In a move that illustrates China's increasingly global reach, a leading heavy machinery manufacturer has announced it will establish an assembly plant in India this year.
Guangxi Liugong Machinery Co Ltd's plant is expected to help the company better meet growing demand for heavy machinery and further tap the enormous market potential in India.
"The investment in India is part of our strategy to step up the development of our global business," said Wang Xiaohua, chairman of the listed firm, in an interview.
"Our firm has laid out a blueprint for overseas business development and we are on the way to a leadership position in our key target markets abroad."
Liugong said it will also expand global sales and after-sales service networks, enhancing its present 30-odd overseas distributors, while establishing local machinery production plants in key markets abroad.
"Liugong is also working on a feasibility study for setting up a production base in Russia after the one in India becomes operational," Wang said.
He noted that Liugong hopes to make a breakthrough abroad with its loaders and then further crack the global market for other products, ranging from hydraulic excavators, vibratory rollers, motor graders, pavers, forklift trucks, concrete truck mixers and other heavy machines.
Overseas revenue is projected to be US$200 million by 2010, or over 15 percent of the company's total business income.
Liugong is striving to sell more than 2,000 machines abroad in 2007 with a total value of US$80 million to US$100 million.
The company sold 1,455 of its machines abroad in 2006, taking in more than US$68 million in foreign currency.
According to the chairman, developing and moderately developed countries and regions are Liugong's current target markets, while developed countries like the United States, EU countries and Japan are markets the firm is eyeing in the coming few years.
"We hope the business turnover in developed countries will account for 20 percent of our total overseas business revenue by the year 2010," he said.
Wang said that Liugong has been generous in research and development (R&D) spending to maintain its competitive edge at home and abroad, with R&D earmarked for about 2 percent of the company's total annual sales revenue.
Revenue totalled 8.09 billion yuan in 2006.
The company has also joined forces with globally renowned companies like Germany's ZF for the development of core technology and components for heavy machinery.
Citing an instance of R&D success, he said machines Liugong has developed for plateau regions have definitely topped other rivals at home and abroad.
To be well prepared for the market penetration into developed countries, he said, Liugong has set up its first overseas branch in Australia, for R&D, testing and marketing with new technological and environmental requirements.
Wang said that Liugong will redouble efforts to promote international certification for its products, which are essential to entering high-end markets.
The US-based Association of Equipment Manufacturers estimates that global market demand for heavy machinery stands at about US$148 billion at present; and the demand will grow at 3 to 5 percent year-on-year.
(China Daily January 25, 2007)