China State lays out its fleet purchase priorities

Dehong Lu, workshop manager for China State Construction Engineering Corporation, discusses the purchase of LiuGong wheel loaders and the key influences in the decision making

Dehong prioritises performance and aftersales service.
Dehong prioritises performance and aftersales service.

Among Chinese contractors in the Gulf, there are few as large or well known as China State Construction Engineering Corporation Middle East (CSCME), the Chinese state-owned contractor backed by the Export-Import Bank of China.

It is therefore not remarkable from a purchasing perspective to hear that the Chinese contractor recently bought 14 LiuGong wheel loaders. However, you would incorrect to assume that CSCME has a preference for Chinese machinery. On the contrary, the contractor goes about its procurement in a remarkably meritocratic manner, and has a strong multi-brand fleet.

PMV Middle East catches up with Dehong Lu, the workshop manager for CSCME’s infrastructure division in the UAE, to tease out the considerations that really drive the contractor’s decision-making process when it comes to the acquisition of new machinery.

In contrast to CSCME’s building and MEP divisions, the infrastructure division focuses primarily on large road and viaduct projects. The contractor was responsible for the recent delivery of two of the three pedestrian bridges recently constructed over the Dubai Water Canal, the viaducts connections for Dubai Parks & Resorts and the Emirates Road Stage 2 improvements, which involved the widening of 33km of highway and the upgrading of the existing intersection with Al Barsha Road.

To handle this kind of work, Dehong has a fleet of 200 machines consisting of wheel loaders, excavators, graders, asphalt pavers, single-drum and pneumatic tyre road rollers, truck cranes and heavy trucks. The diverse line-up of brands within this fleet includes Komatsu, Volvo CE, Witgen, JCB, XCMG, Case CE and Shantui, as well as Shacman trucks.

The purchase of 14 LiuGong wheel loaders this year was fuelled by growth in the number of project being handled by CSCME in Dubai, including four to five active projects.

As the reasons behind the choice of LiuGong units specifically, Dehong notes that the machines are “simple to operate” and equipped with powerful engines.

The first 10 units purchased this year are CLG856 wheel loaders with 3m3 capacity buckets and 220hp of power — delivered by Cummins 6LT9.3 engines manufactured at a LiuGong and Cummins joint venture plant (Guangxi Cummins), and engineered specifically for wheel loaders.

The machines also feature semi-automatic power shift ZF countershaft transmissions (also made at the JV plant) with a kick-down (KD) function that automatically lowers the gear when the peddle is depressed harshly to make use of the greater power with higher rpm — for when the operator wants to accelerate quickly from constant speed.

Dehong purchased four of the CLG856 machines back in 2014, and so has had time to assess their performance in the dusty and hot conditions encountered in the Gulf.

He notes: “We purchased four units in 2014, and after we found that they were good, we decided to purchase more — so 10 more CLG856 units were delivered in early 2016, and four additional CLG877 units are currently in the process of being delivered.”

The CLG877s, the first of which has arrived, have larger 4.2m3 capacity buckets and 295hp of power. The engine is also Guangxi Cummins, with ZF transmissions and axles, and designed to be powerful, operator friendly and with high working efficiency.

Dehong enthuses: “The gear changes with the hydraulic system are very fast.”

Furthermore, and moving onto the second reason for the purchase, both machines are easy to maintain and supported directly by the LiuGong teams in Dubai and local LiuGong dealer, Gargash Machinery — ensuring readily accessible customer aftersales support.

Dehong notes: “For the service, all that is needed is to change the oil and oil filter, and there is also plenty of space to do this, so it is very easy. We have free service for 1,000 hours, and after that we can do the service ourselves. Up until now we have had no major problems.”

As with all his major purchases, however, Dehong still had his team research the LiuGong machines extensively before the order was made, checking the technical specifications, pricing and customer service and aftersales support versus the competition.

It also did not hurt that LiuGong is resoundingly the number one brand for wheel loaders in China, if not the world. This in essence, points to the crux of the contractor’s purchase decision making — the selection of the best brand in a product category at a fair price with aftersales support.

CSCME previously purchased a fleet of XCMG wheel loaders in 2008, back when the machines were typically still manual, but there was no favouritism shown to the existing Chinese brand in the fleet. On the contrary, the 2014 order of four LiuGong wheel loaders impressed upon Dehong that his decision had been the correct one.

The decision making falls on a team of five at CSCME, who together oversee a crew of 60 workshop and maintenance technicians.

For its larger projects, CSME also establishes small workshops on site. That way, when there is a problem with a machine during construction, it can be fixed on the spot.

The company maintains an existing 9,000m2 primary facility in Abu Dhabi, but in line with the broader growth of CSCME’s project work in Dubai, the contractor also plans to establish a 10,000m2 workshop facility in Dubai Industrial City — subject to the approval of the free zone authority.

Broader perspective

CSCME’s meritocratic principles were also evident in its recent purchase of Komatsu PC200/PC400 excavators — a decision that Dehong’s team came to after also considering Caterpillar and Volvo CE machines.

In this particular instance, price did not play a significant role in the process, with the Komatsu machines actually emerging as the most expensive.

However, the team’s research determined that its was the best choice in terms of both specification, reputations in the market, and the support that they could expect to receive from the UAE’s Galadari Trucks & Heavy Equipment, which it had already interacted with for the service of their JCB machines.

In the case of the LiuGong wheel loaders, price did play a role, but it was still just one of many factors that were considered during the decision-making process.

Dehong notes: “Just considering LiuGong, the quality is high and the price is reasonable, compared to say Caterpillar, so price was one of the reasons for the purchase — but the aftersales service is also easy, and as we are both Chinese companies, there is ease of communication.”

Similarly, Wirtgen has emerged as the asphalt road paver of choice for CSCME after the contractor purchase two units and liked the results — particularly the functionality of the computer control systems on the machines for automating previously manual actions.

Given the scope of CSCME’s involvement in road-building it is also not so surprising that they have been won over by Wirtgen as the unrivalled number one provider of pavers in the UAE, as the brand held an impressive 86% market share in 2015, and a 37% market share in the segment worldwide.

The view to quality also flows from the top down at CSCME, unlike the cost-based thinking so common in the region.

Dehong notes: “For the company, management and strategy, they want high quality so that they can use the machines for a long time without having any trouble — because they have lots of projects.”

The contractor also recently made a purchase of XCMG truck cranes, after comparing them with Sany and Zoomlion machines. The price for all three brands was similar, but XCMG had a presence in the Middle East, with facilities in the UAE and faster and better aftersales service.

Dehong adds: “The computer system is easy to operate, with technology from Germany.”

CSCME’s infrastructure division owns a modest fleet of cranes and aerial work platforms, which it bolsters with the services of three pre-approved rental companies.

For its own fleet, the delivery times associated with parts remains a key issue for the contractor, with the service teams often waiting weeks for parts. Another reason why XCMG won out over its competitors was due to the fact that CSCME already had a large parts stock of XCMG truck cranes parts.

In a thumbs up for Galadari, Dehong notes that replacement parts for JCB and Komatsu arrive especially quickly. As for the LiuGong wheel loaders, they have yet to require any spare parts, but the local team will surely be eager to please when the time comes.

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