Attention to detail22 May 2019
At this year’s Bauma, Chinese manufacturers’ stands lacked some of the noisy exuberance of earlier shows, but offered a more nuanced understanding on how to enter Europe. Will North spoke to executives of Zoomlion and XCMG, and Sotiris Kanaris reports from a China Construction Machinery Association press conference.
The high technology, higher price, European and North American markets have long been a target of China’s biggest manufacturers. At previous Bauma shows, many stands showed vast numbers of cranes, backed by booming sound systems and armies of stand hosts. At this year’s show, their presence was quieter. But, a focus on fewer products, and a more restained presence, may actually indicate a clearer take on how to enter the market.
Chinese cranes have built an international reputation for ‘budget’ products: maybe not so high tech as their European, US, and Japanese rivals, but more appealing to customers in markets where cost is key.
Wang Min, chairman of XCMG, told Cranes Today, “At the very beginning of our exports, first we aimed for medium and low-end markets: for example, Asia, South East Asia, and Africa. For these markets, the [technical] standard is quite low. Much, much, lower than Europe, so it is easier for us to start our exports.
“For European customers, who prefer all terrain cranes, they were not high enough [technology]. So, we paid a lot of attention to the innovation and development of our all terrain cranes. We have made a very big improvement to the technology and quality of these cranes over the last year. And now we see customers pay more attention to our all terrain cranes.
“To be frank, our sales of all terrain cranes in Europe and America are at the very beginning. But we believe our technology and quality is improving.”
Wang is aware too that the value of cranes to European customers comes not just from high end technical features, but from aftersales support. He says, “We realise [part supply and service support] has been an issue.
We have not been very strong at our management of aftersales service. For example, some models, when they have been updated, the parts have changed. “It has been hard for customers to find the exact parts. That is one of our problems. In future, we will enhance this sector: in our information management, and through cellular manufacturing [a form of lean production].”
Zoomlion too has gone through a learning process, as it develops its European offering. Luo Kai, general manager of the Changsha company’s mobile crane division, says the company wants to “Aim for a perfect balance of capacity and weight. In Europe, this is more important than elsewhere. In Asia, customers are focused more on capacity.”
Both companies aim to make use of European contacts to improve their approach to the market. But they take slightly different approaches. They each own European concrete equipment manufacturers: Germany’s Schwing-Stetter for XCMG, and Italy’s CIFA for Zoomlion.
The latter is working through its Italian subsidiary to develop new products: at Bauma, it showed two new all terrains, the 60t ATC 960 and 100t ATC 1000, developed in collaboration with its Italian engineers, as well as new tower cranes developed by recently acquired German manufacturer Wilbert.
Luo says, “We have five models of cranes in Europe, with the two new models from CIFA. We will continue to build the range. The cooperation between Zoomlion and CIFA is just a first step to being localised in Europe. We will extend the crane range’s capacity and types.
“Our localisation is not only about the product. We’ve opened with local product design and manufacturing. And we will also localise aftersales in Europe. This is already happening through CIFA. They are employing service engineers.
“Currently our spare part network is covered by our Middle East warehouse centre, in Dubai. We will extend this coverage in Europe in future.”
XCMG takes a slightly different approach. Wang points out that Western rivals do not necessarily build cranes around the world. And, while he praises Schwing-Stetter’s professionalism in concrete equipment manufacturing, he says they will continue to concentrate on this specialism. For cranes, the company will work through local distributors for now. If—and it’s clear this is an open question—the company moves to overseas crane manufacture, it is most likely to do so with new investments.
At the start of the show, Sotiris Kanaris reports, the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) and China Construction Machinery Association (CCMA) held a press conference on global strategy, with executives of top Chinese manufacturers taking part.
According to CCCME figures there were 32,278 units of Chinese construction cranes sold in 2018, of which 2,125 were exported. XCMG's Min talked about the evolution of the brand in the global market. “On March 12, 1992, on the 23rd Bauma Munich, XCMG was the first Chinese enterprise to ever appear at the expo.
"XCMG's exhibition setup for its first appearance was neither large nor grand. There were not even real exhibition items but only a small stand with a handful of pictures. However, at that Bauma expo, we received our first ever export order and the overseas development of XCMG started right there.”
In this edition of Bauma, XCMG had a big stand in the outside area showcasing tens of products.
He highlighted that more Chinese brands are taking part in the trade show, and talked about how all brands can improve their international competitiveness.
“Compared with international benchmarks, Chinese enterprises still lag behind in terms of the proportion of after-sales business in main business and there is still a long way to catch up for them in smart active services, spare parts, logistics and supply chains, especially in international market network layouts.
“We will shorten the distance by strengthening our digital capacity and use it as a ‘catalyst’ and accelerate the progress of in-depth integration of advanced manufacture industry and modern services industry while striving to produce more efficient development model and productivity.”
Vice president at Zoomlion Xiong Yanming talked about the manufacturer’s evolution as a global brand.
“Zoomlion focuses on the ‘Belt and Road’ regions in Southeast Asia and the Middle East, and has established more than 20 trading platforms overseas with more than 120 dealer sales and service outlets covering the key global markets,” he said.
Through investment, mergers and acquisitions, Zoomlion has nine production bases overseas. “Among the six categories of 43 products that we exhibit at the Bauma Show, more than 70% are manufactured by European local companies, including mobile cranes, construction hoisting machine, concrete machinery and other equipment.”
Yu Hongfu, chairman of Sany Heavy Machinery, said the local industry should use its highquality products to change the world’s perception of Chinese manufacturing and explore the road of internationalisation. He outlined ways to open up the international market for Chinese manufacturing products: reasonable pricing; developing new models suited to local markets through the localised R&D and manufacturing; offering highquality service and having a local marketing team.