China Economic Weekly丨From ASEAN to the European Union, China's construction machinery enterprises are fully arranged

Thailand's National Railway Station, Mombasa-Nairobi Railway (the first railway built in Kenya since independence), Brunei Sea-crossing Bridge ...... many first-class projects of the "Belt and Road" are densely packed with Chinese construction machinery products such as Sany Heavy Industry, Zoomlion and XCMG. In such a local landmark project as the national railway station of Thailand, Chinese equipment has even become the first construction machinery brand, with a single purchase amount of more than 500 million yuan.

Since the "Belt and Road" initiative has been proposed, China's major construction machinery enterprises have followed the national strategy to go out. Taking Sany Heavy Industry as an example, its 2016 annual report shows that it achieved international sales revenue of 9.286 billion yuan. Zhou Wanchun, vice president of Sany Heavy Industry, said that at present, in the overall sales of Sany Group, sales in overseas markets have exceeded 40% of the company's performance, of which 70% of the revenue comes from countries and regions along the "Belt and Road", and India, Europe, South Africa, the Middle East and other regions have achieved rapid growth.

Not only Sany Heavy Industry, XCMG, Liugong and other enterprises in the "Belt and Road" region in recent years have shown a good momentum of growth, promoting these enterprises from the construction machinery industry for up to 5 years of industry trough out. Zhan Chunxin, chairman of Zoomlion, believes that "the 'Belt and Road' initiative has broadened the road of transformation and upgrading, opened up a new space for international production capacity cooperation, and made it more stable for enterprises to 'go global'." ”

Sany Heavy Industry advertisement on the side of the road near Suvarnabhumi International Airport in Bangkok, Thailand

Along the "Belt and Road", it contributes seventy percent of overseas sales revenue

XCMG Machinery 2016 annual report said that from 2011 to 2016, the domestic construction machinery market experienced a continuous decline of 5 years and 4 months, and the market capacity shrank to less than 1/3 of the high point. Under the continuous trough, the business demand of most industry enterprises is to "survive", and a large number of enterprises in the upstream and downstream of the industrial chain have either withdrawn or collapsed.

The markets along the "Belt and Road" have a different scenery. According to a research report by the Development Research Center of the State Council, the consensus investment demand for infrastructure in countries along the "Belt and Road" from 2016 to 2020 is more than 10.6 trillion US dollars. This is undoubtedly a huge market, and Chinese companies are the main force in this market.

On May 8, Xiao Yaqing, director of the State-owned Assets Supervision and Administration Commission of the State Council, said that in the past three years, a total of 47 central enterprises have participated, participated in and invested, or cooperated with enterprises in countries and regions along the "Belt and Road" to build 1,676 projects.

This not only creates direct sales revenue for enterprises, but more importantly, China's construction machinery products have more opportunities for countries along the "Belt and Road" to re-understand Chinese brands.

Zhou Wanchun, vice president of Sany Heavy Industry, said in an interview with China Economic Weekly that in many countries and regions along the "Belt and Road", the local elite has received European and American education, and more identifies with European and American brands. The other party saw the more the performance of Chinese products, and slowly changed the impression of Chinese products of 'low price and inferior quality'. ”

Zhou Wanchun introduced that the ASEAN market has maintained a growth rate of more than 20% this year, and the Indian market is growing at a super high speed. On April 28, the 4,000th unit of equipment produced by Sany Heavy Industry India's factory rolled off the assembly line in Pune Industrial Park. According to the data, Sany Heavy Industry's sales in the Indian market in the first quarter of this year were nearly 400 million yuan, a year-on-year increase of 90%. The president of Sany Heavy Industry proposed to Wenbo to double the goal, hoping that its Indian factory will achieve the 8,000th equipment off the assembly line in 2018.

On the whole, the steady growth of the market along the "Belt and Road" has made many Chinese construction machinery enterprises gain a lot. In 2016, Sany Heavy Industry achieved international sales revenue of 9.286 billion yuan, 70% of which came from the "Belt and Road" region. The proportion of data disclosed by XCMG and Liugong is also close to 70%.

From ASEAN to the European Union, China's construction machinery enterprises are fully arranged

In the "Belt and Road" first-level geographical map, China's leading construction machinery enterprises have been fully deployed.

At present, Zoomlion has industrial parks or production bases in 9 countries along the "Belt and Road" such as Germany, Russia and India, as well as 20 overseas trade platforms and 8 overseas spare parts center warehouses, and its products are exported to 31 countries and regions along the route.

Sany Heavy Industry's 2016 annual report said that the company has basically completed the industrial layout along the "Belt and Road", with factories in Turkey, Russia, Belgium, France and other places, and its own industrial park in India, and is now planning to establish an industrial park in Ethiopia, Africa.

Along the "Belt and Road", XCMG has laid out a relatively complete marketing network in 65 countries and regions in Central Asia, West Asia and North Africa, Europe and the Asia-Pacific region.

In addition, construction machinery companies such as Liugong and Xiamen have also seized the "Belt and Road" market.

Although the giants are all in the layout, their respective focuses are not the same, and the major enterprises also have their own characteristics.

Southeast Asia has always been one of the main battlefields for overseas sales of Chinese construction machinery. Zhou Wanchun said that this is the area that Sany Heavy Industry attaches great importance to, with more resource allocation and key guards. However, due to the close sales distance and the convenience of exporting from China, Sany Heavy Industry currently mainly adopts the agency system in Southeast Asia and does not have a large-scale production base.

As a large country with a land area and population size close to China, the importance of the Indian market to China's construction machinery giants is self-evident. Zhou Wanchun said that India's current situation is similar to China's eighties and nineties in the 20th century, the market demand for construction machinery is large, the growth rate is fast, and there are no large-scale construction machinery manufacturing enterprises in India. At the same time, India's overall manufacturing costs are 30% lower than China's, making it easier to export products to the Middle East, South Asia and Africa.

Direct investment in factory construction is the mainstream choice of construction machinery giants.

In January 2017, XCMG announced that it would invest US$150 million to build a local plant in India, and strive to complete the construction of the *5656 cross-plant by the end of the year.

Even so, XCMG's pace was a beat slower. As early as 2006, Sany Heavy Industry invested 60 million US dollars to build a factory in India, and after 10 years of hard work, its sales revenue in India in 2016 exceeded 1 billion yuan. LiuGong's Indian plant was officially put into operation in 2009 and its products have been exported to Oman, Nepal and other places.

As China's overseas industrial park project*5655, the China-Belarus Industrial Park is a landmark project of the Belt and Road Initiative and an important platform for China's high-end equipment manufacturing capacity to go overseas. In 2015, Zoomlion officially settled in the China-Belarus Industrial Park and made it the focus of its efforts.

Zoomlion's declared goal is to use this as a springboard to cover the CIS countries in the near future and radiate the European market in the distance.

Europe is the end point of the "Belt and Road", the high-end market of construction machinery, and the market shortcomings of Chinese enterprises. "M&A" has become the favorite ticket of China's construction machinery giants, so as to open up the whole line of the "Belt and Road".

XCMG acquired German concrete equipment manufacturer Schweiying in 2012, which was another major move after it acquired two European parts companies. In the same year, Sany Heavy Industry bought Putzmeister, a German concrete pump manufacturer with a history of 58 years.

Since the "Belt and Road" initiative was proposed in 2013, Zoomlion, which has always been good at mergers and acquisitions, has accelerated the pace of mergers and acquisitions in the European market. Since 2013, Zoomlion has successively acquired M-TEC in Germany, Raxtar in the Netherlands, LADURNER in Italy and other enterprises, all of which are leading enterprises in European subdivided fields. Previously, Zoomlion also acquired the world's top onesConcrete machineryManufacturer: Italy CIFA.

Zhan Chunxin said that the goal is to build a local manufacturing cluster covering the entire "Belt and Road".

From the new stage of 1.0 to 2.0, how to go?

On May 14, the Belt and Road Forum for International Cooperation was held in Beijing. According to the "Belt and Road" Annual Report jointly released by the "Belt and Road" 100 Forum and the Commercial Press, this may indicate that the construction of the "Belt and Road" will enter the 2.0 stage of optimization and upgrading from the 1.0 version of the framework to the 2.0 stage. In terms of infrastructure connectivity, a large number of landmark projects have been implemented, such as the Gwadar Port in the China-Pakistan Economic Corridor, the Jakarta-Bandung High-speed Railway in Indonesia, the Hungarian-Serbian Railway between Hungary and Serbia, and the China-Laos Railway between China and Laos.

In the face of the new stage of the "Belt and Road", how do China's construction machinery enterprises go?

Zhou Wanchun believes that "borrowing ships to go to sea" is still an important way to "borrow ships to go to sea" through large-scale projects undertaken by domestic construction enterprises, and at the same time, the "going out" model is also transforming to localization. "For example, in the Thai National Railway Station project, Sany Heavy Industry's equipment is directly sold by local agents. Overall, the proportion of overseas localized sales is close to that of domestic construction companies to 'take out', and it should exceed in the future."

Localization becomes the consensus. Past cases of internationalization of Chinese enterprises show that local industrial demand, consumer preferences, laws and regulations, language exchanges, regional culture and other factors may become the key to the success or failure of Chinese enterprises in "going global".

Xiong Yanming, Vice President of Zoomlion, said: "Internationalization was simply selling products to foreign countries at the beginning, and now internationalization is to achieve localization, to achieve local partners, to employ locals, and to carry out local manufacturing, so internationalization needs to go out and go in a solid way. ”

According to media reports, Zoomlion hesitated for a long time before investing in the Indian base, and its complex tax system once discouraged it.

Sany has faced similar confusion. Zhou Wanchun said that India's investment environment is very different from that of China, and it is sometimes difficult to understand various systems. In addition, the demand for products in the Indian market is also different. When Sany Heavy Industry's products first entered India, the sales price was lower than the cost, and later it was found that the Indians pursued pragmatism, the products were simple and sufficient, and the basic functions were on the line, but the product quality requirements were very high. Zhou Wanchun told the reporter of China Economic Weekly that in the past 10 years, Sany India has entered a stage of benign development, and the CEO and 96% of employees are Indians.

According to LiuGong's official website, its Indian factory has reached 30% localization, including all steel parts, tires, rims, hoses, hydraulic parts, etc., and uses engines produced by Cummins India. Only the powertrain, axle, and electronic control system are imported from China.

In addition to the localized production base, the localization of services is the shortcoming of China's construction machinery enterprises compared with international giants such as Caterpillar and Komatsu.

Tao Siyang, deputy general manager of Zoomlion Overseas Company, told the "China Economic Weekly" reporter that if the accessories and accessories can't keep up, the service can't keep up, and the sales performance will be difficult to grow. "It's like buying a car, if there are no 4S stores all over the country, or it's not easy to buy spare parts, do you dare to buy a car?"

Zhou Wanchun revealed, "There is a discipline in Sany, where the service and accessories cannot keep up, there will be no sales. If the brand is damaged for this reason, the losses suffered will not be able to be recovered for many years. ”

Enterprises are working hard to make up for this shortcoming. Liugong said in the 2016 annual report that it is necessary to quickly promote the construction of the "Belt and Road" layout and consolidate the perfect marketing network covering the countries along the "Belt and Road", and provide the best products, services, accessories and training support for the construction along the route. Sany Heavy Industry reported in 2016 that the company will upgrade from an equipment provider to an investment operator through group going overseas, international production capacity cooperation and large-scale project output, so as to realize the upgrade of the international operation model.