international
construction
january-february 2014
REGIONAL REPORT: CHINA
22
A changing environment
M
r Zhang Guofeng, from Beijing Xindadi Equipment Company, is tasked with
extracting between 1 million tonnes and 1.5 million tonnes of limestone a year from
two sites near Beijing, China.
“Since 2005, the company has used Caterpillar excavators to help with the work,” Mr Zhang
said. “We compared Caterpillar excavators side by side with another brand and found the Cat
machines to be more reliable.
“We sold eight of our old machines and want to sell the rest of the old fleet and change to
Caterpillar.”
Beijing Xindadi Equipment Company operates over 100 off-highway machines. The limestone
it removes from its quarries supports general construction and infrastructure activities in the
local area and around the country.
Caterpillar excavators currently used by the company
include the 45 tonne class 345D, 90 tonne class 390D and
49 tonne class 349D models
“Business in 2014 is looking good, we have not been
affected by the mining downturn,” Mr Zhang said, adding,
“China is still building a lot of houses.”
Fleet replacement
A quarry operator near Beijing upgrades its fleet as business improves
government is clearly committed to infrastructure development,
which provides excellent opportunities for companies in the
construction business like Volvo CE.”
Mr Luo said Volvo CE had achieved steady growth in market
share, performing well in 2013. “Since entering the market in
2002, we have developed a strong presence by implementing
localised strategies – like our dual brand strategy – and offering
diversified products that meet customers’ needs.”
Volvo’s dual brand strategy is its joint venture with Chinese
construction equipment manufacturer SDLG, while Caterpillar
has a similar arrangement with Chinese manufacturer SEM.
In fact many international manufacturers are accessing China’s
domestic market through acquisitions and joint ventures.
Meanwhile, speaking at the 2013 International Construction
Economic Forum (ICEF), which took place from 20 to 22
November in Amsterdam, Off-Highway Research European
analyst Paul Howard forecast that sales of construction
equipment in China would increase from US$ 22.6 billion in
2013 to US$ 25.6 billion by 2017.
To put this in perspective, sales of construction equipment
in China totalled US$ 37.1 billion in 2011. Mr Howard
said demand built up very rapidly between 2005 and 2010,
encouraged by massive investment and creating dangerous
bubble.
“All manufacturers had unrealistically high expectations for the
future,” Mr Howard said. “The government is now cooling down
the GDP growth rate, leading to a reduction in construction
expenditure and a sharp downturn in demand for equipment.”
This has resulted over-capacity in the domestic market.
“Capacity is now 50% too great,” Mr Howard said. “Many
OEMs now face huge liabilities, and new machines are being
repossessed. There is also a very large young machine population,
limiting new equipment sales.”
Mr Howard also said the perception of Brand China machines
as being of poor quality with little customer support was more
of a perception than reality.
and overseas ones in terms of technical
strength. Core technologies of a number
of key components are still dominated by
foreign enterprises.
“What’s more, we still lack variable
hydraulic components such as variable
pumps and variable displacement
motors required by high value-added
and high technical hydraulic systems as
well as advanced hydraulic components
of
mechanics-electronics-hydraulics
integration,” he added that these
components were still mainly dependent
on importation.
Amd Lawrence Luo, president of Volvo
CE region China, said, “Over the past
decade, China has grown at a rapid pace. Though China’s growth
has slowed, it is still a market with enormous potential. China’s
Lawrence Luo,
president of
Volvo CE region
China, said the
manufacturer had
achieved steady
growth in market
share in China,
performing well
in 2013.
The Lomon Group operates a mine in Panzhihua and recently
purchased eight EC360 and EC460 C-Series excavators from Volvo
CE. The company now has 23 active Volvo Units and has calculated
one Volvo excavator can mine 3,500 m
3
of minerals a day.
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