Zoomlion speeds up overseas expansion
Updated: 2012-09-28 09:45
By Li Fangfang in Changsha (China Daily)
The construction equipment maker Zoomlion Heavy Industry Science & Technology Development Co Ltd is speeding up its overseas expansion as the domestic market stagnates amid the economic slowdown.
"We hope that our business in overseas markets will contribute 30 percent of our total annual revenue by 2015, up from less than 10 percent now," said He Wenjin, vice-president of Zoomlion and general manager of its overseas business branch.
According to He, Zoomlion's revenue from abroad increased 87 percent in the first half of 2012.
As China's total excavator exports rose 60 percent in the first half, Zoomlion led the sector with a growth of more than 300 percent year-on-year.
Zoomlion's first and fundamental priority will be on its sales network around the world.
Related reading: Zoomlion sets up overseas JV with Indian partner
"Zoomlion has set up offices, sales dealers, and parts supply operations in more than 60 countries to support our exports," said He.
Although exports are still the priority in Zoomlion's overseas expansion, He said the company has entered the next stage, which is investing in manufacturing, and cooperating with partners in some developing countries, after the brand is established.
In August, Zoomlion said that it clinched a deal with India's largest industrial crane maker, ElectroMech to set up a joint venture plant - Zoomlion's first direct investment in an overseas factory.
The plant, 70 percent owned by Zoomlion, will start production in early 2013.
"We hope the joint venture plant, which specializes in the production of tower cranes, will achieve $50 million in annual sales in five years and get more than 50 percent of the local market share," said He.
India - with a tower crane industry that had of $93 million in revenue in 2011 - plans to invest $1 trillion, or 10 percent of its GDP, in infrastructure construction over the next five years. Industry insiders expect the sector to maintain an annual growth rate of more than 20 percent in the next decade.
Zoomlion has a long-term strategy in the Indian market and plans to invest $100 million to boost the development of its business in India in the next few years.
"We are also preparing another production facility in Brazil, which is likely to be a fully owned project," said He. "Emerging markets in Africa, Asia and South America will be our priority over the next years."
"We want to take over brands, technologies, distribution networks and management ideas through acquisitions," said He.
In 2008, Zoomlion, which will celebrate its 20th birthday at the end of the month, acquired the Italian concrete machinery producer Compagnia Italiana Forme Acciaio SpA, with Goldman Sachs and two other investors, for 271 million euros ($348.81 million), to gain a foothold in the European market and boost overseas sales.
The Chinese government's tighter monetary policy, which was adopted last year, has cooled the domestic construction boom. In the first half, the total sales revenue of the construction machinery industry dropped about 20 percent year-on-year.
According to the China Machinery Industry Federation, orders received by major companies declined 0.95 percent year-on-year, compared with a 20 percent growth in the same period in 2011.
The declining market has made players more interested in overseas opportunities.
Sany Heavy Industry Co Ltd - Zoomlion's biggest rival - in July spent 8.1 million euros to acquire Intermix GmbH, a German truck mixer maker.