Machinery makers eye opportunities further afield

By Wang Chao and Huo Yan (China Daily) Updated: 2012-12-25 10:00

SGMW, a joint venture in which SAIC Motor Corp, Liuzhou Wuling Motors Co and GM China have stakes, is also treating Africa as one of its most important overseas markets. A factory has already been established in Egypt, serving the North African and Middle Eastern markets.

Liugong's efforts to concentrate on overseas markets seem to have paid off. This year, Liugong is expected to export 10,000 units. Five years ago, it was only 2,700 units.

Since 2002, the company's export volume has increased 70 percent annually, and its export value has risen from $4 million to $500 million. It aims to make overseas sales one third of its total sales by 2015. Currently, they account for 24 percent of its total export volume.

Qin said Liugong Machinery attributes its success in overseas market to good distribution networks and after-sales service.

It has signed agreements with local distributors to sell products, so the brand can respond quickly to customers' needs.

"Building overseas networks is very expensive and time-consuming. It is made much easier by cooperating with local distributors," Qin said.

To assist research and development, the company has hired 140 local experts as they "have more knowledge of the global market".

Although Liugong has made impressive achievements in overseas markets, it is yet to enter mature markets such as Western Europe.

"To enter these markets, we need to meet the high standards set by these countries, which emphasize noise control and operational comfort."

Qin said Liugong's greatest advantage remains its machinery's competitive pricing. Compared with renowned brands such as Caterpillar, the loading machine produced by Liugong is a third of the price.

But as more Chinese companies enter emerging markets, the price competition is getting fierce.

Qin said the company is following the route Japan took during the 1970s and 1980s, when products were cheap and lacking in strong brands. "But as costs increase, price competitiveness will fade out, and we have to improve product reliability and build our brand, so we can increase our profit margin in the future."

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