Shandong Heavy Industry Group, a State-owned machinery maker based in Jinan, plans to restructure Heibao Auto, an automotive manufacturing company based in Weihai, in an effort to inject new momentum into the development of Shandong's auto industry, according to local officials.

The two companies signed an agreement on Nov 10 in Jinan, capital of Shandong, to commence strategic restructuring.

Shandong Heavy Industry Group and Heibao Auto sign an agreement on strategic restructuring on Nov 10. [Photo provided to chinadaily.com.cn]

According to the agreement, Shandong Heavy Industry Group will carry out a comprehensive reorganization of Heibao Auto in a bid to increase the auto sector's overall quality and core competitiveness.

Heibao Auto, founded in 1980, is a competitive player in the domestic diesel micro-card market. The company mainly produces light trucks, mini trucks, engineering dump trucks, and cargo trucks, with an annual production capacity of 100,000 vehicles. It has established more than 1,000 service outlets across the country.

Shandong Heavy Industry Group was founded in 2009 through a merger between Weichai Power, Shandong Construction Machinery Group, and Shandong Automobile Industry Group.

During his speech at the signing ceremony, Ling Wen, vice-governor of Shandong, said that the move is a vital reform for Shandong Heavy Industry Group and will propel the development of the province's high-end equipment manufacturing industry, especially the automobile industry.

Zhang Haibo, Party secretary of Weihai, said that the restructuring will accelerate the conversion of old growth drivers into new ones and push forward high-quality development. He added that Weihai will offer its full support to guarantee the project is carried out smoothly.

Tan Xuguang, chairman of Shandong Heavy Industry Group, said that the company will focus on product R&D, marketing, after-sales service, and more to develop Heibao Auto into a leading enterprise and contribute to the development of the automobile industry in Shandong.