Chinese construction firms set to raise their game

Chinese Construction equipment manufacturers are aiming to raise their game in order to capture a larger share of the global market, in particular that of the US.

Lessons have been learned, according to several senior executives from major Chinese firms who, as a group, faced the press during a presentation at the CONEXPO-CON/AGG in Las Vegas.

Greater machine durability coupled with improved customer service are central to improved sales, said Wang Min, chairman of 2490 XCMG. Chinese firms have not been good at talking among themselves in order to share best practice manufacturing for the greater good of the sector, said Wang in a forceful presentation.

Zeng Guang’an, chairman of 269 LiuGong, agreed. He pointed out that many Chinese firms already spend upwards of 4% of their global revenue on research and development. But Chinese manufacturers understand that more investment in money and time is needed to develop dealer networks and to improve after-sales service for its clients.

It is a given that “the customer comes first”, said Yu Hongfu, chairman of 1170 Sany, speaking about relationships with dealers and end-users. However, Chinese firms will have to dig deeper into that relationship to acknowledge and understand the pressures faced by their customers. “Customers come first but this must be accompanied by respect for the demands that are placed upon the end users,” he told the media.

Zhang Xiuwen, chairman of 1171 Shantui, said that the US firm 178 Caterpillar, being a successful global business, is a model and example for his firm, like it is for many others in China. “We have to get our production right first time, every time,” he said. It is one thing to add value to the machine but the key point in the relationship with customers is to add value to their business. A purchase is much more than just a machine and manufacturers have to work more with customers to understand their business. Of course, better dealerships and aftersales service are part of this.

As a group, they understood US president Donald Trump’s desire to see more products made in America by Americans. In today’s global climate, many Chinese manufactures are already moving in the direction of manufacturing in the US rather than reassembling their products.

What will likely push, or lead, Chinese companies to do more manufacturing in the US is the decreasing difference in manufacturing costs between China and other countries, including the Americas, as China becomes more wealthy and urbanised. “This has been going on for 10 years or so,” said Zeng Guang’an of LiuGong. “The manufacturing cost difference is now becoming so small.”

Many components, such as engines are manufactured globally for use in Chinese equipment so a Chinese product is not solely Chinese anymore.

Chinese supply chains are increasingly sophisticated and global.

But, Zeng noted, in order to manufacture in the US, Chinese firms also have to increase sales and market share to ensure it is economically feasible.

In the end, said Wang Min of XCMG, president Trump’s focus on infrastructure is good for the entire equipment manufacturing sector.