The economic crisis of 2008 provided a chance for China's construction machinery companies to reverse course, but the global industry landscape is unlikely to change dramatically in the next decade.
Seven years ago, xugong group construction machinery co., LTD. (hereinafter referred to as xugong) rejected the world machinery manufacturing industry giant American caterpillar to the olive branch, with the latter had a failure of joint venture cooperation experience xugong worry, by its lead to own brand dying, I'm afraid.
Today, the buying winds are reversing. Learned, xugong group is working with the world's second largest Schwing concrete machinery company (Schwing) discuss the takeover, according to a number of industry forecasts, xugong for business is very bad Schwing is likely to implement the full acquisition.
The global economic crisis in the late 2009, zoomlion to "snake swallow like" trend with the world's third largest CIFA concrete machinery company, every corner from hunan in partial mid-range of industry chain company, enter the international market whole industry chain, reminded the Chinese engineering machinery enterprise bigger overseas acquisitions.
In the wake of the new European debt crisis, more opportunities are coming. Just opened in 2012, sany heavy industry (600031. SH) announced a joint citic industrial investment fund, paid 360 million euros for global concrete machinery top German Portsmouth meister 100% stake, which sany heavy industry account for 90% of the shares. Critics say the Chinese company's overseas acquisition is no longer a "snake swallow" because sany's own size is far more than the international giant it has acquired.
At the same time, Guangxi Liugong Machinery Co.,Ltd.(000528.SZ) also finalized the acquisition of the polish HSW engineering Machinery business unit project. A year ago, liugong announced the acquisition of HSW's engineering machinery division and its wholly owned subsidiary, Dressta. At the end of June last year, is preparing to the celebration dinner was held in Warsaw, liugong, confronted with the polish national road and highway administration to China overseas engineering co., LTD on overseas give up Poland A2 highway project contract, cause the A2 highway project unable to claim for compensation timely completion of the negative impact of events, the purchase was forced to shelve. After months of negotiations, liugong finally made substantial progress on the deal with a 335 million yuan payment and a debt relief program.
From the domestic market and foreign competition, to invest overseas, to go out and buy international well-known enterprise, does this mean that the Chinese construction machinery enterprises really have the ability to reverse the global industrial structure?
"This is only the beginning of the internationalization of China's engineering machinery companies." Wang jinxing, deputy secretary general of the China construction machinery industry association, said in an interview that the global construction machinery industry is unlikely to change in the next 10 years because of China.
Opportunities in crisis
Concrete machinery is a barometer of the economic cycle. Around 2008 of the international economic crisis, and in recent years, Europe's debt crisis intensified, hit the international construction machinery manufacturers, some European enterprises are facing the product sales decline, poor operating conditions, and even on the verge of bankruptcy. Putzmeister and shi weiying, two of the world's top concrete machines, were the first to be ranked.
"Emerging economies are only indirectly affected by the economic crisis, and demand for concrete machinery remains strong. But the high quality of products produced by putzmeister and schweitin is not matched by emerging economies' demand for good quality products. Su zimeng, secretary general of China construction machinery industry association.
In the economic crisis, putzmeister fell sharply and suffered its first loss in 50 years, and the recovery is still slow. Mr Shi, who has a much older history, is doing worse. In 2009, the U.S. subsidiary filed for bankruptcy, and the bankruptcy filing showed that the U.S. debt was $90.9 million as of July 31.
"In 2008, the company's sales revenue was about 1 billion euros, down to about 400 million euros in 2009 and less in 2010," a mechanical industry analyst said in an interview. Shi weiying has been looking for a buyer.
Chinese construction machinery companies are on the rise. Since 2010, Chinese construction machinery "three giants" xugong, zoomlion and sany heavy industries have all reported higher growth of more than 50 per cent.
Acquisition of drive
In the areas of engine, hydraulic components and other core components, Chinese construction machinery companies have always lacked the control and bargaining power, which is the biggest driving force of their overseas acquisitions.
"About 60 percent of our core components, such as chassis, pumps and electrical components, are purchased abroad, accounting for more than 70 percent of the total cost." "A person from xugong economic department admitted.
From the overall perspective of the industry, "the import cost of key components accounts for more than 40 percent of the manufacturing cost, and nearly 70 percent of the industry profits are occupied by imported components." According to wang, relying on imported core components has long been a bottleneck factor in the development of China's construction machinery industry.
Wang min, chairman of xugong, has publicly stated that he wants to make breakthroughs in the core technologies and manufacturing technologies such as intelligence, light weight and energy conservation and environmental protection.
It is understood that because of the difficulty in solving the core technical problems, xugong has cooperated with foreign manufacturers to set up parts manufacturing enterprises to guarantee the supply of raw materials. The other is acquiring technology through acquisition.
Schwing xugong attracts, because it has a number of core technologies in the field of global worldwide patents, such as domestic commonly used S valve, is the patent schwing had to give up in the 1980 S.
Sany acquired all its technology through the acquisition of putzmeister. Putzmeister still holds two world records: the vertical pump height of 532 meters in 1994, and the 2015 rice horizontal pump distance in 1997.
The polish company HSW, founded in 1937, is one of the largest engineering machinery manufacturers in eastern Europe and has advanced technology in heavy engineering equipment. "After the acquisition of HSW, liugong will receive all its intellectual property and trademarks directly." Luo guobing, general manager of liugong international marketing division, said that HSW's technology and research and development efforts in the field of bulldozer make up for the lack of liugong.
In addition, China's construction machinery industry also faces the problem of domestic overcapacity, and has to go abroad to expand the market.
According to the China construction machinery industry association, in 2011, overseas exports of China's engineering machinery industry grew by 51% in the january-october period, compared with only about 30% in the domestic market. "From the point of sany heavy industry, domestic market development space for the remainder of the machinery has been difficult to support the sustained and rapid development of it, and to expand the international market, the concrete industry number one brand for Portsmouth meister is undoubtedly the best pedal." Duan jiaxuan, a researcher in the machinery industry of cic, said.
Acquiring foreign companies can not only acquire the technology, but also the sales network. Xiang wenbo, President of sany heavy industries, said that through the acquisition, sany could acquire a sales network built by putzmeister 52 years ago. "Sany's exports account for less than 5 per cent of sales and we already have overseas markets through acquisitions."
"After the acquisition of HSW, we can quickly liugong's eastern Europe become a" second home market ", liugong will as a base, to Europe, North America and the commonwealth of independent states (cis) market sales of construction machinery products." Luo guobing said to the author.
Shi weiying also has eight production bases and ten service companies in Germany, the United States, India, Brazil, Austria, Russia, France and China, with sales agents in more than 100 countries.
Internationalization just started
While Chinese companies are about to pocket the world's three largest concrete giants, it is still hard to change the dynamics of global engineering. At present, caterpillar, komatsu, terex, liebherr, Volvo, John Deere, Hitachi construction machine, Keith - new Holland, Ingersoll rand and other large multinational manufacturer still controls 70% ~ 80% of the global construction machinery market.
"In the next 10 years, it will be difficult for China to change this pattern." According to wang, caterpillar's annual revenue is more than half the revenue of China's construction machinery industry. In 2011, caterpillar's revenues were $47 billion ($295.8 billion), while China's engineering machinery was operating at about $79.45 billion (about 500 billion yuan).
In the eyes of su zimeng and wang jinxing, the wave of mergers and acquisitions in China's construction machinery industry is only the first step in the path of enterprise internationalization.
Previously, China's engineering machinery companies were mostly overseas investment and construction plants. Like sany, which has invested in factories in India, the us and Germany, manufacturing abroad does not mean that Chinese brands can be immediately accepted by the international market.
Sany heavy industry, general manager of east German confessed to the author, trinity early German company, one of the biggest challenges facing is the market for made in China there is a profound discrimination and prejudice, the cost is low, the quality is poor.
"The company's overseas sales now account for 15 per cent, and this proportion will double in the next three years," the xugong said. To achieve this goal, xugong will invest $1 billion over the next five years to build factories overseas, and also want to capture international market share through global m&a.
Guo xuehong, vice President of zoomlion, also said recently that zoomlion's sales revenue in 2012 will strive to exceed 100 billion yuan, and that it will expand overseas markets and continue to make overseas acquisitions.
According to liugong's development strategy from 2010 to 2015, liu's sales revenue target is 26 billion yuan in 2012 and 50 billion yuan in 2015, including 20 percent of international sales. "Mergers and acquisitions will still be the next big step for liugong, including international acquisitions." "Said luo.