Most of China Construction Machinery profits earned by foreign companies

“In 2011, the operating income of the construction machinery industry in China exceeded 500 billion yuan, a year-on-year increase of 17%. The current profits have not yet been calculated and are expected to increase slightly. The profit in 2010 is 35 billion yuan.” An expert from the China Construction Machinery Industry Association told yesterday. reporter.

This is the income of more than 1,700 enterprises in the country last year. This kind of income was almost surpassed by one of the world’s largest construction machinery companies. Last year, the construction machinery giant Caterpillar's operating income reached 60.138 billion US dollars (equivalent to 381.6 billion yuan), net profit of 4.928 billion US dollars (equivalent to 31.2 billion yuan).

This is why the Chinese construction machinery industry has recently caused a wave of overseas mergers and acquisitions. When the acquisition of the German "Elephant" has not yet been settled, Sany announced yesterday that it will form a joint venture with Austria's Palfiger Group, the leader in the hydraulic folding crane market, to enter the global crane market.

Of course, not only Sany Heavy Industry, China's engineering machinery industry leading enterprises Xugong Machinery, Zoomlion, Liugong and other through overseas mergers and acquisitions, development of supporting parts and other ways to enhance competitiveness.

The majority of profits earned by foreign companies over the past five years are five years of explosive growth in China's construction machinery industry. The compound annual growth rate of sales revenue is more than 20%, but 70% of profits in this sector contribute to foreign high-end parts and components suppliers. Chinese host manufacturing companies earn only modest profits.

A Caterpillar salesman told this newspaper that with the loaders of 6 to 8 tons as an example, Caterpillar sells for about 800,000 to 900,000 yuan each, and domestically produced similar models cost about 600,000 yuan. Not only are the loaders, excavators, bulldozers, and other construction machinery largely the same.

From the standpoint of the quality of the mainframe, domestically produced machinery is significantly inferior to foreign brands in terms of performance. "For example, loaders, domestic brands may only be overhauled in two to three years, and some high-end brands can use seven or eight years, or even ten years. In the long run, some of the conditions are poor, and the procurement of high-end brands is Cost-effective, but in some areas, domestic brands have reached the technical requirements." Caterpillar said the above sales staff.

“Most of the profits were contributed to high-end component suppliers, mainly because domestic high-end components could not be manufactured. For example, many hydraulic components were imported into Kawasaki, and the number of Kawasakis was not enough for domestic host companies to use, so the price was high. A senior executive of Shandong Leishde excavator company told this newspaper .

At present, the production and supply of general construction parts for domestic construction machinery is very sufficient, and it can fully meet the demand of supply from the main engine plant, and there are also exports. According to the "12th Five-Year Plan for Development of the Construction Machinery Industry," key high-tech and high-value-added components are mainly imported. The average price per ton exceeds 80,000 U.S. dollars. For example, transmission components, control components, diesel engines, and key hydraulic components are severely in short supply, and the overcapacity and structural shortage are strongly opposed, which affects the development of Chinese construction machinery to high-end technology products.

Take the excavator engine and hydraulic control system as an example. At present, domestic excavators are basically equipped with engines from foreign brands such as Cummins, Isuzu, Yanmar, and Kubota. The hydraulic system uses mainstream brands such as Kawasaki in Japan and Bosch Rexroth in Germany.

Although domestic companies have been trying to break through the core technologies of the parts, the core hydraulic pumps, motors, speed reducers and high-end multi-way valves have not yet achieved a technological breakthrough. In addition, electronic control technology, especially for micro-electronic technology for energy conservation and emission reduction, is still far from abroad. Caterpillar is not only a host manufacturer, but also has a complete production system for parts and components, so its competitiveness is strong.

Overseas mergers and acquisitions mainly see technology Sany Heavy Industry announced earlier this month that the first brand of global concrete machinery, Putzmeister, for 2.654 billion yuan was also considered due to its technology and market position. Although small in scale, Putzmeister has many world records in the field of hydraulic piston pumps and is a leader in concrete technology for the global market outside of China.

Liugong chose to conduct mergers and acquisitions in Poland. On January 18 of this year, Liugong signed a preliminary agreement with the Polish construction machinery company HSW in Liugong’s acquisition of the HSW engineering machinery business unit, which signified that the acquisition project in Poland was basically completed. HSW is one of the largest construction machinery manufacturers in China and Europe, and has a full range of bulldozer product lines and loaders.

After the acquisition is completed, Liugong will directly obtain all the intellectual property rights and trademarks of HSW, and can use this as a platform to establish an efficient R&D, procurement, production, marketing and parts service network in the European market, which will greatly save overseas new construction plants. The cost and time will quickly build the Eastern European market into the second local market of Liugong, and will sell bulldozers and other products directly to high-end markets throughout Europe and North America.

In terms of overseas expansion, no one of several large companies is willing to fall. In May last year, a senior executive of Xugong Machinery disclosed to this newspaper that the company had acquired two hydraulic parts manufacturers in Germany and the Netherlands. This is Xugong Machinery's first overseas acquisition of hydraulic parts production company, the company plans to invest in R & D center in Germany, the two companies will become an important part of the R & D center.

The newspaper learned from the Jiangsu Provincial Development and Reform Commission yesterday that the German company is called FT. "The most important thing is to value its technology and it is also what Xugong needs most." Xugong said. Although XCMG has already built five manufacturing bases for slewing rings, drive axles, transmissions, engines, and hydraulic cylinders, it is not a worry. In the field of engines, XCMG Machinery also established a joint venture with Doosan of Korea to establish an engine manufacturing base, thereby significantly reducing the cost of engine procurement.

In June 2008, Zoomlion jointed Mandalin, Hony, and Goldman Sachs to jointly acquire Italy's concrete machinery giant CIFA for EUR 271 million.

However, overseas mergers and acquisitions cannot solve all problems. In fact, the core equipment companies in the construction machinery industry, such as the engine brands Cummins, Isuzu, Yanmar, Kubota, hydraulic system brands Kawasaki, Bosch Rexroth, are not willing to sell them. Chinese companies. The mergers and acquisitions of Chinese companies are still in the second tier and even the third tier of foreign brands.

The above-mentioned experts from the China Construction Machinery Industry Association told this newspaper that there are two ways to develop Chinese construction machinery companies in the future: strengthening technological innovation and implementing the “going out” strategy.