Chinese OEMs are now on par with Western firms
Is there anything that Western OEMs can do to regain the advantage?
According to a recent CLSA study, Chinese construction machinery is now good enough to compete on the global stage. PMV asks whether Western OEMs should be worried
Fairly or not, construction equipment produced in China has long since been viewed as inferior to that manufactured in Europe and North America. What might surprise you, however, is that this is not solely down to Western bias.
In fact, prior to the financial crisis of 2008, 90% of digging equipment on Chinese building sites was foreign branded.
It seems, however, that we are in the midst of a paradigm shift. An article published recently in The Economist reported that Chinese manufacturers have not only made impressive headway on the domestic front, but are also expected to enjoy substantial international growth over the next decade.
Room for all
Speaking on behalf of Pacific Machinery, the authorised distributor for SDLG in the UAE and KSA, Ahmad Halwani told PMV that winning the trust of global customers has been one of the most significant challenges faced by Eastern firms.
“Chinese manufacturers such as SDLG have had to work extremely hard to build market confidence,” he explained. “Improving product quality has been a key step in this process, but quality alone is not enough. For this reason, SDLG has also invested resources in other areas of its operations, such as after-sales support.”
Halwani points out that SDLG has not been working unilaterally in this respect. It has taken a coordinated effort to achieve the market position now enjoyed by the firm.
“Volvo is a major shareholder in SDLG,” he said. “Together, the companies have committed not only to improving the quality and performance of SDLG machinery, but also to strengthening aftermarket support. A combination of factors have driven improvements in these areas, and customer confidence has followed suit.”
Of course, established OEMs will not sit idly by and allow Chinese firms to eat into their profits. Even so, when asked whether Western manufacturers can maintain the gap in quality between themselves and their Eastern challengers, Halwani offered a candid response.
Developing the complete package
Ultimately, Halwani expects that both Eastern and Western OEMs will find their respective niches in the global construction equipment sector. Of course, regardless of whether the market can accommodate everybody, China’s OEMs will continue to push to dethrone their international competitors.
Whilst better build quality has played a major role in turning the global tables, XGMA’s Garret Gao contends that the secret behind China’s success has been a sustained effort to improve after-sales support.
“The main challenge for us right now is to match the quality of companies such as Caterpillar and Komatsu,” he told PMV.
“In order to do this, we must address customer service as well as the quality of our products. It is not enough to simply stock and distribute spare parts for our machines. In order to completely eliminate the gap between us and our global competitors, XGMA must continue to improve its after-sales support.”
As the CLSA study has highlighted, the quality of Chinese construction equipment is now broadly comparable to that supplied by Western manufacturers. However, all machines require maintenance and customers are looking for the complete package.
Last month, PMV brought you news that SDLG had sold its first wheel loader to the North American market. Within days of unveiling its range to the region, the Chinese manufacturer received an order from Canada-based Double K Excavating.
The Canadian firm, which operates in Tuxford, Saskatchewan, purchased an SDLG LG959 wheel loader. The machine is being used to perform a variety of tasks, including those related to underground waterworks, road construction, lagoon building, and materials handling.
The LG959 features a Tier 3 Deutz engine with 224HP, ZF transmission and axles. The base unit costs $144,500 and comes with a 12-month, 1,500-hour warranty.
“A wheel loader isn’t something we use for 10 to 12 hours a day, every day,” said Double K’s Cole Koch. “Some days it will get eight hours, some days only two or three.”
Double K purchased the LG959 from Regina-based Redhead Equipment – one of seven authorised SDLG dealers in North America.
“Double K wasn’t looking for a 2,000-hour-a-year wheel loader,” said Redhead Equipment’s Dean Wolfe.
“For the limited number of hours the machine would run and for the amount of money the company wanted to spend, it made more sense to purchase a brand new SDLG machine with a 1,500-hour warranty than a used machine from another brand.”