The following is a speech by Mr. Yang Qingyuan of Guangdong Fronte Machinery Co., Ltd. on how agents can connect with the capital market in the aftermarket.

    The full text is as follows:

    Yang Qingyuan: Good morning, leaders and guests.

    First, I am very happy to meet you in Beijing. I am also very honored to stand on this podium today on behalf of Fronte for the first time to show and introduce Fronte. The topic arranged by the association for me today is how dealers can establish an effective performance management system to achieve connection with the capital market. This topic is a bit difficult for me. When it comes to performance management, perhaps human resources companies, including well-known consulting agencies, are more suitable and professional. In this regard, I can only say that I have some superficial knowledge and insights. Many international companies attended the meeting today, including Linde from the forklift industry, Caterpillar from construction machinery, and Doosan. I believe their performance management systems should be better than ours. I will focus on introducing Fronte Company.

    Just now, President Dong revealed a little information about Fronte. Fronte is an enterprise in the forklift aftermarket industry that focuses on the aftermarket. All our business is closely related to forklifts, including forklift whole machine sales, spare parts supply, forklift leasing, and maintenance services. The company was founded in March 2001. Through more than ten years of development, it has grown from a forklift business department to a large-scale enterprise with one headquarters, seven back-office management centers, four business divisions, nearly 70 branches, nearly 800 employees, annual sales of nearly 400 million RMB, and assets of hundreds of millions of RMB. Compared with many large enterprises attending the meeting today, our current scale is still relatively small, but after listening to President Dong's analysis, I am greatly encouraged. President Dong said that in a few years, Fronte's market value will reach 10 billion, which I am also looking forward to.

    Today, there are not many participants from the forklift industry; most are from the construction machinery industry. As many guests mentioned yesterday and President Dong just mentioned, the entire forklift market is very chaotic, and the scale of current practitioners is generally very small—I mean agents. Fronte is the same. When we started in 2001, we were also a small business department, but what makes us different from many practitioners is that we seized several opportunities and made several adjustments and transformations. When we started in 2001, we were in Shunde District, Foshan, acting as an agent for TCM forklift sales. When the forklift market sales situation was excellent, 80% of our revenue came from sales. When the 2008 financial crisis came, we made our first adjustment and transformation, and we launched the forklift parts business. At that time, we started simultaneously domestically and internationally, based in China, serving the world. In 2010, we saw the huge situation in the aftermarket. Based on our understanding of the aftermarket, we believe that forklift leasing and second-hand forklifts are very important carriers in the aftermarket, and forklift parts are the most basic foundation. So in 2010, when we saw the huge business opportunity in the aftermarket, we timely launched the forklift leasing project. So far, we have formed four major business divisions: the whole machine division, including the leasing business, the domestic parts division, and the international parts division. Our headquarters is in beautiful Panyu, Guangzhou, very close to the new railway station. Our years of honest sales and service have won the trust of domestic and foreign customers and suppliers. Now we have become a distributor of forklift parts for many world brands in China and even globally. The company will, with an international business perspective, a scientific and pioneering innovative spirit, a reputation-based business philosophy, and a customer-first service concept, be based in China, serve the world, and sincerely provide domestic and foreign users with various services of excellent quality and reasonable prices. Therefore, Fronte is dedicated to the forklift aftermarket business.

    We know that service is very important, and we have great dreams. Yesterday, many guests mentioned that the development of the entire industry, whether construction machinery or forklift industry, cannot do without the boost of capital. Fronte is very honored to have received investment from an investment company for the first time in 2011. President Dong just introduced that July 2013 was the second round of investment. We are also very honored and proud that our business, what we do, and our business model are recognized and accepted by everyone. We are also very happy.

    Fronte's philosophy: goals, talent, management—these are three words, six characters. In doing anything, whether as an individual or any organization, it is very necessary to set a goal and move in a clear direction. Just like a ship sailing in the ocean, if it does not know its course, I believe the farther it goes, the more serious the deviation from the target. So at Fronte, from the top leaders to the grassroots employees, everyone knows their direction and has clear goals, which is what we value. Second is talent. Nothing can be done without people; without talent, everything is doomed to fail. So at Fronte, we adhere to the employment concept of appointing people on merit and putting character first. We employ people regardless of age, education, gender, or seniority; the only thing we value is work ability. Third is management. Fronte has more than 70 branches across the country, which should be considered relatively large among forklift agents and ranks at the forefront nationwide. Compared with many appliance chain and other chain enterprises, our number is still small, but in terms of the service network for forklift agents, our network now has more than 70 branches, which is a chain format. Chain undoubtedly means connecting the market and locking in management, so management is the soul of the chain. What Fronte has always been proud of, and the biggest difference from other agents, is our back-office management. From the beginning of our business to now, we have particularly emphasized it, so we have formed seven back-office management centers. Our management has now achieved standardization, informatization, and refinement. This is Fronte's business philosophy: goals, talent, management.

    Next, I will introduce the development history of Fronte. Let's start from 2013. First, personnel: currently we have 800 people. For 2014-2016, we have a budget to reach 1,200, 1,700, and 2,300 people. In terms of the number of branches, currently 70, reaching 100 in 2014. In terms of operating income and sales, this year we have 400 million, the 2014 budget is 650 million, 2015 is 1 billion, and 2016 is 1.5 billion. I also believe that with the efforts of all parties, we will certainly achieve these goals. I think in 2016, when we truly achieve a revenue scale of 1.6 billion in the forklift aftermarket, as President Dong just said, the value of our enterprise will be great.

    Fronte's goal performance management system—when it comes to performance management, I am showing off in front of experts; it is not my strength. I have always worked at the grassroots level, and now at Fronte I am responsible for the leasing and second-hand forklift sector. So I can only talk about Fronte's actual situation, hoping to be helpful to everyone.

    First, the necessity of establishing a performance management system.

    1. Senior management is busy with bookkeeping, while grassroots employees cannot feel the operational pressure of the enterprise and are in a "three no's" state—no work goals, no pressure on shoulders, no direction for effort.

    2. Assessment indicators are set with great randomness, often resulting in situations where the monk is poor but the temple is rich, or the monk is rich but the temple is poor. Either situation is unsustainable.

    3. Performance management only stays at "deducting wages and bonuses" or "eliminating unqualified employees", leading to serious employee resistance.

    4. Managers deviate from the focus of management, trying to grasp everything, resulting in chaos when relaxed and rigidity when controlled.