Sunday, April 22, 2012

South Korea Group of Springhill: China's Export Machine Goes High-End



A Sany truck-mounted concrete pump


From its sprawling manufacturing base deep in China’s southwestern Hunan province, some 100 kilometers from where Mao was born, construction-machinery maker Sany Group plans to take on the world. While workers in blue overalls and yellow hard hats crawl over huge mobile hydraulic cranes and cement mixer trucks in a gleaming factory, Sany President Tang Xiuguo sits in his expansive office nearby, discussing the opening of Sany factories in Brazil, India, and Alabama, as well as the soon-to-be-completed $475 million acquisition of Germany’s Putzmeister, the world’s largest maker of cement pumps. The bespectacled Tang, one of four founders of the 22-year-old company, aims to lift overseas sales, now some 5 percent of its $16 billion revenue, to up to one-fifth of revenues within five years.

The phrase “Made in China” summons up images of cheap shoes, plastic toys, and electronics assembled in the vast factory complexes of Foxconn Technology Group (HNHPF). While China built its powerful export business—increasing 17 percent a year over the last three decades—on such light industry and electronics assembly, that is fast changing. Rising labor costs, up 15 percent annually since 2005, plus an appreciating currency, are putting new pressures on China’s cheap manufacturing model and driving textile, shoe, and apparel factories to close or relocate to Vietnam, Cambodia, or Bangladesh. “China’s share of the world’s low-end exports has started to fall. This reflects a shift by Chinese producers into sectors where margins are higher rather than a failure to compete,” wrote U.K.-based Capital Economics in a March 28 note.


Chinese-built ships, for example, dominated the global market with a 41 percent share last year, well ahead of South Korea and Japan, according to London-based shipping services company Clarksons. Data from the International Trade Centre, a joint agency of the United Nations and the World Trade Organization, also show strong gains in China’s global share of the markets for railway locomotives and wagons, machinery, and industrial boilers. In construction machinery, Sany’s specialty, three Chinese companies (Sany included) now rank in the top ten globally. Many of the new exporters are producing from inland China, rather than the coast, the traditional region for manufacturing.

Overall, the portion of China’s exports made up by heavy industry, about two-thirds of which is machinery, has grown from 29 percent in 2001 to 38.7 percent last year, surpassing light industry and electronics, according to Beijing-based economics consultants GK Dragonomics. “They are making different products with higher technology, things they can charge more money for,” says Andrew Batson, GK Dragonomics’ research director, who estimates that the new industries can help lift China’s share of global exports from 10 percent now to 15 percent by 2020. “The typical Chinese exporter is not a shoe factory in Guangdong anymore. Instead it is some kind of equipment or machinery maker.”

The Chinese makers of this machinery are targeting India, South America, and the Middle East, as Europe, still China’s largest export market, struggles with its debt crisis. Europe, the U.S., and Japan accounted for 48 percent of China’s total exports last year, down from 56.1 percent in 2003, with developing countries now taking the majority, says Louis Kuijs, an economist at the Hong Kong-based Fung Global Institute. “We have an advantage because our technology and our products level are more suitable for these countries,” says Sany’s Tang. “And our price is a bit lower than other international brands.”

Policy makers have made upgrading industry a national priority. Equipment manufacturing, shipbuilding, and cars are among the industries slated to receive $2.5 billion from the government this year to improve technology and product quality. Mergers and acquisitions inside China and overseas are also being encouraged. Says Shao Ning, vice minister of the powerful State-Owned Assets Supervision and Administration Commission of the State Council: “Our position is we support Chinese companies investing abroad.”

While China’s new manufacturers are not competing in developed markets yet, already they are challenging Caterpillar (CAT), Siemens (SI), General Electric (GE), and other established equipment makers in places like South America and Russia. China’s construction-machinery industry is expected to overtake Japan’s and Germany’s soon, making it the world’s second-largest exporter in the category, behind the U.S.

Winning market share in the U.S. and Europe could take years, in part because of concerns over Chinese quality (the crash of a Chinese-built high-speed train in Zhejiang province in July hurt China’s reputation as a manufacturer). Sany says it spent $240 million last year upgrading its factories, including the installation of welding robots. As Sany expands overseas, it aims to improve its products to match the quality achieved by its newest acquisition, Germany’s Putzmeister, which will share engineering know-how and suppliers with its Chinese parent. Says Tang, “We know that ‘Made in China’ doesn’t have a great reputation. We want to change this through selling high-quality products.”

The bottom line: Chinese exports have been rising 17 percent a year on average. To keep that pace, China is trying to grab market share in high-end machinery.

Roberts is Bloomberg Businessweek's Asia News Editor and China bureau chief.

Saturday, April 21, 2012

China's export machine goes high end : Slideshare

China's export machine goes high end

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China’s export machine goes high end — Presentation Transcript

1. Chinas Export Machine Goes High-End
2. From its sprawling manufacturing base deep in China’ssouthwestern Hunan province, some 100 kilometers fromwhere Mao was born, construction-machinery maker SanyGroup plans to take on the world. While workers in blueoveralls and yellow hard hats crawl over huge mobilehydraulic cranes and cement mixer trucks in a gleamingfactory, Sany President Tang Xiuguo sits in his expansiveoffice nearby, discussing the opening of Sany factories inBrazil, India, and Alabama, as well as the soon-to-be-completed $475 million acquisition of Germany’sPutzmeister, the world’s largest maker of cement pumps.The bespectacled Tang, one of four founders of the 22-year-old company, aims to lift overseas sales, now some5 percent of its $16 billion revenue, to up to one-fifth ofrevenues within five years.
3. The phrase “Made in China” summons up images ofcheap shoes, plastic toys, and electronics assembled inthe vast factory complexes of Foxconn TechnologyGroup (HNHPF). While China built its powerful exportbusiness—increasing 17 percent a year over the lastthree decades—on such light industry and electronicsassembly, that is fast changing. Rising labor costs, up15 percent annually since 2005, plus an appreciatingcurrency, are putting new pressures on China’s cheapmanufacturing model and driving textile, shoe, andapparel factories to close or relocate to Vietnam,Cambodia, or Bangladesh. “China’s share of the world’slow-end exports has started to fall. This reflects a shift byChinese producers into sectors where margins arehigher rather than a failure to compete,” wrote U.K.-based Capital Economics in a March 28 note.
4. Chinese-built ships, for example, dominated the globalmarket with a 41 percent share last year, well ahead ofSouth Korea and Japan, according to London-basedshipping services company Clarksons. Data from theInternational Trade Centre, a joint agency of the UnitedNations and the World Trade Organization, also showstrong gains in China’s global share of the markets forrailway locomotives and wagons, machinery, and industrialboilers. In construction machinery, Sany’s specialty, threeChinese companies (Sany included) now rank in the top tenglobally. Many of the new exporters are producing frominland China, rather than the coast, the traditional region formanufacturing.
5. Overall, the portion of China’s exports made up by heavyindustry, about two-thirds of which is machinery, has grownfrom 29 percent in 2001 to 38.7 percent last year,surpassing light industry and electronics, according toBeijing-based economics consultants GK Dragonomics.“They are making different products with higher technology,things they can charge more money for,” says AndrewBatson, GK Dragonomics’ research director, who estimatesthat the new industries can help lift China’s share of globalexports from 10 percent now to 15 percent by 2020. “Thetypical Chinese exporter is not a shoe factory in Guangdonganymore. Instead it is some kind of equipment or machinerymaker.”
6. The Chinese makers of this machinery are targetingIndia, South America, and the Middle East, as Europe,still China’s largest export market, struggles with its debtcrisis. Europe, the U.S., and Japan accounted for48 percent of China’s total exports last year, down from56.1 percent in 2003, with developing countries nowtaking the majority, says Louis Kuijs, an economist at theHong Kong-based Fung Global Institute. “We have anadvantage because our technology and our productslevel are more suitable for these countries,” says Sany’sTang. “And our price is a bit lower than otherinternational brands.”Policy makers have made upgrading industry a nationalpriority. Equipment manufacturing, shipbuilding, and carsare among the industries slated to receive $2.5 billionfrom the government
7. this year to improve technology and product quality.Mergers and acquisitions inside China and overseas arealso being encouraged Says Shao Ning, vice minister ofthe powerful State-Owned Assets Supervision andAdministration Commission of the State Council: “Ourposition is we support Chinese companies investingabroad.”While China’s new manufacturers are not competing indeveloped markets yet, already they arechallenging Caterpillar (CAT), Siemens (SI),GeneralElectric (GE), and other established equipment makersin places like South America and Russia. China’sconstruction-machinery industry is expected to overtakeJapan’s and Germany’s soon, making it the world’ssecond-largest exporter in the category, behind the U.S.
8. Winning market share in the U.S. and Europe could takeyears, in part because of concerns over Chinese quality(the crash of a Chinese-built high-speed train in Zhejiangprovince in July hurt China’s reputation as amanufacturer). Sany says it spent $240 million last yearupgrading its factories, including the installation ofwelding robots. As Sany expands overseas, it aims toimprove its products to match the quality achieved by itsnewest acquisition, Germany’s Putzmeister, which willshare engineering know-how and suppliers with itsChinese parent. Says Tang, “We know that ‘Made inChina’ doesn’t have a great reputation. We want tochange this through selling high-quality products.”
9. The bottom line: Chinese exports havebeen rising 17 percent a year on average.To keep that pace, China is trying to grabmarket share in high-end machinery.




Friday, April 20, 2012

South Korea Group of Springhill: China's Export Machine Goes High-End

China's Export Machine Goes High-End
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From its sprawling manufacturing base deep in China’s southwestern Hunan province, some 100 kilometers from where Mao was born, construction-machinery maker Sany Group plans to take on the world. While workers in blue overalls and yellow hard hats crawl over huge mobile hydraulic cranes and cement mixer trucks in a gleaming factory, Sany President Tang Xiuguo sits in his expansive office nearby, discussing the opening of Sany factories in Brazil, India, and Alabama, as well as the soon-to-be-completed $475 million acquisition of Germany’s Putzmeister, the world’s largest maker of cement pumps. The bespectacled Tang, one of four founders of the 22-year-old company, aims to lift overseas sales, now some 5 percent of its $16 billion revenue, to up to one-fifth of revenues within five years.




























Wednesday, April 11, 2012

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by roxxystilch | Saved by 1 users | Jan 27, 2012
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