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EQUIPMENT
LIUGONG
will be flat or down for the next
year or two as the economy adjusts.
But the market for construction
equipment in China is still the
biggest in the world.”
The Chinese industry grew up
a great deal in the boom of the
2000s. It was a period that saw
Liugong, along with the likes of
Sany, XCMG, Zoomlion and
others emerge from obscurity
onto the world stage. But as large
as these companies are today,
the fact remains that Chinese
manufacturers still tend to be
dependent on the Chinese market.
Many like Liugong have a plan
to be global players, but most
exports to date have been to
developing markets where the
legal requirements and customer
needs are on a par with China. Big,
developed markets like Europe
and the US remain a challenge
due to the number of competitors,
difficulty in establishing good
dealer networks, and technical
july-august 2014
international
construction
New approach
A
fter a decade of growth
and then the stimulus-
driven boom of a few
years ago, Chinese equipment
manufacturers are still getting used
to the idea that markets can go
down as well as up.
Following the huge surge of work
that carried the country through
the global economic crisis, the
inevitable downturn is now in its
third year.
According to is chairman of
Liugong Machinery and president
of Liugong Group, Zeng Guang’an,
there were some glimmers of hope
earlier this year, but the second
quarter has seen domestic demand
take a turn for the worse. “The
Chinese market was not bad in the
first quarter, but there was a big
drop in April and May. Wheeled
loader sales were down about -16%
compared to last year. The same for
excavators, dozers, rollers, graders,”
he said.
Mr Zeng added, “The market
Weakness in its
traditional markets
means Liugong
is taking a more
measured approach
to its expansion
plans, according to
group president, Zeng
Guang’an. However,
the ambition to be a
serious global player
remains.
Chris
Sleight
reports.
Chairman of Liugong
Machinery and president of
Liugong Group, Zeng Guang’an.
PHOTO: Hans Dhillon.
barriers such as engine emission
laws.
But so far export markets have
not come to the rescue of Chinese
manufacturers seeing difficulties at
home.
“Chinese manufacturers mostly
export to emerging markets, where
economies are slowing down and
investment is falling. The second
problem is the exchange rate. Most
emerging market currencies are
falling, which increases the cost of
their imports. So the demand is
going down and the cost is going
up. That makes a big difference for
the whole industry,” said Mr Zeng.
All this is of course having
an impact on the equipment
manufacturing landscape in China,
as Mr Zeng elaborated. “Since
about 2011, demand has been in
almost continuous decline. Chinese
OEMs have been losing money
as well as seeing bad debts, higher
inventories, high fixed costs and
over capacity. So in the last three
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