Analysis: China's budding Caterpillars break new ground overseas

Thu Mar 8, 2012 2:01am EST
 
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By Alison Leung

HONG KONG (Reuters) - When concrete-pump maker and symbol of German industrial strength Putzmeister rolled up at Japan's Fukushima last year to help tackle the nuclear disaster, few industry watchers might have guessed it would soon be bought by China's Sany Heavy Industry.

Sany (600031.SS: Quote), often referred to as China's Caterpillar (CAT.N: Quote), and other top domestic construction gear makers such as XCMG Group and Zoomlion Heavy Industry (1157.HK: Quote) (000157.SZ: Quote) are stepping up their overseas hunt for assets that will give them more than just technological know-how.

They're not just dismantling production lines and shipping them home, but going after brand recognition and established distribution networks, driving China towards its three-year goal of becoming the world's top exporter in the $150 billion global market for equipment like bulldozers, excavators and forklifts.

"Engineering machinery could well be a sector where China can really start the production and go out and take a much larger share," said David Chin, UBS head of investment banking in Asia.

The machinery manufacturers, little known outside of China a few years ago, are already making a mark. Chinese manufacturers accounted for 15 percent of the top 50 construction gear companies' revenues globally in 2010 compared with just 1.6 percent in 2003, according to industry data provider KHL Group.

The pace of their overseas expansion is set to accelerate.

State-owned XCMG Group, whose sales at 87 billion yuan ($13.8 billion)were about a quarter of Caterpillar's last year, clinched two European acquisitions in 2011 and has said it is seeking bigger overseas assets to power its sales target of 300 billion yuan a year in 2015 and a goal of becoming the world's No.3.

Chinese media have reported it may buy a stake in German concrete-pump maker Schwing GmbH, although an XCMG spokesman declined to comment.   Continued...

 
A worker drives an excavator past other excavators at a construction machinery manufacturing factory in Hefei, Anhui province March 3, 2012. Chinese top domestic construction gear makers are stepping up their overseas hunt for assets that will give them more than just technological know-how. They're not just dismantling production lines and shipping them home, but going after brand recognition and established distribution networks, driving China towards its three-year goal of becoming the world's top exporter in the $150 billion global market for equipment like bulldozers, excavators and forklifts. Picture taken March 3, 2012. To match Analysis CHINA/CONSTRUCTION REUTERS/Stringer