Business strategy Digitalisation is supposed to make Shenyang global

Author: Stéphane Itasse

The products of Shenyang Machine Tools, one of the world's largest machine tool manufacturers, are still relatively simple and the competition from Germany or Japan is far ahead. Technical innovations for productivity gains are not in sight - that's why the Chinese manufacturer is relying on digitization.

Easy-to-use machine tools for markets, that have not been tapped yet, are the target of Shenyang Machine Tool.
Easy-to-use machine tools for markets, that have not been tapped yet, are the target of Shenyang Machine Tool.
(Bild: Shenyang Machine Tool Group)

As Dr. Ömer Sahin Ganiyusufoglu, consultant to the Chairman, explained at the WBK Autumn Conference in Karlsruhe, Germany, Shenyang Machine Tool has already undergone drastic changes in recent years: "In 2011, the company produced 96,000 machine tools, of which only 31,000 were CNC-controlled, and in 2016 only 30,000 machines left the factory - but all of them were CNC-controlled. The world's largest manufacturer of metal-cutting machine tools employs a total of 20,200 people for this purpose, 14,000 of whom work at the Shenyang site alone, generating sales of approximately EUR 1.8 billion. In Germany, the manufacturer Schiess belongs to the group. According to Ganiyusufoglu, all industries in China are supplied with milling, turning and drilling machines.

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However, imported machine tools still account for a large share of the Shenyang domestic market. The government in Beijing is ambitious and wants its own industry to catch up. But for Shenyang this is not easy, according to the consultant, technical innovations that would have brought huge productivity gains would stagnate.

Machine tool should be as easy to operate as a smartphone

Shenyang Machine Tool therefore takes a different approach. According to Ganiyusufoglu Board Chairman Guan Xiyou, when Apple launched its product in 2007, "Why is a machine tool not as easy to use as an I-Phone?" This is the model for the machine tool of the future." This would also give the Chinese company a chance.

"The future lies in digitalisation and it starts with control technology", explained Ganiyusufoglu at the conference. The Chinese machine tool manufacturer has therefore developed its own control platform called I5, based on the model of the I-Phone. It is intended to serve as a platform for the digital world of the future. By 2014 the control system was released, and by 2016 Shenyang had already sold 20,000 machines with this control system. The sales target for 2017 was a further 20,000 machine tools with I5 control.

Shenyang targets new machine tool markets

At the same time, the Chinese are looking for a different way to access world markets. Instead of challenging established manufacturers in their home countries, they are relying on regions that so far had little or no industrialization.

"80 % of the world's machine tool exports go to countries where only 20 % of the world's population lives", he explained and added: "The Chinese want to conquer the markets that nobody thinks about."

In order to open them up, Shenyang did not rely on a technical race, but on strategic innovations. These could be new product types and properties, but also new business models and "win-win" cooperations. At the same time, the Chinese machine tool manufacturer is aware that there is no way to do it alone. "We cannot open up any of these target countries on our own initiative, the key is cooperation", said Ganiyusufoglu.

In order to become fit for the world market, Shenyang has also launched an internal strategy: Go Smart. "Smart" stands for simple, maintenance-friendly, affordable, reliable and timely to market and profit. "When we focus on the markets of the future, our machines have to meet these requirements", said the consultant. And he went on to say: "We must come down from high-tech and build machines for everyone - according to the I-phone principle."

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About the author

 Stéphane Itasse

Stéphane Itasse

MM MaschinenMarkt