and highlight industrialization orientation. Specifically, on the one hand, we should increase investment in innovation to build an innovation chain integrating R&D, incubation, industrialization and scientific and technological services, promote the improvement of innovation capacity in key areas and the industrialization of major scientific and technological achievements, and build a new material industrial cluster focusing on fibrous composite, membrane material for environment and energy, quartz, intraocular lens and other special functional materials, display glass, special materials for major projects. On the other hand, we should highlight industrialization orientation, combine the excellent scientific and technological achievements of the institutes with the strong industrial strength of the enterprises, combine the R&D capabilities of scientists and the operational capabilities of entrepreneurs, and accelerate the transformation and industrialization of scientific and technological achievements at home and abroad.

(III) Empower development with reform

A seminar on the formulation of pilot reform programs was held

       Reporter: We know that you are good at capital operation, and China National Building Material Group is a pilot state-owned capital investment company. What will you do next around the pilot?

       Zhou Yuxian: China National Building Material Group has been at the forefront of market-oriented reform. Over the years, we have accumulated rich experience in reform, such as implementing the “SOE market-oriented operation” model, taking the path of “common progress of the people”, establishing an efficient and flexible market-oriented mechanism, and vigorously promoting entrepreneurship centered on innovation, persistence and responsibility. These valuable experiences should be carefully summarized. Reform is the gene of China National Building Material Group. We will firmly follow the path of reform to empower development and stimulate vitality with reform. The pilot program for state-owned capital investment companies was approved by SASAC in September 2019. In 2020, we will examine the decisive results of SOE reform in important areas and key links, and begin to implement the three-year action plan for SOE reform. The pilot program for state-owned capital investment companies is the program for the next reform and development of China National Building Material Group. We will take this as an opportunity to summarize previous reform experience and implement reform measures in a coordinated way so that the benefits of deepening reform will continue to show.

       We should actively adjust our strategic positioning in the course of reform. Industrial group and industrial investment group have different positioning. The group headquarters should focus on the functions of investment company and position itself as a strategic control headquarters. Through investment and financing, industrial cultivation and capital operation, we should give full play to the role of investment guidance and structural adjustment, and shift from managing enterprises to managing capital, from building material to comprehensive material, and from local market to global layout. In terms of investment and financing, we should build a financing system that better meets the requirements of state-owned capital investment companies, and focus on three core investment directions, namely the optimization and upgrading of basic building material, mass production of key products of new material, and optimization of engineering and technical services. Meanwhile, we should optimize the control mode. As a state-owned capital investment company, the Group should establish a control mode focusing on strategic objectives and financial benefits, and strive to improve its capabilities in strategic guidance, resource allocation, capital operation and risk control.

       Reporter: Recently, SASAC held the working conference on the reorganization and integration of central enterprises, and proposed to “further promote integration and fully release the benefits of reorganization”. As a pilot enterprise of central enterprise merger and reorganization, what corresponding measures will China National Building Material Group take next?

       Zhou Yuxian: In accordance with the principle of "meet the deadline and relatively thorough", we should integrate business units efficiently and orderly, and successfully implement the three-step strategy for the reorganization of basic building material and new material. According to the principle of refocusing, the Group will accelerate the reorganization of internal resources and reconstruct the three business units of basic building material, new material and engineering and technical services. We will carry out the business integration step by step, complete the business integration according to the established plan, and build more large professional profit platforms. In terms of basic building material, the Group will promote integration and optimization, and highlight professional operation. In terms of new material, according to material classification and business characteristics, the Group will determine the key business, establish the independent capital operation platform for subdivisions, and create more “invisible champions”. In terms of engineering and technical services, the Group will consolidate the platform of listed companies, actively explore overseas markets, and shift from a cement production line construction service provider to a diversified engineering and technical service provider.

       We will continue to deepen mechanism reform. People are at the heart of the mechanism. We will take increasing the value of knowledge as our orientation, respect talents in scientific research, technology and management, evaluate their contributions by the market, and pay them according to their contributions. We will strengthen the incentive mechanism and coverage, so that all our staff can work and live with dignity. We will focus on stimulating endogenous driving forces and enhancing efficiency. Focusing on the incentive of operation management, core management and technical backbone, and combining the characteristics and category of the enterprise, we will apply different incentive methods in a targeted way, so as to stimulate the enthusiasm, initiative and creativity of key personnel to start businesses.

(IV) Promote development with internationalization

BAYAH Cement Project in Indonesia won the Luban Prize for Construction Project

       Reporter: Since China Building Materials Federation put forward the strategic goal of “promoting China's building material industry to surpass and lead the global building material industry through reform and innovation”, it is widely hoped that China National Building Material Group and other large enterprises will lead China's building material industry to the center of the world stage. So, what is the plan of China National Building Material Group in internationalization?

       Zhou Yuxian: Internationalization is the only way to build a world-class enterprise, but also the only way to survive and develop. As an important window for Chinese enterprises to go global and one of the country's business cards, China National Building Material Group will combine the domestic market training and international vision planning based on the existing achievements in international production capacity cooperation. The Group will continue to strengthen its main business, diversified development of related businesses and internal coordination, strengthen overseas market development, break the ceiling of business development, and realize re-start, re-layout and re-breakthrough.

       Firstly, we should expand high-level opening-up and cooperation. Adhering to the principle of “Sincerity, Real Results, Friendship, and Good Faith”, and abiding by the three principles of “contributing to local economy, cooperating with local enterprises and getting along well with local people”, we will build peace and friendship, from going out to going in. By means of joint development among enterprises within the Group, joint development with other central enterprises, joint development with private enterprises and joint development with multinational companies, we will jointly explore third-party markets and form a competitive advantage featuring mutual complementarity, risk sharing and mutual benefit. Of course, we should strictly abide by local laws and regulations in our international business, actively fulfill our social responsibilities, take the initiative to integrate into the local culture, adhere to integrity management, be enthusiastic about public welfare, and be an excellent global citizen.

       Secondly, we should innovate the "going global" model. Relying on our advantageous industries, we will further integrate and share our advantageous resources, achieve the internationalization of market, capital and talents, and build a new mode of global procurement, global sales, global services and global utilization of resources.

       Finally, we should enhance our international strength by going global. We will carefully sort out the international development needs of each business segment, promote the opening of internal equity and personnel integration among business segments, drive overseas investment with the help of engineering enterprises and enterprises with overseas investment experience, further expand cooperation channels, optimize collaborative mode, promote the implementation of “six one” as soon as possible, and enhance Group's brand influence and competitiveness in the world.

       To pursue the dream ahead, we should focus on the journey. In the coming year, guided by Xi Jinping thought on socialism with Chinese characteristics for a new era, we will seize the day and live up to our youth. We will spare no effort to improve our competitiveness, innovation, control, influence and risk resistance, build ourselves into a globally competitive comprehensive investment group in the building material and new material industry, and make greater contributions to securing a decisive victory in building a moderately prosperous society in all respects and realizing the Chinese Dream of national rejuvenation!