Financial Times: Chinese companies enter Germany

(Financial Times, August 13, Daniel Schaefer, Frankfurt)

     
Sany, one of China's flagship machinery groups, is about to become the first engineering company in the Middle Kingdom to start production in Germany. The move heralded an attack on the European engineering market by China's fast-growing industrial companies.
Daniel He, managing director of Sany Group in Germany, told the Financial Times that the concrete pump plant being built by the industrial conglomerate near Cologne is scheduled to come on stream in early 2011.
Daniel He's team in Germany now has more than 60 people, which will increase to several hundred when the plant and supporting R&D center are put into operation. He gave the team a mission: to conquer the heart of global engineering. "We want to achieve at least a very prominent position in Germany," he said.
His self-confidence is well-founded. Sany Group produces a wide variety of machinery and equipment, from excavators to crawlerscraneAnd so on. In the 16 years since its establishment, Sany Group's sales revenue has grown at an average annual rate of 50%, reaching 30.6 billion yuan in 2009.
"We should have a good market share in Europe because we're already a global leader," said Daniel He, who was screened out. Daniel He was sitting in his office in Cologne with a model of the world's *5661 72-meter concrete pump produced by Sany Group on his desk.
Sany and its domestic rival, Zoomlion, which bought Italian concrete pump maker Cifa two years ago, have highlighted that Chinese industrial companies are beginning to emerge as formidable rivals for German engineering groups, which are often the first in the market, to hit the heart of Germany's export success.
"My experience is that more and more Chinese companies are moving from low-cost and cheap products to more sophisticated products," said Hermann Simon, chairman of Simon Kucher & Partners, a German consulting firm.
"They usually see the Germans as benchmarks. We must take this new type of competition seriously. ”
Simon specifically mentioned the solar and wind power industries. In the solar industry, Chinese companies such as Yingli have taken the crown of world leader from Germany. When it comes to wind energy, nearly 70 Chinese companies are trying to replace global players such as Denmark's Vestas and Germany's Siemens.
While Chinese companies are preparing to enter the European market, many of Germany's smaller, family-owned engineering companies lack the resources to expand into Asia.
Industrial giants such as Siemens or Bosch, as well as family-owned market leaders such as laser cutting machine maker Trumpf, have long developed low-cost strategies to expand into emerging markets, including large production plants and R&D centers in Asia. But it is difficult for SMEs to follow their lead.
Roman Zeller, managing director of restructuring consultancy Alix Partners, said: "German mechanical engineering companies perform poorly in markets where technological advantage is not the decisive factor. But those are the markets where music is going to be playing in the next few years. ”
Even the fact that orders for German engineering products surged by 32 percent in the first half of the year, driven by China, cannot hide the fact that German engineering companies are losing out not only to Chinese companies in their own markets, but also in countries such as India and Brazil.
Chinese companies have long since replaced Germany as the market leader in the global machinery manufacturing industry. Last year, China's machinery sales revenue rose 12 percent to 300 billion euros ($393 billion), while Germany's machinery industry fell 23 percent to 178 billion euros.
"German mechanical engineering companies are rapidly losing market share," Zeller said. This is a huge problem. ”
In terms of technology, some Chinese companies, such as Sany Group, can compete with their German rivals. But in Europe, Sany Group is still lagging behind in some key areas: it lacks a large sales and service network, and it does not have an established brand.