How to make China's export engineering machinery go to high-end? Recently, Sany Group is formulating plans for high-end engineering machinery to go global. Tang Xiuguo, president of the group company, is planning the development of three Sany plants in Brazil, India and the United States, as well as a $475 million acquisition of the German Putzmeister Machinery Manufacturing Co., Ltd. Tang Xiuguo is one of the four founders of the company. He plans to increase the company's overseas sales from about 5% of the company's current revenue to 20% in five years. The company’s sales this year are expected to reach $16 billion.
Heavy industry export ratio soared
The word "Made in China" is reminiscent of cheap shoes, plastic toys and electronics assembled at the Foxconn factory. China has established a strong export industry based on light industry and electronic assembly. The annual growth rate has reached 17% in the past 30 years, but this situation is rapidly changing. Rising labor costs (up 15% annually since 2005) and currency appreciation have put new pressure on cheaper manufacturing models across China, leading to the closure or migration of textile, footwear and apparel factories to Vietnam, Cambodia and Bangladesh. According to a recent research report by the UK-based Kayin International Macroeconomics Consulting, “China’s share of low-end exports in the world has begun to decline. This reflects that Chinese manufacturers are turning to more profitable industries rather than competing. It tends to fail."
According to data from the United Nations and the World Trade Organization’s United Machinery International Trade Center, China’s global market share in railway locomotives and trains, machinery and industrial boilers has increased significantly. The construction machinery of Sany Group, including three Chinese companies including Sany, has ranked among the top ten in the world. Many new exporters are produced in China rather than coastal. In addition, data show that machinery in heavy industry accounts for about two-thirds, and the proportion of China's exports has increased from 29% in 2001 to 38.7% last year, surpassing light industry and electronics. It is expected that by 2020, new industries can help China increase its share of global exports from the current 10% to 15%. So there are rumors: "The typical Chinese exporter is no longer a shoe factory in Guangdong, but a certain type of equipment or machinery manufacturer."
Focus on developing countries
While Europe, which is still China's largest export market, is struggling to cope with its debt crisis, Chinese machinery manufacturers are targeting India, South America and the Middle East. Gao Luyi, an economist at the Hong Kong Economics and Economics International Research Institute, said that Europe, the United States and Japan accounted for 48% of China's total exports last year, down from 56.1% in 2003, while developing countries accounted for the majority. Tang Xiuguo said: "We have an advantage because our technology and product levels are more suitable for these countries. And our prices are slightly lower than other international brands."
Although China's new manufacturers have not yet competed in developed markets, they have already challenged Caterpillar, Siemens, General Electric and other established equipment manufacturers in South America and Russia. China's construction machinery industry will soon surpass Japan and Germany, becoming the world's second largest exporter after the United States.
With the expansion of Sany's overseas, it intends to improve the quality of its products in order to achieve the quality of its newly acquired Putzmeister Machinery Company.
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