China’s largest construction equipment manufacturers aim for the top spot
Sany, LGMG and Zoomlion are accelerating their product and market development strategies to match the perceived quality and value of leading global brands
“We are confident that soon we will be the top construction equipment manufacturer and supplier of heavy equipment worldwide,” said Lei Li, managing director-West Africa, Sany, while speaking to PMV Middle East at the Bauma China 2018 exhibition in Shanghai where the company showcased 68 machines including 45 new products in the concrete, road, excavator, crane, piling, port and coal equipment categories.
Sany is currently the world’s largest concrete machinery manufacturer and China’s largest construction equipment manufacturer. This also makes it one of the top construction equipment manufacturers worldwide.
Li’s confidence about taking the top spot comes from Sany’s sales performance and geographical expansion during the past few years. In 2017, Sany sold around 35,000 excavators worldwide. The company achieved the same sales figures by Q3 2018 in the domestic market alone, surpassing its annual sales projections and enabling it to pursue a bigger target of 45,000 units by end of 2018. Sany also celebrated the sale of its 100,000th small excavator in 2018.
“Sany has maintained the highest market share for excavators in China; currently, one of every three excavators in the domestic market is from Sany. Our recent overseas sales achievements places us at least in the second position or possibly the first position in the global excavator industry,” said Li.
Lei Li, managing director-West Africa, Sany
Sany’s leadership in the excavator industry comes from its extensive investment in R&D and manufacturing. The company’s Lingang Industry Park in Shanghai has the world’s largest excavator assembly-line production. It operates five other manufacturing facilities in China to produce other construction, mining and material handling equipment.
“Sany’s rapid developed initially was due to the demand in China. For the last 15 years, we’ve been focusing on international markets. We’ve seen an average YOY growth of 50% in international markets, which currently constitute 40% of our turnover,” said Li.
Sany has expanded its presence to 150 countries and established R&D and manufacturing facilities worldwide in the US, Germany, Brazil and India.
Sany’s production facility in India was the company’s first overseas investment. Sany Middle East was established in 2012 with its headquarters in Jeddah, Saudi Arabia.
“The manufacturing centre in India serves the Asia Pacific, Africa and Middle East markets because of its proximity to those markets. The Sany factory in India has maintained a leadership position in the manufacturing of excavators, truck mounted cranes, crawler cranes, transit mixers, piling rigs, and graders,” said Li.
Li attributes Sany’s success in international markets to the company’s priority for after-sales services.
“We identify dealers and agents that understand local markets better than anybody else and partner with them. In addition, we maintain our own warehouses and service engineers in all of our major markets to support our local dealers and engineers. This ensures that our customers get prompt service and machine downtime is reduced,” said Li.
Li points out Sany’s other competitive strengths that has enabled is sales growth as well as brand perception in the domestic and international markets.
“Every year, we invest 5–7% of our turnover in R&D. We run a post-graduate research centre, the only institution of its kind for the heavy equipment industry in China. We also run the only university for the heavy equipment industry in China, which trains over 5000 students. We are working together with international universities to train the industry professionals of the future,” said Li.
Despite their manufacturing and distribution strengths, Chinese companies continue to face the challenges of customer perception about the price, quality, and originality of Chinese products.
Li points out that Sany is determined to change this long-standing perception by aiming for technology and service leadership.
“I meet customers who have been previously disappointed with the service offered by Chinese companies. As a result, they tend to stereotype any Chinese product as being cheap and low quality and the service as poor. Sany is changing the perception of such customers by prioritising service and availability of parts, which has helped improve the perception of Sany as well as other Chinese brands. Furthermore, Sany has the highest number of patent applications in the industry. We have over 10,000 effective patents, not applied patents.So, no one can accuse us of copying products,” said Li.
Lingong Group Jinan Heavy Machinery Co. (LGMG), one of the three core subsidiaries of Lingong Group, which also includes Shandong Lingong Construction Machinery Co. (SDLG) and Lingong Special Machinery Co., is targeting further global expansion in four major markets including mining trucks; aerial work platforms (AWPs); and mine transportation auxiliary equipment; components and parts including tyres and oils.
LGMG entered the AWP business in 2015, initially catering to demand in China. A year later, the company established its global AWP operations and has since then been targeting the US and Europe markets.
According to Robin Wang, AWP export division sales manager, LGMG, there’s huge potential for growth in the domestic market alone, where demand for AWPs has been increasing with awareness about working at height safety.
“During the last three years, the AWP market in China has more than trebled in volume, from 20,000 to over 70,000 units. In comparison, the US market demands above 500,000 units every year. So, there’s plenty of room for growth and competition. By Q32018, we sold 7000 units in China, and we expect to sell over 8,000 by the same time in 2019. With regard to international competition, we benchmark ourselves with the world’s best brands. Currently, our scissor lifts are at par with leading global brands and we are working on improving our boom lifts to achieve the same results,” said Robin.
Robin points out LGMG’s advantage of operating joint ventures with Swedish companies Sandvik Group – Jinan Lingong Mining Machinery and Rock Technology Co. (LGMRT), and Volvo Group – SDLG, which enables technology transfer of electric and control systems and quality control of LGMG products.
“Our joint ventures have enabled us to learn from the world’s best companies and develop high-quality equipment with the highest safety standards. We improve on them by building machines for tough conditions, the type of conditions we are used to in China, through selection of the best materials for additional strength and longevity. We’ve got feedback from customers in Europe that operate AWPs in tough conditions that our machines are much stronger and durable that leading Western brands,” said Robin.
Robin Wang, AWP export division sales manager, LGMG
“We are taking a step-by-step growth approach. In the next two years, we aim to be the number 1 Chinese AWP brand worldwide, and in another three years, we want to be among the top three AWP brands globally. We have telehandlers in our three-year development plan. Similar to AWPs, there’s potential in the global telehandler market, particularly Europe,” said Robin.
Aerial work machinery is a new focus and product category for another Chinese manufacturing giant, Zoomlion, which recently entered the business with eight new AWP products in three categories. Zoomlion also launched an automated production line for AWP products, which according to the company, is the industry’s first intelligent production line covering the whole production process of scissor lifts.
“Zoomlion is providing rich resources and strong support for the smooth launch of its aerial work machinery products in such aspects as technology, capital, markets, services and finance. We will actively seize market opportunities, strengthen our technical advantages and adopt a long-term vision in order to guarantee that the Zoomlion aerial work machinery brand becomes a high-end brand in the industry,” said Fu Ling, chief engineer, Zoomlion.
LGMG is also expanding its range of rigid dump trucks for the mining industry, particularly Africa where LGMG reported increase in sales of trucks in 2018 to copper mines.
LGMG launched two rigid dump trucks for mining applications at Bauma China. The CMT range of trucks – the CMT 66 and CMT 106 – have payloads of 45 tonnes and 70 tonnes with maximum speeds of 40km/h and 47km/h, respectively. LGMG offers another range of rigid dump trucks, the MT range, with payloads ranging from 35 to 60 tonnes.
The major visible difference between the CMT range and MT range is the cab position; the cabs on the CMT range have a central position and those on the MT range have a side position.
According to Adler Zeng, mining machinery export corporation regional manager, LGMG, only China provides a mid-market truck dedicated for mining applications. Adler explains how this proposition is attractive for the mining industry which largely operates articulated and rigid dump trucks.
Adler Zeng, mining machinery export corporation regional manager, LGMG
“The acquisition and operating costs of both articulated and rigid dump trucks for mining applications are high and their useful life is about 10 years. Small tipper trucks could be used to reduce costs, but they come with a trade-off of lower capacity and life of one year. The price of the CMT range of trucks is about one-third that of articulated and rigid trucks for the same tonnage, and their life is 5–6 years. This offering is unique to LGMG: a significantly lower price at the cost of a slightly reduced but sufficient truck life is what the mining industry needs currently,” said Adler.