Compelling opportunities in the post-recession era

China's heavy machinery industry is finding compelling global opportunities in the post-recession era, company executives.

Shan Zenghai, director of the technical center at State-owned Xuzhou Construction Machinery Group, said he is "optimistic" about the world's machinery market in the near term.

"Very few markets are as developed as Europe, North America and Japan, and the markets in most emerging countries are all increasing sharply," he explained. "Although the world market has shrunk due to the economic crisis, we still find great opportunities in some hot markets including Russia, India and Brazil."

Shan's idea was echoed by Zhu Dan, vice-general manager of Sany Heavy Industry Co Ltd, a leading privately owned Chinese machinery manufacturer.

"About 80 percent of our company's sales revenue has come from the domestic market until now, and the economic recovery in overseas markets makes me optimistic about the future," said Zhu.

He said Sany started its international business in 2008, and plans to integrate its global resources in the coming five years.

Earlier this year, the company announced the acquisition of Germany's Putzmeister Holding GmbH, the world's largest concrete pump producer, which will make Sany "a new global leader in the concrete-pumping machinery industry".

Completed with the assistance of Citic PE Advisors (Hong Kong) Co Ltd, the purchase "is a milestone in China's machinery industry", said Zhu. "Putzmeister is a symbol of top technology in the field, and after the acquisition, we can improve our own technologies and products."

"And Putzmeister, in turn, can share Sany's sales and service network in China," he added.

Focus on R&D

Beside the mega M&As, construction machinery maker XCMG has plans to cooperate with international counterparts on product reliability and core parts, which are "two of the key barriers for the Chinese machinery industry".

"Take the large-tonnage hoisters sector for example. Around 70 percent of our profit goes to providers of core parts and technologies," said Shan.

Acquisitions of overseas manufacturers of machinery will be one of the company's strategies in the years to come to help the company "develop proprietary intellectual property in core parts", said the XCMG technical chief.

On March 20 the Chinese machinery giant started construction in Shanghai on a new R&D and manufacturing center, which will be the largest in China except for the company's Xuzhou headquarters.

Shan said a future focus for XCMG will be expanding into new business sectors including mining machinery and marine engineering equipment, with another push to come in "upgrading technologies in traditional sectors".

"Machinery manufacturing in the entire country has a large scale, but it is weak in R&D," he said. "To make it stronger, we have to pay more attention to the development of technologies rather than just the products since improved technologies improve products."

He said many small and medium-sized machinery companies in Europe are leaders in some key technologies, but are "conservative when it comes to marketing".

"Chinese companies such as XCMG, on the other hand, are advanced in industrialization and marketing, so if we join with European counterparts, we can soon make a win-win effect."

Shan said there will be still "a decade of good days" in the Chinese domestic market for the industry due to the nation's continuing urbanization.

"The industry is an epitome of infrastructure construction, and the scale of infrastructure construction decides the need for engineering machinery," he said.