Chinese heavy industry

Zoomlion, a Chinese construction machinery manufacturer, has set its sights on the UAE.

immy Pan, vice general manager of Zoomlion, which hopes to expand its business in the Gulf.
immy Pan, vice general manager of Zoomlion, which hopes to expand its business in the Gulf.

One of China's top construction machinery manufacturers, Zoomlion, is predicting a massive leap in sales this year, off the back of the continued Middle East construction boom.

The company, which increased sales in the region from US $8 million in 2005 to US $19 million last year, is forecasting a hike in sales of US $40 million this year, and US $70 million in 2008.

Construction on the company's US $2.27 million spare parts warehouse and service centre in Dubai's Jebel Ali Freezone has begun. The 10 000m2 warehouse, which follows an office opening in Dubai in April, will be ready by early 2008.

Zoomlion, which is listed on the SZSE Component Index 100, manufactures a range of construction industry machinery, including tower cranes and trailer concrete pumps which are a familiar sight on building sites in the UAE and across the Middle East. Currently, Zoomlion's overseas market has exceeded more than US $120 million, with the Middle East contributing about 30% to that total. The company has more than 10 000 employees, around 20% of whom work in the design field.

PMV met up with Jimmy Pan, vice general manager of Zoomlion, to talk about the company's plans in the region.

Is the Gulf market important to Zoomlion?

We think that the Gulf region is one of our most important overseas markets. As the leading manufacturer in China, we are not limited to working only in the Chinese market, we are eyeing the overseas market as well and this area is one of our most important.

When we judge whether a market is important or not, we assess it through several standards, such as the population or economic growth forecast. I think the booming of the construction industry in this region is obvious to everybody. We think in the coming years the boom will continue, so the Gulf will be a very important market to us.

What are your current sales in the region?

The total amount in this region so far this year is over US $40 million. Next year we hope it will be double that.

How will Zoomlion approach increasing its market share here?

We have a global strategy, but it is different for different parts of the world. Looking at the Gulf, we think we will not come here by ourselves; we must have a local partner. The GCC countries are a very big area, we don't think it is possible to find just one local dealer to cover such a wide product range in such a big area. So that means we will have several local partners in different industries and different countries. So this is our starting point, to fix partnerships with local partners.

Will there be one partner in each country?

It will depend. Maybe in a country that is comparatively small, with consumption or demand that is very concentrated, we will fix just the one partner. But in some countries if it is big and the demand is diverse we will appoint several dealers for the different sectors.

What sectors are you concentrating on first?

If you take the UAE for example, we think that priority should be given to concrete machinery, mobile cranes, including crawler and truck-mounted cranes, and the tower cranes. After that maybe the environmental equipment, such as road sweepers and road washers.

How many manufacturing bases do you have and are you planning any expansion?

We manufacture and design all our own equipment in five manufacturing bases in southern China. There is a sixth in Shanghai too.

With the growth in our overseas market we are planning to perhaps transfer some of our facilities or establish new production facilities in some other countries, in order to keep production close to the customer. This will save on transport costs and raise competitiveness. In the UAE we have had our groundbreaking ceremony for the warehouse for the spare parts and machines, but maybe in the future some assembly work could be done there too.

How would you like the Middle East market to develop for Zoomlion?

It could play a very important role in our global strategy. Maybe in four or five years time we will not just be talking about being a Chinese manufacturer, maybe we will describe ourselves as a global manufacturer. We think that the Middle East and the Gulf could play a very important role in our whole system.

Are you finding it difficult to acquire basic materials for manufacturing?

This is a common problem across all industries, it's not just Chinese manufacturers facing such problems. We have several ways to cope with the difficulty of getting supplies of the components or raw materials. The first is to expand the sources, so there are some alternatives, we cannot be reliant on one supplier. The second way is to transfer production facilities to other countries, to be closer to the suppliers. The third option is that maybe we should also think about using Chinese-made raw materials.

How do you compare to your competition in this region?

I think in this region we face competition on two levels. On the first level is the manufacturer from Europe, the US or Japan. The second level comes from our domestic competition in China. Such competition is inevitable, so we have to face it.

Compared with the first level competitors, we think that the performance and quality of our products is similar. But we think we have an advantage in technology, because we design everything ourselves. We also have an advantage in the production costs. So we have an advantage in price and technology, with similar quality.

Compared with other Chinese manufacturers we have greater financial power. That is why we are able to set up our after sales service system in overseas countries, which many smaller Chinese manufacturers cannot afford to set up such a service system globally.

Do you have many new products under development?

Yes of course. We used to be the construction machinery research institute, so we have a profound accumulation of technology and expertise in different machines, which is the reason we have such a wide product range. We have a lot of new machines in reserve, if the market needs it we can put them forward.

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