Dialogue with Wu Shengfu: Topics Raised by

In the newly built heavy equipment machining & heat treatment workshop of CFHI, Wu Shengfu introduced the CFHI s nuclear power products development and manufacture conditions to Mr. Shu Guogang, the general manager of China Nuclear Power Engineering Co. LTD. (Taken on 2009.10.28) issued by Xinhua News Agency.

1^st Dec. of Xinhua net Beijing, Title: Topics Raised by a Big Order of the Nuclear Power Products Face to Face with Mr. Wu Shengfu, China First Heavy Industries General Manager.

As we set off from Beijing to Fularji, a key industrial town in north of China to interview CFHI, the weather report said the temperature there has dropped to -15 .

In the year shocked by the economic crisis, what happened to CFHI which is called as the Hatcher of the Republic s Industry ? How to begin the topic? These questions puzzled us on the way there.

We were suddenly enlightened as Mr. Wu Shengfu showed us a big order of the nuclear power products with which we started our interview.

The warm winter brought by the big order.

Reporter: CFHI s advantage is to supply the whole set of heavy equipment for steel and iron industries. Since last year, the economic crisis has a serious impact on the relevant industries, and does it have much influence on CFHI?

Wu Shengfu: The economic crisis has a big influence on equipment manufacturing industries, especially on the enterprises engaged in heavy mechanical equipment manufacturing. Before the economic crisis broke out, CFHI had maintained around 50% annual increase speed for continuous 5 years; however the crisis decreased the increase speed to 10%. It means output value will be about 3 billion less than the plan.

Fortunately, this April we signed an order of nuclear island equipment manufacturing with China Guangdong Nuclear Power Holding Corporation (CGNHC) in Dalian which is the first big order in the whole equipment manufacturing industries after the adjustment and revival layout on equipment manufacturing industries was brought forward.

CFHI people are delighted and encouraged. This year, the total amounts of CFHI s nuclear power products order are more than 3 billion yuan which almost makes up the output value decrease due to the economic crisis and helps to overcome the disadvantaged effects on the traditional industries.

Reporter: CFHI can set the heart at rest with the big order of the nuclear power products . What is deep end would the enterprise encounter, provided that CFHI could not get the order?

Wu Shengfu: If we are without the 3 billion, as a large-scale enterprise, CFHI would suffer from an unimaginable strike and the enterprise would only seek survival instead of development. Many of our workshops will have to shutdown and we will never reduce the staff because Fularji is so small that the society is not able to absorb so many residual laboring forces and we have to decrease the income, if so, the entire area s consumptive level and economic developing speed would fall down at once.

Reporter: We can see that the big order brings the warm winter for our enterprise. Will the warmth last continuously?

Wu Shengfu: At present we can see that our enterprise can almost pass the winter smoothly. But it is still a long-term problem of replying the crisis and industries revival. Generally the macro economy has a time lag to equipment manufacturing industry; especially the orders of steel, the petrochemical industry, nuclear energy and so on have a time lag for about one year that is to say orders of this year determine next year s production.

From our contact with the customers, there is no enquiry at all at the beginning of the year and the sales men s visit to the customer is a merely visit. But generally the amount of the order is continuously increasing and it is obvious that stabilized to show good momentum.

Independent Innovation, survival while passive waiting, death

Reporter: There are many equipment manufacturing enterprises so why CFHI can get the vital nuclear power products order ?

Wu Shengfu: The order is just a chance but getting hold of the chance depends on the strength. In fact, it is not an easy thing for us to gain the big order. We have spent several years in scientific research for all the forgings of nuclear island so as to facilitate us the ability to fabricate the core equipment of the nuclear power. All of this helps us to seize the opportunity when is comes.

In the early times we have realized that the steel and iron industry can not maintain the constant high increasing rate all the time, so we have always been focusing on new fields research and new equipment development. So the significance of the order to CFHI lies in the extremely strong promotion and advance for CFHI s future, especially for nuclear power equipment fabrication.

It is only a superficies that industry revival outlay can help enterprises to gain big order; the independent innovation is the base of long-term development of equipment manufacturing industry. One of the important symbols to show human s progress is the advance in tools, so technology innovation is the soul and life to equipment manufacturing industry. An enterprise is unable to sustain without innovation, let along gain more profit.

Reporter: Innovation and scientific research are extremely important but they also need much input. Sometime it can not take effects at once. What s the opinion of CFHI?

Wu Shengfu: Within CFHI, scientific researchers always get the highest income which is higher than that of workers, administrators and leaders. Previously, many people have different opinions but the economic crisis let us realize the importance of the scientific research and the technical level.

The most important thing of innovation is the talent input. Fularji is in such a remote location; in order to absorb talents, we moved the research agencies to Dalian and Tianjin which now can fetch in more than 200 masters or talents of higher diploma. In capital input, the capital in research and development these years accounts for 4% to 5% of our sale.

Reporter: What achievement has CFHI gained with such much input?

Wu Shengfu: The development of economic society goes with the equipment advancement. Enhance China s manufacturing ability with equipment of good quality is our tenet. The process of providing good-quality equipment for our new China is the process of constant technical innovation.

CFHI has created numerous the first in China and the tendency still continues. We have developed many new products these years, such as thermal power unit. We could only make the precritical ones before, but the 1000KW thermal power unit supercritical superpure low voltage rotor forgings have been finished. We can manufacture nuclear power forgings in whole set and at present there are only four companies can do it in the world.

The largest and most advantaged 150MN hydraulic forging press in the world awarded the first prize of the national science and technology progress. It can meet the needs of large-scale forgings in rolls equipment in steel industry, rotors in the power plant, nuclear island in nuclear power plant, hydrogenation reactors in chemical industry, etc.

Just because we have this kind of independent research and development strength, we are quite confident of CFHI s future.

Try to seed the docking point between traditional industry and new industry

Reporter: Every time after a serious economic crisis, there would be the reconstruction. It is generally deemed that the new increasing point of the world economy lies in low carbon economy. So, what is the development turning point for the equipment manufacturing industry as a traditional industry?

Wu Shengfu: As the big order indicates, only rely on electric power generation of high efficiency and cleanness, ecological environment and the people's livelihood, significant special fields of science and technology, etc. should the development of the equipment manufacturing industry find the space for revival.

At present, CFHI s focus on the equipment for nuclear power industry is just in compliance with the requirement of low carbon economy. Nowadays, CFHI can supply the required forgings for the new nuclear power project. From this point of view, we have been supporting the nation s needs of low carbon economy and new energy development. To develop new energy and to revival equipment manufacturing industry are not conflict with each other, but supplement each other.

The development of CFHI will still rely heavily on the needs of low carbon economy and new energy field. We will try to find the docking point between traditional industry and growth industry, develop pioneer products and gain bigger breakthrough in domestic and international markets.

Reporter: From this point of view, is there still much space for equipment manufacturing industry?

Wu Shengfu: The advantage of equipment manufacturing industry is that as long as manufacturing business exists, our industry will be needed; so we say there is a market for this industry forever. If only we can catch up with the science and technology progress and the step of times improvement, there should be survival and development space for all time.

Furthermore, as a weatherglass, the equipment manufacturing industry can reflect both the macro economy and business economy. If the general situation of equipment manufacturing industry is satisfying, it may show that the overall economic situation is good; if one certain field is in massive demand of the equipment, we can see that this field is in a rapid growth. We could feel the economy is growing positively and the down-stream enterprises in Fularji begin to experience recovery.