Reduce operating costs and improve the technological competitiveness of enterprises

Dear Esteemed Experts, Colleagues, Distinguished Leaders, and Friends from the Industry Media, It gives me immense pleasure to be invited to this 2012 China Superhard Materials Technology Development Forum and the Henan Superhard Materials Industry Alliance 2012 Annual Work Conference, held amidst the crisp, autumnal charm of Zhengzhou. It's truly an honor to engage in discussions with industry luminaries and peers from various walks of life. I represent Fuyang, a city under the jurisdiction of Zhengzhou, the capital of Henan Province. Fuyang holds countless historical tales familiar to every Chinese individual. With landmarks such as the ancient battlefields tied to the famous stories of Liu Bang and Xiang Yu, as well as the legendary Three Prisons of Lu Bu, the city is steeped in rich historical sentiment. I must clarify the name Fuyang since it might be mistakenly associated with Xinyang, renowned for its Maojian tea. The character 荥, specific to Fuyang’s name, consists of a grass atop, water below, and soil in the middle—symbolizing fertile waters and ideal human habitats. I warmly invite everyone to visit Fuyang and experience its beauty firsthand. Over the past few days, I’ve had the privilege to study the Secretary-General's industry development report and the insightful presentations from numerous experts. As a local government official, I’ve been profoundly inspired and enriched. Particularly noteworthy are the lessons learned regarding addressing current market demand challenges and the economic downturn, as well as understanding and resolving deeper economic contradictions. I am deeply impressed by our industry peers' dedication to advancing superhard materials toward global excellence. On behalf of the CPC Fuyang Municipal Committee, the Fuyang Municipal People's Government, and the 650,000 residents of Fuyang, I extend heartfelt gratitude to the experts, entrepreneurs, and friends of the Zhengzhou New Materials Industry Cluster Management Committee. As one of the speakers at this forum, I earnestly hope everyone will join me in applauding and expressing gratitude to the organizers, the China Machine Tool Industry Association Superhard Materials Branch, and the Secretariat members. Next, I will address the development of new material industry clusters in Fuyang and Zhengzhou. 1. Fuyang possesses unique advantages for developing the superhard materials industry. Fuyang’s geographic location offers unparalleled transportation advantages. As a city under Zhengzhou, the provincial capital of Henan, Fuyang benefits from proximity to Zhengzhou, just 10 kilometers away. Key transportation infrastructure, such as Zhengzhou Xinzheng International Airport (reachable in 40 minutes), Zhengshang Road, Zhongyuan Road, Bohai Road, Science Avenue, Longhai Railway, and the Shijiazhuang-Wuhan high-speed rail, all traverse Fuyang. The Yellow River pontoon and the forthcoming Taohuayu Yellow River Bridge promise enhanced connectivity. Zhengzhou West Railway Station and Xinzheng Station in Zhengdong New District reinforce Fuyang’s strategic position. Plans to increase highway exits from three to eight within the next few years and the intersection of the national “four vertical and four horizontal” high-speed rail network will further solidify Fuyang as a pivotal transportation hub. These advantages allow Fuyang to share Zhengzhou’s resources—logistics, finance, human capital, and consumer markets—while enjoying lower land, labor, water, and electricity costs. Fuyang has consistently ranked among the top counties in Henan for socioeconomic development and received accolades such as the Most Investment Potential City, the Best Investment City in Henan, and the National Health City. The foundation of Fuyang’s superhard materials industry is robust. The integration of Zhengzhou and Fuyang’s industrial systems has fostered a complete industrial chain, supported by institutions like the China National Sixth Institute, China Mill Corporation, and Henan University of Technology. These institutions provide comprehensive support from research and development to talent cultivation. Henan’s status as a key economic and industrial province offers distinct advantages in equipment manufacturing, complemented by Zhengzhou’s rapid growth in electronics, automobiles, and machinery sectors. Projects like Foxconn Electronics, Gree Electric Appliances, and Dongfeng Nissan underscore a promising market for superhard materials. The superhard materials industry in Fuyang enjoys a vibrant development atmosphere. Thanks to the efforts of industry associations, superhard materials are now part of the national strategic emerging industry development plan. Both Henan Province and Zhengzhou City have prioritized this sector. The “Twelfth Five-Year Plan” for strategic emerging industries in Henan specifically emphasizes the development of superhard material clusters in Zhengzhou. Zhengzhou and SINOMACH, the leading entity in China’s superhard materials industry, are collaborating to leverage their respective strengths, aiming to build a high-hardness materials industry hub centered in Fuyang. 2. Zhengzhou New Material Industry Cluster Area Following thorough investigation and planning, the Zhengzhou Municipal Party Committee and Government issued Document No. 13 this May, outlining seven key industries for Zhengzhou’s future focus. The new material industry, anchored in superhard materials, is concentrated in Fuyang and designated as the Zhengzhou New Materials Industry Agglomeration Area. Covering 10 square kilometers, the site is strategically located near Zhengzhou’s main city, with Science Avenue Expressway and Longhai Railway running through it. Its ecological environment is pristine. The agglomeration area focuses on developing advanced functional ceramics, new abrasives, and superhard materials equipment, alongside superhard materials themselves. By 2016, the goal is to achieve an industrial output value of 100 billion yuan, establishing China’s largest new material industry cluster with distinctive features and global influence, branded as the “Diamond City” and “China Superhard Materials Industry Valley.” Since its establishment earlier this year, the Zhengzhou New Materials Industry Cluster has garnered significant industry attention and swiftly attracted talent, funding, projects, and policy support. The Zhengzhou Municipal Government has provided high-level oversight, while Fuyang has established a construction headquarters led by the Party Secretary and Mayor. Renowned experts, including Wang Guangzu and Wang Qinsheng, have been engaged to guide the development. The plan by China National Machinery Corporation has been successfully reviewed. The agglomeration area now boasts comprehensive land use planning and favorable policies. SINOMACH and 14 other projects have confirmed their settlement, with nearly 100 superhard materials companies showing interest and committing investments totaling 7 billion yuan. Planning includes standardized workshops worth 1.2 billion yuan. Our two primary objectives for this year are: first, to complete infrastructure and factory construction by year-end, and second, to secure investments reaching 10 billion yuan. 3. Fuyang is eager to collaborate with China’s superhard materials industry. Since the inception of the new material industry cluster, we’ve focused on reducing enterprise operational costs and enhancing technological competitiveness. Studying the Secretary-General’s report and expert presentations has been highly enlightening. Two key insights emerge: first, the profit margins in China’s superhard materials industry are shrinking due to rising costs and market pricing pressures; second, our products largely remain in the mid-to-low range, lacking sufficient technological sophistication and value-added. Moving forward, we aim to intensify efforts in both areas. In reducing comprehensive operating costs, we’re planning a holistic approach centered on the environment and service. Leveraging the expertise of the China National Machinery Sixth Institute, we’ve developed a high-standard, sustainable development plan for the agglomeration area. This addresses issues like fragmented industries, weak R&D foundations, and land scarcity, creating a complete industrial chain spanning raw materials, synthesis, products, and specialized equipment. By integrating R&D, production, testing, display, and trade, we aim to reduce costs and enhance product competitiveness. Environmental planning includes agreements with SINOMACH for non-operational infrastructure and standardized factory buildings, ensuring immediate availability for incoming businesses. We’ve also planned residential zones and business districts to cater to employee needs and provide top-tier living environments. Our commitment to improving technological competitiveness involves establishing a national testing center and R&D facility with SINOMACH’s support. I urge fellow industry professionals to consider strengthening comparative research with international standards, conducting fundamental studies, and fostering collaborative mechanisms involving government, industry, and market operations. To all esteemed entrepreneurs and experts, Fuyang welcomes your insights and investments. Together, let’s advance the dream of superhard materials. Lastly, I extend my gratitude to the industry association for their efforts and wish everyone prosperity and success. Thank you, Deputy Secretary of the CPC Fuyang Municipal Committee, Zheng Xinxin Executive Deputy Commander, Wang Xinting October 25, 2012

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