FUYAO GROUP GLASS INDUSTRIES CO., LTD.

To become a conducting model for competitors of the same trade

Tuesday 25 October 2011, by Kitty Wang, Lydie Favre- Felix, May Chen, Sonja Chen, William Mao

1 inspired

1.THE MAIN FACTS ABOUT THE ACTIVITIES OF THE COMPANY?

FuYao Group is the largest, most advanced manufacturer, and the biggest exporter of the automotive glass in China. The ?FY? trademark of the products so far stands out exclusively in the Chinese automotive glass industries as the ?Chinese famous trademark?. The group has established the ORACLE ERP IT management system with advanced international manufacture management models and business processes; stresses HR development and trainings; implements the quality-cost control systems; attaches importance to brand building.

High quality products, leading R&D center, and complete production lines and huge capabilities attribute to very strong marketability products. For motor makers in China, FuYao has OEM supplies for famous motor brands and takes over half of the Chinese OEM market share. Fuyao group insist the tenet of ?quality first, efficiency first, credit first, customer first, and service first?
While providing high quality productions and after-sales servers, FuYao group actively participates in researching and developing new sunless and energy-saving productions as well as social and cultural support activities. Besides these , as a excellent corporation, FuYao Group ative in the development of public charity. Until 2009, the total charity account of Fu Yao group was reached at 280,000,000RMB. This fund was used in the aspects of providing disaster relief, helping the poor people and education support. From 1996, FuYao Group had established ? FuYao XiaMen university education fund? and help the poor students to complete the study. In 2010, Cao Dewang, chairman of the FuYao Group in Fuzhou, capital of East China’s Fujian province, was named the biggest donor at the eighth charity awards ceremony, held by the China Association of Social Workers and China Philanthropy Times, who donated more than 1 billion RMB ($153 million) to charity.

According to the FORTUNE CHINA, FuYao Group acquired the honor of the most admiring company in China in 2011.

2.THE ETHICAL CHALLENGES THIS COMPANY IS ADDRESSING.

a.Under the global economic crisis influence, the Car sales have been shrinking (ie Fewer have been sold) recently in the developed countries from 2009. It is no doubt that there are a vast majority of complex factors retard economy fully recovers, so the whole industry is facing rat race in an international marketing. Global trade protectionism is severe, so it is critical for FuYao Group to improve the competitiveness rather than staying away from the potential risk which they will confronted with in future. Keeping doing business like the tenet of ?quality first, efficiency first, credit first, customer first, and service first?, FuYao will strive to make itself become a giant company having the capabilities to research, design, develop, and manufacture the automotive glass series products, associated materials and equipment.

b.One of the challenges for Private Enterprises in China is who will be responsible for the corporate when the board chairman retires from the work. Most of the sons or daughters of the entrepreneurs in China are not willing to take over the company from their parents. It is the big problem for the elder entrepreneur to think about who is the best successor. The boss of FuYao Group, Cao De Wang decided to ask Cao Hui, his elder son to manager the group in the next coming years. We are wondering if Cao Hui can keep doing the charity like Cao De Wang and if Cao Hui can lead the FuYao team to achieve the goals in the severe and competitive environment.

c.The board chairman of FuYao Group, Cao De Wang has set up HE REN Charity Foundation (HCF) which is first fund set by donating FuYao Group?s stock in Dec, 2010. According to the Charity List which is announced by Rupert Hoogewerf in 2011, Cao De Wang has donated 4.58 billion RMB already and he is the first philanthropist in China. We think the ethical challenges FuYao Group is addressing how to manage this foundation more effective in future and how to make sure each donation can really help the people who indeed need it to solve their problems.

3.WHAT MAKES YOU BELIEVE THIS COMPANY IS REALLY ETHICAL AND WHY YOU TRUST IT?

There are many reasons that make us believe Fuyao Group is really ethical.
First of all, Fuyao Group is honest to its customers. Based on creditable management, Fuyao always puts the interests of customers in priority, and provides them with perfect products and best service, without any unethical tactic. Fuyao is the only China mainland enterprise who has won a global outstanding supplier gold award from Ford Motor, the second largest vehicle manufacturer in the world. In fact, the company has become a model of conduct for competitors of the same trade.

In addition, Fuyao Group is kind to its employees. To offer employee better learning and living condition, Fuyao spent huge amounts of funds on establishing business school which can offer regular EMBA education, a well-stocked library, beautiful staff dormitory and neat dining room. Furthermore, Fuyao helps every employee lay out reasonable work career. Every Fuyao employee has the opportunity to study in foreign country.

Most importantly, Fuyao Group is social responsible. Fuyao has been adopting a proactive strategy to take social responsibility. During the past over ten years, it has donated more than ten million RMB to those in need of help. Fuyao is one of the outstanding social responsible enterprises.

We do trust this company as our dream in China.

Firstly, we trust Cao Dewang the company CEO. His family has been believing in Buddhism for generations. Cao Dewang is an honest, hardworking and responsible entrepreneur, and he never gambles. During the past over ten years, he has been focusing on automobile glass industry to do his best.
Secondly, we trust the company. The company is a pioneer in perfecting its management system to link with international standards. For example, it is the first company of the same trade in China for automobile glass production and sales that passed the ISO9002, QS9000, VDA6.1, ISO14001, and TS16949 quality system certifications. And it voluntarily invited the world top accounting firm to do audit since 1996.

Last but not least, Fuyao Group is a prosperous enterprise. It took Fuyao only 18 years to become No.1 in China and No.6 in the world in this industry. And today it has been ranked to No.4 in the word. This company has set up an example as the professional automotive glass supplier.

In short, we have no doubt that Fuyao Group is a not only ethical but also profitable enterprise.

4.THE POSSIBLE CHALLENGES FACING TEHE COMPANY IN TH FUTURE AND HOW YOU THINK THIS COMPANY MAY IMPROVE.

a. Here are the possible challenges:
?In term of production cost: FuYao Group will have to face competition within the next few years because the automotive industry is a growing market in China. For now on, FuYao Group has always paid a lot of attention on the quality of its products (ISO9002, QS9000, VDA6.1, ISO14001, and TS16949 quality system certifications). So their competitive advantage, as a first mover in the China industry, is about the quality and the expertise. The competitive advantages of the following entrants will probably be about the costs (less R&D costs?) so they will have cheaper prices.

b.How can FuYao Group cope with that?

1)Keep on being socially responsible (lot of attention on the quality, the security?). Don?t cut cost on the quality but try to innovate and invest money in the R&D to still have a first mover advantage continuing to offer the best product on the Chinese market.

2)Outsource the production to reduce the cost: This will probably be one of the issues for FuYao Group. It is not one of our advice but they may do it to keep on being profitable. If they do so, they will have to close some plants in China. They will also have quality control issue concerning the production plants abroad.

3)Develop strong relationship with all the actors in the supply chain: treating them as partners. A lot term relationship will help coping with the competitors.

?In term of copyright: They will probably have to spend a lot of money within the next few years to face this issue. If they want to keep their brand image intact, they will have to do so.

c. How this company can improve?
?Create its own security label in partnership with the Chinese ministry of industry it would be an improving in the security control product in the Chinese market.
?Chose its suppliers in accordance with FuYao Group?s values (do they treat their employees well?)
?Keep on investing in R&D to innovate

Bibliography

http://www.fuyaogroup.com
http://gongyi.qq.com/a/20101216/000011.htm
http://www.fortunechina.com/magazine/c/2010-10/05/content_42054.htm
http://static.sse.com.cn/cs/zhs/scfw/gg/ssgs/2011-08-11/600660_2011_z.pdf
http://www.sse.com.cn/sseportal/webapp/datapresent/SSEQueryBulletinStaticHome?PRODUCTID=600660&REPORTTYPE2=DQBG

Location: Fu Qing (CHINA, FU JIAN)

Sector: safety glass, industrial technological glass

Official website: http://www.fuyaogroup.com

Key figures:

FuYao Group is a joint venture corporation founded in 1987 in Fuzhou, specialized in production of automotive safety glass and industrial technological glass, and is the first company of the trade in China listed in the Shanghai Stock Exchange in 1993 named FuYao Glass with the share code number 600660.
The group has over 10000 employees and built automotive glass production bases in Fuqing, Changchun, Chongqing, Shanghai, Guangzhou, and Beijing and the modern float glass production bases in Fuqing of Fujian, Shuangliao of Jilin, Tongliao of Inner Mongolia, and Haikou of Hainan, and has established a complete production and sales network across the country.

The total assets have accrued from 6.27 million RMB when registered in 1987 to 9.0 billion RMB of the present. It is a transnational company with business offices in America, Japan, Korea, Australia, Russian, Germany, West Europe, and East Europe, etc. The company?s annual revenue achieved 8.51 billion RMB in 2010, increasing 39.92% compared with the same period of 2009. The annual profit was more than 1.78 billion RMB, increasing 60.05%.

In the future, FuYao Group will keep updating technologies and developing the upstream and downstream industrial chain centered on the automobile glass so as to make FuYao Group into a modernized and internationalized large corporation with the capacity to design, develop and self-supply materials.

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