Dalian Machine Tool, the former leader of the Chinese machine tool industry, ranked 8th in the “World Machine Tool 500†ranking of the American Metal Association and the 400th in the top 500 Chinese enterprises. In November 2017, it was decided by the court to be bankrupt and reorganized. Creditors The total amount of declared claims was 22.422 billion yuan. In June 2018, Chairman Chen Yongkai was listed as an A-level wanted criminal by the Ministry of Public Security. He was suspected of fraudulently obtaining loans and was investigated by the public security department. In July 2018, the Dalian Machine Tool Bankruptcy Manager issued an announcement seeking to introduce new strategic investors to promote bankruptcy and reorganization.
This former manufacturing giant has now fallen to this position with a parabolic trajectory. What makes people embarrassed is not only the fate of Dalian machine tools, but also the cruel reality that domestic veteran manufacturing companies have failed to complete the transformation and upgrading.
Once stepped away from the market
Dalian Machine Tool is a veteran state-owned enterprise. Its predecessor was the Guanghe Machinery Factory, which was founded in 1948. In 1953, it was renamed Dalian Machine Tool Plant. In November 1995, with the Dalian Machine Tool Plant as the core, the main enterprises of the Dalian machine tool industry were merged and the Dalian Machine Tool Group was formed.
As one of the “18 Arhats†in the national machine tool industry in the early days of the founding of the Republic, Dalian Machine Tool is the largest R&D and manufacturing base for combined machine tools, flexible manufacturing systems and automation complete sets of technology and equipment.
At the beginning of this century, Dalian Machine Tool ushered in its high light moment. From 2000 to 2006, the company was rated as one of the “Top Ten†enterprises in the industry for seven consecutive years by the China Machine Tool Industry Tool Association as the industry sales revenue, numerical control output value, export earning, and brand creation. In 2004, Dalian Machine Tool was ushered in restructuring. After several equity changes, the company was changed from state-owned sole proprietorship to diversified investment and state-owned shares. After the restructuring, the historical burden of the company has also been unloaded, and the number of employees has been reduced from 18,000 at the highest level to about 6,000.
Prior to the debt crisis, Dalian Machine Tool Group owned more than 40 wholly-owned, joint venture, holding and shareholding subsidiaries.
Dalian machine tools were only one step away from the market. In 2013, its parent company Dalian Gaojin Technology Development Co., Ltd. (hereinafter referred to as “Gaojin Technologyâ€) wanted to use the shell of Huadong CNC (002248.SZ) to let Dalian Machine Tool be listed. At that time, Gaojin Technology invested 320 million yuan to subscribe for 50 million shares of Huadong CNC common stock, holding 16.26%, and after several degrees of increase, became the largest shareholder of East China CNC. However, due to the heavy debts of Gaojin Technology, the holdings of the East China CNC shares were all frozen by the judicial, and so on.
After the listing, the Dalian machine tool was hopeless, and it was deeply mired in financing. From March 2016 to present, Dalian's machine tools have defaulted on multiple bonds. According to incomplete statistics, the total amount of defaults exceeded 3.8 billion yuan. In December 2016, the rating agency lowered the long-term credit rating of the company's main body to C; in August 2017, the China Interbank Market Dealers Association suspended the related business of Dalian machine tool debt financing instruments.
In addition to bond defaults, Dalian Machine Tool and its subsidiaries have also experienced large-scale overdue loans to other financial institutions. The largest “debtor†of Chinese banks involved a total of 2 billion yuan, and only overdue loans amounted to 1.395 billion yuan.
The reporter of China Economic Weekly has repeatedly called Dalian Machine Tool on related matters, and its official telephone has not been answered.
Urgently needed strength "Golden Lord" to survive
Dalian Machine Tool’s last disclosure of the company’s financial data goes back to the 2016 third quarterly report. The report shows that Dalian machine tool consolidated statement liabilities totaled 18.087 billion yuan, and the asset-liability ratio was 77.08%. In the first three quarters of 2016, the total revenue of Dalian Machine Tool Consolidated Reports was 9.334 billion yuan, the total operating cost was as high as 9.047 billion yuan, the profit margin was only 3%, and the operating profit for the same period was -401.958 million yuan.
The severe debt crisis and the sluggish profitability eventually forced the old machine tool company to go bankrupt.
In conjunction with Dalian Machine Tool, it was included in the bankruptcy track, as well as its holding parent company Gaojin Technology. Gaojin Technology is a company that was born with the reorganization of Dalian machine tools. Chen Yongkai, who has served as deputy general manager and vice chairman of Dalian Machine Tool, has held Gaojin Technology together with 41 other natural persons. Among them, Chen Yongkai holds 77.35% of shares, which is the actual controller of Gaojin Technology and Dalian Machine Tool.
Standing on the edge of bankruptcy and reorganization, Dalian Machine Tool urgently needs the strength of the "Golden Lord" to survive. On July 12, the manager who presided over the bankruptcy reorganization of Dalian Machine Tool announced that because Dalian Machine Tool Group and its subsidiaries are heavily in debt and lack of debt repayment funds, it is urgent to introduce strategic investors to supplement liquidity to resume business operations. Integrate core assets to achieve re-value.
In fact, the case of getting out of trouble through bankruptcy reorganization is around Dalian machine tools. In October 2016, the northeast special steel headquartered in Dalian was ruled to enter judicial reform. In the end, Shen Wenrong, Chairman of the Board of Directors of Shagang Group, invested RMB 4.5 billion through Jinzhong Shazhou, which he controlled, to take over Northeast Special Steel. This is the case in China's first private steel enterprise to reorganize large local state-owned steel enterprises.
High-end market competitiveness is low
As the basic production equipment of the machinery industry, the modernization level and scale of the machine tool industry is one of the important signs of a country's industrial development.
At present, the shrinking of the traditional low-end machine tool market has become an industry consensus. The market analysis firm Frost & Sullivan statistics show that the market size of China's traditional machine tool industry in 2016 was about 165.6 billion yuan and 1,365,800 units respectively. The compound annual growth rate between 2011 and 2016 was only 0.3% and 0.4%.
Compared with the traditional machine tool industry, China's CNC high-precision machine tool market has entered a period of rapid development. With the increasing demand for CNC high-precision machine tools in the downstream industries such as IT, electronic products, automobiles, medical equipment, etc., China's CNC high-precision in 2016 The size of the machine tool market reached 118.5 billion yuan, and it is expected to expand to 156.1 billion yuan in 2021, with a compound annual growth rate of 5.7%.
In contrast, Dalian machine tools are mainly low-end products such as ordinary machine tools and economical CNC machine tools. The technical barriers are weak and the market threshold is low. As the competition in the industry intensifies and the market demand gradually shifts to high-end CNC machine tools, the contradiction between oversupply in the low-end and mid-end machine tools market is increasingly prominent, the overall profit margin of the industry is continuously compressed, and the profitability of enterprises is decreasing year by year.
It is worth noting that technical barriers remain the biggest problem facing Chinese companies in the mid to high-end market. In the field of high-end CNC machine tools, the domestic product market share is less than 5%; among the components that make up the machine tool, 80% of the core components such as CNC system, swinging head, high-speed spindle and tool are imported.
From a larger perspective, since 2011, the growth rate of operating income and total profit of the machine tool industry has continued to decline. The number of loss-making enterprises in the industry increased from 359 in 2011 to 818 in 2016, and the amount of losses increased from 1.599 billion yuan in 2011 to 7.277 billion yuan in 2016.
In addition, the status quo of talent cultivation and technology accumulation is extremely worrying. According to industry insiders, in the domestic, the machine tool industry is also suffering and tired, and college graduates are reluctant to do it; existing staff are also difficult to sink into the technology, or they are busy dealing with project reports, or shifting jobs, or being paid by foreign counterparts. Digging away, the shortage of young high-end technical talents, enterprise technology research and development.
Key time points before and after Dalian machine tool reforming
August 2017
The Dalian Machine Tool was publicized by the Supreme People's Court as a letter-of-trust company.
September 2017
Chen Yongkai, chairman of Dalian Machine Tool, was arrested by the public security department for allegedly defrauding a 600 million yuan loan from a financial institution in Jiangxi Province.
November 2017
Dalian Machine Tool was ordered by the court to be bankrupt and reorganized, and designated managers were co-ordinated. As of the end of April this year, 114 creditors reported their claims to the administrator, and the total amount of declared claims reached 22.422 billion yuan.
June 2018
Dalian Machine Tool said it received a letter from the Jiangxi Provincial Public Security Bureau. Chen Yongkai has been listed as an A-level wanted criminal by the Ministry of Public Security.
July 2018
The Dalian Machine Tool Bankruptcy Manager issued an announcement seeking to introduce new strategic investors to promote bankruptcy and reorganization.
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