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Linglong chairman intent on continued innovation through crisis
Linglong chairman intent on continued innovation through crisis
Nearly a year since the virus first hit, companies across all industries are reckoning with the impact of the COVID-19 pandemic. The initial market shock landed a devastating blow on national economies, thus affecting overall demand and posing a huge risk to firms’ product sales and prices. The subsequent domino effect on the rest of the system—including material supply chains, logistics and operations, has been significant—especially for multinationals whose have seen their costs rise because of epidemic prevention policies and the curtailing of international travel and communication.
Despite economic headwinds creating a challenging environment for foreign companies, there have been some bright spots: the situation in China has vastly improved. Companies are slowly, but surely, recovering though some remain cautious about the future.
Shandong Linglong Tyre Co. Ltd. is one such company, though it is not remaining complacent. Linglong is currently working towards strengthening its crisis management mechanisms, while also retooling its business strategies to leverage on new opportunities and offset the impact of future risks on their production and business operations.
The firm has been able to remain optimistic about its future because of the experienced management has steered Linglong with a steady hand throughout these turbulent times. At the company’s helm is chairman and president, Wang Feng, an entrepreneurial veteran whose leadership has paved the way for Linglong to emerge as one of the world’s top tyre manufacturers.
Leading from the grassroots
Chairman Wang receiving the Most Responsible Enterprise in Petroleum and Chemical Industry Award from Gu Xiulian, Governor of Jiangsu from 1983 to 1989 (first woman in this position), Minister of Chemical Industry from 1989 to 1998, Vice Chairwoman of the Standing Committee of the 10th National People’s Congress, and Chairwoman of the All-China Women’s Federation.
Wang was born into a working-class family. As a young man, he worked alongside his father in a Zhaoyuan chemical plant where his interest in chemistry and management beliefs were seeded. Later, he would pursue his studies in chemistry at university and eventually begin working in a Yantai tyre factory, Linglong’s predecessor. Wang moved quickly through the ranks, eventually emerging as the firm’s chairman and making the bold moves that have characterised his tenure.
Under him, Linglong has achieved many milestones: the company presently exports its products to over 180 countries and regions all over the world. Linglong won the prestigious China Industrial Award—the first domestic tyre enterprise to do so—while Wang himself has garnered numerous accolades including the title of National Outstanding Entrepreneur and the Most Respectable Entrepreneur of the Year, among others.
For Wang, leadership is all about “seeing the bigger picture” and setting clear development goals that are effectively broken down and communicated to the entire team.
Sponsorship of Wolfsburg League
“Doing so will encourage the team members to work well together and in this way, the team will have a positive spirit, be united and prepared for action!” he said.
Wang noted that effective communication skills are also fundamental for the success of any team, which has helped inform his own hands-on, grassroots approach to managing his company. Having once been a front-liner himself, Wang is intimately familiar with every production process.
“[This] makes it less challenging to manage the company,” he shared, adding that even overseas visitors are surprised and heartened by his familiarity with every point in the production process. “This helped to build trust between us and them more easily.”
The company’s “contact the grassroots and serve the staff” approach to workforce management is built out of several aspects which centres their people’s well-being as core to Linglong’s success.
Critical response to crisis
Wang’s grassroots-oriented management style has influenced how the company has responded to the COVID-19 crisis. Aside from following government guidelines on epidemic prevention, Linglong formulated a strict work safety plan to ensure the health of workers in their plants. This plan is bolstered by a “vegetable basket project” that guarantees each employee’s basic living needs while simultaneously building stability into the overall company.
The company is not only focusing on the people inside the company, but also those outside it. Since the outbreak, Linglong has donated RMB five million to the Wuhan and Jingmen Red Cross Societies to support efforts to control and prevent epidemics. They have set up free tyre rescue services for construction vehicles of the Huoshenshan and Raytheon Mountain hospitals through its partnerships with local dealers in Hubei.
Linglong’s charitable work has also extended to those outside China: the firm donated more than 300,000 sets of anti-epidemic material to the Serbian government, as well as disposable masks and medical gloves to countries in North and South America, Europe, and Africa.
Wang explained that business development composes of two major factors: economic and social values. Though they may appear unrelated, they actually influence one another more than most realise. “
“Investing in public welfare improves brand reputation, which then promotes faster enterprise development,” he said. “This gains us trust and respect from both shareholders and consumers.”
Toughing it out
While the COVID-19 pandemic was unprecedented in its scale, Linglong and its entrepreneurial chairman is no stranger to major challenges. In 2000, the company faced obsolescence thanks to the rise of the superior radial tyre, a new innovation born in the 1990s. At the time, Linglong was only producing bias tyres, and was not designated by the Chinese government as a key manufacturer in its large-scale plan to develop a national radial tyre.
Rather than being cowed by this challenge, Linglong got to work on an ambitious plan to invest RMB16 million to produce its proprietary radial tyre, without the support of government or private funds. Within 11 months—a remarkably short timespan in an industry where such a feat would usually require three years at minimum—Linglong’s first radial tyre was coming off the production line and being sent to market.
“[We surprised] the industry with the ‘Linglong speed’,” Wang said proudly.
The next challenges arrived one after the other: first, the 2008 financial crisis dealt the tyre industry a major blow. Then in 2009, the US implemented its “special safeguard policy”, making Chinese tyres imports much more expensive, thus hurting the domestic market.
However, once again, Linglong refused to allow a bad situation to get the better of them. Wang explained that the firm worked hard to adjust the quality of their business—from the production of their tyres, to their customer relationship management—through research and development, and cost-cutting measures in their production and operations processes.
In doing so, they were able to reposition themselves in the market and won even more support and accolades form their customers, thus curtailing the impact of the US’s trade policy.
Developing entrepreneurship through challenges
Linglong’s approach to meeting challenges has not changed when it comes to the pandemic.
On a macro-scale, the automobile industry has taken a significant hit thanks to the COVID-19 pandemic which hampered the outputs of factories in not just China but also Europe. In response to the new economic conditions, Linglong made adjustments to their business in order to maximise their profits. The sales team analysed the overall market sentiment and made the necessary adjustments to their sales prices in order win more market share.
Whatever the company had lost in terms of sales volume they were able to make up for by winning a larger slice of the market. As a result, the company was able to make up whatever they had lost in terms of sales volume, and was performing better than expected within the first half of 2020. Overall domestic sales volume increasing by 35 percent, and between March and June 2020, Linglong’s growth rate exceeded 51 percent.
Wang’s belief in the spirit of entrepreneurship bolstered by a focus on innovation may explain why the company has responded so well to the pandemic. For example, the Linglong sales team took a significant step towards innovating how they networked and communicated through the construction and implementation of a new retail platform. The platform combined the best of online platforms—through which the team held bi-monthly video meetings with dealers—in order to maximise offline sales.
“Innovating through entrepreneurship amid uncertainty can create greater added value even with limited resources,” he said, adding that companies should use market challenges as opportunities to improve themselves and their enterprises in order to strengthen their customers’ trust in them.
Getting smart for the future
Linglong’s chairman does not intend on allowing the innovation born from the pandemic to slow down. Moving forward, Linglong has plans to establish its first “smart platform” at its fifth production base in Changchun, which has been designated by the Jilin Province government as the site for an international automobile city. Furthermore, Changchun is strategically located in relation to Linglong’s main retail markets in northeast China.
Once it has been built, the Changchun facility will become the first digital-first factory, filling an existing gap in the global tyre industry. The technologies being put into place would support more complete dissemination of information among its staff throughout various processes, as well as increasingly sophisticated research and development projects.
“We have invested a lot of time, manpower, and material and financial resources in research and development, and have achieved positive results, which has boosted our confidence in building a truly automated digital smart factory in China,” Wang said.
Wang noted that through the smart platform in Changchun, excess inventory can be reduced to meet precise demand levels, thus lowering the storage and warehouse costs by almost 70 percent. Furthermore, labour-intensive manufacturing and production processes will become less reliant on manpower, which can be redirected to ensuring high quality products, and higher customer satisfaction.
“The creation of a digital and smart platform enables each of our tyres to pass the test in terms of quality,” he said.
In terms of its international business, Linglong also has plans to make a strategic shift of focus. The business had previously been focused on what they call their “5 + 3” strategy, which covers their five existing domestic production bases and three retail markets in northeast China.
Moving forward, Wang is determined to transition the company to a “6 + 6” strategy which would be more focused on globalising its reach and production. He explained that the company is working on laying out more domestic production bases—the goal is to have six in China alone—and making further inroads in other countries in the Americas, Africa, and the Middle East. In addition to Linglong’s bases in Thailand and Serbia, the company has established research and development institutions in Beijing, Shanghai, Germany and the US to drive more scientific research.
For Wang, pushing the development of better products through R&D has helped the company continue to innovate and emerge as a market leader in the global tyre industry.
“Underlying every great brand is a great product. We are committed to do everything necessary to improve the quality and standard of our product. Only through taking care of our customers, our employees and our community can we achieve the vision of building a world-class tyre manufacturing company,” Wang said.