There were once hundreds of local construction machinery manufacturers in China; now there are only a few. Who decided which would fail or succeed? The government appears to have chosen a few promising organisations and stocked them with the talent and money to raise them to export quality p14). We report how the Chinese government continues to hang on to control of its superstar, XCMG (p19). Others, such as Jinzhou Heavy Industries, have gone bust (p23). The first truck cranes from XCMG have reached North America (p20). Price is a key selling point here, and hinges on the low Yuan/Dollar exchange rate. It is the Chinese government, again, that fixes this rate.
The Chinese government protects its own at home too, partly through its exchange rate, and through other means. Several Chinese contacts insist their country respects World Trade Organisation rules on protectionist tariffs; but, if a type of crane is manufactured in China, the government charges a 10% levy on imports of similar foreign models, before 17.5% tax.
And who buys the cranes? I believe government-owned or -controlled entities are still the single largest plant owners in China. At the same time, I understand that private, non-governmental contracts are now responsible for the majority of crane business in China.
So government-controlled manufacturers stocked with money and talent make cranes sold to government-controlled businesses, at a 10% advantage compared to foreign imports. These are exported at knockdown prices set by an exchange rate that the government fixes.
In the short term, Chinese firms may benefit from this intervention. In the long term, this will hold them back from having to adapt to the harsh competition of the free market. Only in the light of such competition will we really find out what Chinese crane companies are made of.
