Winners sell at home, heroes sell overseas

23 February 2012


Exhibitors at BICES, once seen by many as China’s ‘domestic’ construction equipment show, are increasingly setting their sights on export markets. Kevin Walsh reports from Beijing

To borrow a motivational adage adorning the office of one Chinese manufacturer, ‘one who earns money in China is a winner, one who earns money overseas is a hero’.

This theme was evident at BICES 2011, with many manufacturers casting their gaze beyond the fruitful Chinese market. With production output slowing across Chinese manufacturing and the domestic crane market becoming more competitive every day, some are placing renewed emphasis on exports despite turbulent economic times elsewhere.

As in many other countries, parts of China’s crane market are already well saturated. Where once there were precious few crane rental firms, thousands have now sprung up, and as a result fewer contractors are buying machinery direct from the manufacturer, opting to use these companies instead.

With the growing number of large rental operations, not to mention the innumerable ‘Mom and Pop’ style start-ups, rental rates for many types of smaller capacity cranes are through the floor, and perhaps among the lowest you will find across the globe.

So much so that even larger manufacturers like Tadano and Manitowoc’s Potain brand seem less focused on competing at this level, preferring to target demand at the high end of the market.

But for large and small manufacturers alike, from companies entering the construction market for the first time to established businesses diversifying their products, BICES 2011 was the perfect opportunity to widen the net.

Cranes Today takes a look at some of the exhibitors.

Japanese manufacturer Tadano’s Chinese joint venture BQ Tadano launched its latest truck crane, the GT-1000E truck crane, for the Chinese market. Aimed at the higher capacity end of the Chinese truck crane market, the first of the 100t line has already been sold to the Shangxi mining company and Tadano aims to target other large firms in the mining and oil and gas sectors.

It features a five-section main boom with a maximum outreach of 48m and a fly jib that can add from 9m to 19m to length. Both engines are manufactured by Cummins, with the engine in the carrier being manufactured in China while the upper’s Cummins engine is from its US factory. Despite this the bulk of components are manufactured at BQ Tadano in China, although the materials for the boom and some of the control systems, such as the automatic load moment limiter (AML), are manufactured by Tadano in Japan.

The new crane completes the range of global truck cranes offered by Tadano, now spanning capacities from 8t to 100t. Marketing spokesperson for BQ Tadano, Zhang Yan, says that the firm will now focus on its all terrain product offerings, launching a 160t all terrain that should be ready for Bauma China in 2012.

Zhang says: “Tadano sees that in the Chinese market customer demand for cranes is still getting bigger and bigger now, especially from the mining companies and the oilfields. Our customers are mostly the big companies in oil, highways and such, so we know that the customers demand is for bigger cranes. So we designed the 100t truck crane, and we are now taking through conception and design a 160t crane.”

This focus on the high capacity end of the market is an important part of Tadano’s strategy in China, where competition from other truck crane manufacturers is growing steadily every day.

But with a number of high quality components for each crane manufactured outside of China, the high unit prices for Tadano cranes entailed means relying on a smaller pool of large companies for sales.

“Often Chinese rental companies are much smaller customers,” explains Zhang, “As our products have a higher price than other Chinese companies, they can’t afford these special cranes. But bigger companies are more concerned about the quality, the brand and the abilities, and are concerned less about the money needed to achieve this. But we have made great efforts to cut the cost and are developing some cheaper cranes for smaller customers.”

Although BQ Tadano also produces standard globally available crane models, such as the GT-1000E, it is now concentrating its efforts on refining some of its products to better suit the markets of China and South East Asia. The result is a ‘premium’ product line and a separate, more inexpensive line of cranes made almost wholly in China.

Zhang explains: “We produce cranes with the same capacities but two different lines, one for China and one for the rest of the world. Though we cut the price we keep the quality the same, and we have a cheaper 25t and 35t truck crane already developed.

“We started making them this year, in the first quarter. The 55t one is not completed yet, we are still researching and doing some testing.

“Most of the components including engines and even the AML are made in China to decrease the cost and keep the price low for more customers. We only import the electronics and the hydraulics, which are made in Japan.

“Even with us making great efforts to cut the cost the price is still high, about 20% higher than XCMG or Zoomlion or Sany. We still have much work to do, because they have big volumes, but we produce much fewer so the product price is hard to cut.”

BQ Tadano’s more cost-effective line— usually denoted by an ‘M’ at the end of the model name—is predominantly sold in China, but some have found their way further afield since the firm started exporting truck cranes, in 2010, to markets including Saudi Arabia, Taiwan, Singapore and Thailand.

BQ Tadano is targeting overseas sales of over 30 units for 2012, and the bulk of these are expected to be its traditional premium line products, which broadly have the same characteristics and components as Tadano Faun cranes made in Germany. But with 400 truck cranes sold in China alone in 2011, Zhang says the Chinese market will be the main consideration.

Zoomlion
Although Zoomlion did not have anything new on its stand for BICES, the firm took the opportunity to showcase a wide selection of cranes from each product line. From the impressive QUY550 crawler crane and QAY260 all terrain, to the RT100 roughterrain and a TCT7015-10E tower crane, the Zoomlion stand gave potential buyers lots to get to grips with.

While at the show the TCR6030 and TCT7015-10E tower cranes clearly dominated the skyline, due to the fortunes of the European crane market in recent years, Zoomlion tower cranes have found it much harder going in the west.

This is an important market for Zoomlion as with Chinese infrastructure spending expected to slow in 2012, combined with a weak global economy and lower demand, the company is keen to develop its market share in newer territories.

Zoomlion’s regional sales and marketing manager for Europe, Li Haibo, elaborated, saying, “Our best time was in 2008 when we had about 75 tower cranes exported into Europe. Also this was only our second year in the European market. In 2008 we had a really good start.

“Then in 2009 and 2010 it was a really bad time in the tower crane market in Europe back then. The total tower crane market for sales of new cranes dropped from around 7,000 units to 1,800 units. And of course 2010 was as bad a time as 2009, when we sold less than ten, less than five I think.”

However as the market bottomed out Zoomlion’s European tower crane sales rose to 20 units by the end of 2010, and after a number of sales to rental firms in Poland and Germany Li expects around a 50% increase again for 2011.

Despite the turmoil in the European markets, Li remains upbeat, saying, “Actually although I am not too confident about the tower crane market [in Europe] I am confident in Zoomlion’s product line for the reason that recently we appointed some more European dealers to get our cranes into this market.”

Having Zoomlion dealers in Turkey, Serbia, Poland and the UK, each with a dedicated service team on hand, is an important part of Zoomlion’s growth strategy for Europe. Add to that the acquisition and integration of tower crane technologies from JOST and Li’s confidence seems fairly well founded.

“The first thing we are focusing on is the service. For the customer this is a very important thing. The second point is products. We need to really focus on compliance. We must be compliant with all the regulations within the European Commission or in England or whichever specific country we’re targeting, national regulations. In this regard, the JOST deal was a milestone event.”

Liugong
BICES 2011 was the first time Liugong had exhibited at the exhibition, and prior to 2008 there was little in the way of crane products for the company to display.

Having previously only manufactured cranes with capacities up to 35t, its 2008 merger with Bengbu Auli—a Chinese crane manufacturer originally established in 1975—to create what is now Anhui Liugong gave it the opportunity to target higher truck crane capacities.

Now the firm manufactures truck cranes from 8t capacity to the 70t TC700, and many of these were on display at BICES.

Having been awarded a production certificate allowing the manufacturing of its own truck crane chassis, along with a number of patents it holds on various components, its research and development team is working on developing its product range to compete in the Chinese market.

In addition, the announcement at BICES of a joint venture between Luigong and Cummins, Guangxi Cummins Industrial Power, that will see the US firm manufacturing mid-size engines compliant with Tier 2 and 3 emissions standards shows the pace with which the firm aims to develop.

Highlighting this while commenting on the deal, Cummins COO and president, Tom Linebarger said: “LiuGong has achieved outstanding growth in recent years and is poised to expand its business even faster in the years ahead. It is clear that LiuGong shares many important values with Cummins. These shared values will help drive our new joint-venture forward to achieve its goals.”

Liugong deputy general manager, Zhang Zongshan, a Liugong veteran of over 30 years, said: “Liugong has three strategic products, wheel loaders, cranes, and excavators. For Liugong cranes is an important division, so from manpower to technical ability we intend to do some more investment in the crane business.”

At its new 70,000m2 factory in Bengbu, Anhui province, Liugong already has 1,020 staff, and at such an early stage in the company’s development Liugong claims to have around 2% of the market share for truck cranes in China.

With capacity to produce 3,000 units a year at the Bengbu facility Anhui Liugong are aiming at achieving sales of around 9,000 cranes over the next few years, compared to the 2,200 sold in 2010.

At least some sales are expected to overseas customers. Zhang identifies Turkey, Northeast Asia, Brazil and Russia as target markets, but stresses that much more work must be done before Liugong is ready to export its truck crane product line within the next three years.

Manitowoc
Due to a number of its new product releases still being in the final stages of testing, Manitowoc opted for a small indoor stand at this year’s show, where customers could be kept abreast of what to expect from the manufacturer in 2012.

One product that was ready in time for the show but not exhibited was the new 20t Potain MCT 370 tower crane, the first topless tower crane to be built by Potain in China rather than imported.

Potain intends to sell the crane not only to the top rental and construction firms in China, but also through its dealers throughout the Asia-Pacific region in places like Singapore. This will help to boost crane sales for Potain in Asia while reducing import costs, as the highly pricesensitive tower crane market in China is as difficult as many other parts of the world, even with higher rates of residential construction.

Manitowoc marketing manager for China, Stephen To, explains: “We don’t have a large market share because we only make tower cranes from 63tm and up. This is even though the smaller tower crane market here, with for instance the small 25tm cranes, is over 20,000 units each year. There’s too many small manufacturers selling at low prices.

“Our customers are mainly the top truck crane rental companies in China and the large state construction companies. Since the 80s Potain has been a very well known brand name in China, so when our customers can afford it they will buy Potain.”

Among products that would have been exhibited if not for Manitowoc’s extensive testing regime were the GT-8 and GT-10 truck cranes, now scheduled to reach the Chinese market by January 2012.

Intended as an update to Manitowoc’s existing ten-year-old Chinese truck crane line, To says the new models’ design is more akin to Manitowoc Grove products.

“We simplified the hydraulics and piping so we can reduce the chances oil leakages, which is a common problem for a lot of small companies in China. We also redesigned the counterweights so we can have a shorter swing radius.”

Manitowoc also has plans for the global release of a 150t crawler crane in the first quarter of 2012 that To says will be a boon to the Chinese market because of its compact design and its three falls of rope, which he claims is a feature seldom seen in Chinese crawlers.

Sany
Sany exhibited a massive selection of crawlers, truck cranes and all terrains at BICES 2011, including the 300t and 500t SCC8300 and SCC8500 all terrains first seen earlier in 2011 at ConExpo in Las Vegas. Having sold 360 crawler cranes worldwide last year, Sany has increased its output year on year by 15%, despite the Chinese crawler crane market shrinking by around 20% in 2011.

Sany believes that they have roughly a 45% share of the Chinese crane market. For crawler cranes over 250t, Sany say this figure improves to a 50% share of the market, with the remainder split between the likes of Zoomlion, XCMG and Liebherr.

Marketed as high-quality cranes, fewer small Chinese companies can afford to buy expensive Sany cranes, especially the massive 3,600t megacrawler, the SCC8600TM.

As a result Sany has yet to sign another contract for the sale of another SCC8600TM, and estimates that, once testing is complete in March 2012 on the first crane produced, it will take them a maximum of one and a half years from receiving the order to actual delivery of another one of these cranes.

Most of the interest in the 3,600-tonner has come from Russia and Middle East so far, but when asked about their ambitions for exporting the crane to the US, the head of Sany’s crawler crane division answers “Why not?”

Following on from the successful launches of the SCC8300 and SCC8500 crawler cranes in the US, and considering the establishment of Sany America’s new headquarters he now believes the firm is well geared up for US success.

Not to mention the pace at which they performed the stringent condition testing, overload tests and wind condition resistance tests they needed for the two American crawlers to achieve certification, which Sany says took only three of the six months they had planned for. This leads the company to hope that maybe a second SCC8600TM can be provided well within the year and a half current estimate.

This is not to say they are overlooking other markets; during 2011 they sold roughly 25 crawler cranes to customers in Europe, as well as exporting 40 crawler cranes to Singapore.

“For the traditional markets we are trying to still keep hold of our market share while expanding in other areas,” said Gang Wu, manager of Sany’s sales department and assistant to Sany president Jack Tang.

“We will be concentrating next year on crawler crane markets in emergent markets like India. We will do our best to satisfy the local market, no matter whether that is the emission levels and other requirements we will provide that,” he added.

Shantui
Established in 1980, Shantui is no newcomer to the construction market. It claims to have become the country’s top manufacturer of bulldozers since the 1990s.

However, last year the firm made its first foray into the crane market, starting a crawler crane line in the 100–200t capacity range. The first of the SC series of crawlers, the SC150C, made its BICES debut on Shantui’s stand at the show.

Shantui’s 150-tonner, along with a 100t and 200t version, were chosen as the models to mark the company’s entrance into the crane market as the firm intends to tap into current high-level Chinese demand for crawlers in this capacity range.

The 150t crawler features a maximum main boom length of 86m and an engine delivering 204kW (274hp).

Cheng Wei, Shantui’s division manager for its European business arm, explains that the firm’s move into the crane market was inevitable considering the company’s focus on diversification, which led to the establishment of its Special Machinery Division in 2009.

“First we had the earthmoving machinery business, then the concrete machinery division, thenroad machinery, now this. This is maybe the last one in this area of construction we want to enter.

“We will have more products, we will have a full line of crane products, but this is just our first one. We thought it was best to choose the most popular model to start our business. This one [150t], is the most popular capacity for crawlers.” Once Shantui has filled out its crawler range, Cheng says the firm will move onto the development of truck cranes.

As relative newcomers to the crane market, Cheng says that Shantui still needs to survey the global crane market and identify the best prospects for easy entry into the export market, only moving when the economic signs abroad are good.

But with the Chinese market as strong as it is, Shantui is in no rush.

“These new cranes were initially developed mainly for the domestic market, manufactured in China for buyers in China,” says Cheng. “This is still the biggest market for crawler cranes even now, so first we should be established in this market, then work on our exports.”

Although the company is planning to achieve CE certification standard with its new crawler line, nothing is concrete at the moment, and Cheng says this goal is not necessarily an indication that they will target European exports any time soon.

XCMG
At XCMG’s stand a wide selection of cranes on show were joined last year by the RT60 and RT100 truck cranes, which up until October 2011 the company had been testing in the Chinese truck crane market.

XCMG’s 60t RT60 has a 43m-long boom with a maximum under hook height of just under 44m, while the RT100 can extend to 49m with a jib. Each is powered by a 192kW Tier 3 compliant Cummins engine.

Already XCMG has sold over ten units in the domestic market, many of which were purchased by a crane rental company in South West China, and is hoping the cranes’ innate manoeuvrability will make an impression a market still dominated by truck cranes.

However since completing testing on the cranes, XCMG has also made them available in South America and Oceania, where XCMG believes it can attain a good market share.

In Australia in particular demand for truck cranes of these capacities is still high, as assistant director for XCMG’s America and Oceania department, Wu Shu Xin, explains.

“In Australia, there’s a very big market. The market capacity is along the lines of 2,000 to 5,000 a year for the whole Australian domestic market. Australians prefer the rough terrain crane much more than the normal all terrain.

“Our agents in Australia, they have helped us to achieve the certification, and gave us some suggestions and advice for improvements, things like the roading weight on the axles. For this model we are more concentrated on the overseas market, this is just the first thing.”

Wu Shu Xin says XCMG is aiming to sell around 80% of the RT60 and RT100 lines overseas, with only 20% remaining in China.

As in Australia, the all terrain crane is far from the most popular crane type in China at the moment. But Wu Shu Xin says that with the wealth of government spending on infrastructure projects over the last few years, he estimates XCMG has sold around 300 units to rental or construction firms that are currently at work.

“Especially last year in 2010, for government projects like the high-speed railway and the Qingdao Haiwan bridge that were being built. We have from 160t to 1,000t cranes on those and more than 300 units in the total market. The 300-to- 400-tonners are the most popular models.

“For all terrains in 2012 we will focus on brand new models, a 600t and a 700t to make it a complete series of all terrain cranes. Also from this year we are creating the 3,000t crawler crane. Hopefully this will be ready for the next Bauma in Shanghai.”


Shantui Shantui
Tadano Tadano
XCMG XCMG
Liugong Liugong
Zoomlion Zoomlion
Sany Sany