Heavy equipment firms on track for recovery
Updated: 2013-10-17 07:12
By Zhong Nan (China Daily USA)
Zhan Chunxin, president of Zoomlion Heavy Industry Science and Technology Development Co, the world's sixth-largest construction machinery maker by sales value, said that his company will shift focus from excavators, bulldozers and pipe-layers to agricultural machinery, heavy trucks and public service vehicles. The company aims to sell these products in the domestic and foreign markets.
A factory to produce wheel loaders and excavators was established in India last year and the company is building another plant in Brazil.
Zhan is also considering setting up factories in Russia and South Africa to expand the company's business channels to Eastern Europe, Central Asia and sub-Saharan Africa over the next three years.
"To avoid mounting trade barriers across the world, building factories overseas is a useful strategy. It also reduces logistics costs and establishes an enhanced dealership network in those emerging markets, where demand remains high and encouraging," said Zhan.
The Changsha-based company posted a profit of $1.43 billion in 2012
The life cycles of construction machinery such as road rollers and wheel loaders are much longer than those of civilian vehicles and they are quite durable on the ground. This longevity is another reason that the domestic market has become saturated since the "golden era" that ran from 2008 to 2010, Zhan said.
Like its Chinese competitors, Zoomlion bought Italian machinery maker Compagnia Italiana Forme Acciaio SpA, known as Cifa, in 2008 to strengthen its research and development capability, especially in the areas of new materials and high-efficiency engines.
Tang Ming, adviser to China's State Council, said that even though foreign companies have a technological edge, the reality is that many such companies in the United States and Europe are being acquired by Chinese players in the industry.
"The Chinese Academy of Engineering is making a specific plan to boost the nation's key heavy industries. It will help eight industries such as construction machinery and shipbuilding to reach a world-class level by 2020," said Qi Jun, president of the CCMA.
(China Daily USA 10/17/2013 page14)