posted on: 2012-02-10 02:00:27
According to a report by Off-Highway Research (a consultancy specialising in the research and analysis of international construction), China's share of the global construction machinery market jumped from 18% in 2002 to 32% in 2009 in terms of sales volume (see chart above). China's three leading pioneers in this regard are Sany Heavy Industry, Zoomlion and XCMG, which have emerged as the three dominant manufacturers that together account for about 30% of the market in China, larger than the top three foreign companies active in China (see chart below). Indeed, these three are now ranked in the top ten in terms of sales revenue globally. Though the industry in China is highly fragmented with over 900 companies vying for market share, a majority of them only manufacture components or engage in sub-assembly due to the hefty upfront financial investments that are required. In addition, intense competition between both domestic and foreign participants as well as rising demand for improved and advanced technology have forced small operators to either be acquired by more established players or simply exit the game. It is worth noting that foreign enterprises have had little opportunity to compete against local competitors in this consolidation drive due to regulatory restrictions, and have been unable to acquire majority stakes in joint ventures with domestic firms. This has allowed local rivals to gather market share from foreign companies and at the same time narrow the capability and quality gap by integrating independent enterprises' abilities via strategic acquisitions. Moreover, foreign enterprises have simply not been able to increase production fast enough to meet rising demand, diluting their market shares. Over the years, Chinese companies in various industries have successfully moved up the value chain by offering a wide range of products and the construction machinery industry is no different. Foreign companies have historically served the Chinese excavator market by leveraging their strong expertise and precision quality. Yet according to CCMA data, Chinese companies now control one-third of the global excavator market, up from 22% in 2006. Such strategic moves have undeniably boosted their overall competitiveness and allowed them to capture market share from their foreign competitors in China and in other emerging markets. China's three leading construction machinery manufacturers seem well placed to achieve these goals, yet each of them still have much potential to improve their technology. To be sure, to enhance their competitive position, Chinese machinery manufacturers are constantly upgrading their technological capabilities and focusing on technical innovation, but they still have some ground to cover before they start taking on the world leaders. That said, these firms have demonstrated a remarkable ability to incorporate technology and quickly adapt. As a case in point, Sany invented the first 66-metre truck-mounted concrete pump in the world. Among these key differences, there is one commonality that exists in the internationalisation strategy of all three of China's major machinery manufacturers - they have been aggressively marketing their product overseas though new distributing channels with a core focus on emerging markets, namely Brazil, Russia, India and Africa. Emerging markets are sweet spots for these companies because it is difficult to access developed US and European markets where dominant and established players, such as Caterpillar, emphasise their value-added after sales services. Emerging markets, on the other hand, are more price sensitive, and prices of machinery equipment from Chinese manufactures are typically 15-20% below foreign competitors, providing buyers in emerging markets with a considerable overall cost saving. Another important reason is that, like China, these countries are experiencing a similar urbanisation process and are consequently investing a lot towards infrastructure improvement, providing Chinese enterprises a potential market to tap into. Classifier: http://www.hxjq-crusher.com/22.html Mobile crushing station: http://www.hxjq-crusher.com/10.html Sand making machine: http://www.hxjq-crusher.com/58.html