Sany Heavy Industry Co., Ltd.(600031.SH) , the construction-equipment maker run by China’s richest man, plans to build factories in more than 10 foreign countries as domestic demand growth slows.
The company intends to add facilities in emerging markets and resource-rich nations as it works to boost the proportion of sales generated overseas to 40 percent from about 10 percent within five years, Nobuhiko Oku, deputy general manager at Sany’s international sales arm, said yesterday in an interview in Tokyo. The company has completed plants this year in the U.S., Brazil, India and Germany, he said.
“We’d like to make Sany a big global brand,” said Oku, a former Komatsu Ltd. engineer, who joined the company in 2009. He is among about 70 foreigners, predominately engineers, hired by Changsha, Hunan province-based Sany to help improve quality and boost overseas sales, he said.
The equipment-maker, headed by Chairman Liang Wengen, and Zoomlion Heavy Industry Science & Technology Co. have begun to challenge Komatsu and Caterpillar Inc. overseas as the China market suffers from slowing demand and rising competition. Sany will likely miss its goal of selling 30,000 excavators domestically this year, Oku said.
‘Won’t Be Easy’
“It makes sense for Sany to accelerate its international expansion given weakness in the home market,” said Karen Ubelhart, a Bloomberg Industries construction-equipment analyst based in New York. Still, “success won’t be easy,” she said.
Sany may be better off focusing on emerging markets than Europe and the U.S., where larger players have already built up extensive distribution networks, she said. Chinese companies will also have to continue investing in product development to help soothe quality concerns, Ubelhart said.
Sany gained 1.6 percent to 12.40 yuan as of 10:08 a.m. in Shanghai trading. The stock has fallen 14 percent this year, compared with a 17 percent decline for the Shanghai A-Share Stock Price Index. The equipment-maker delayed plans for a Hong Kong share sale in September amid a stock-market slump.
Liang formed Sany in 1989 with three other graduates of Central South University in Hunan province. The four have all become billionaires, according to Forbes, on the back of China’s construction of roads, railways and factories.
The company, China’s biggest maker of concrete equipment, had sales of 33.8 billion yuan ($5.3 billion) last year, a 13- fold increase over five years, according to Bloomberg data.
China Slowdown
Demand growth has slowed this year as China’s central bank has raised one-year leading rates three times this year to 6.56 percent to cool inflation and tackle concerns about a potential property-market bubble. Sany’s excavator sales will likely fall short of target as demand has dropped since April, Oku said.
Still, Chinese companies are boosting their share of the domestic excavator market as they increase their focus on more sophisticated and profitable products, Bloomberg Industries’ Ubelhart said.
Sany’s share climbed to 8 percent from 3 percent in the three years ended 2010, she said. The combined share of the three market leaders -- Komatsu, Hitachi Construction Machinery Co. and Doosan Infracore Co. -- dropped to 37 percent from 48 percent in the period, according to Off-Highway Research data, cited by Bloomberg Industries. China also accounts for 45 percent of global construction-equipment retail sales, it said.
In Japan, Sany is receiving inquiries from potential customers, Oku said, declining to elaborate. The company supplied a concrete-pump truck that helped cool the crippled nuclear plant in Fukushima after the March 11 earthquake and tsunami.
Zoomlion, China’s second-largest construction-equipment maker, is planning to build a factory in Japan after winning an order for 30 truck-mounted concrete pumps in the country, it said in September.
Source:cmbol.com