Big Three of Construction Machinery Revitalizes Overseas

On March 28th, the National Development and Reform Commission, the Ministry of Foreign Affairs, and the Ministry of Commerce jointly issued the “Vision and Action for Promoting the Joint Construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road.” This will be a low-level domestic construction machinery company. Bringing important new opportunities.

In the “One Belt and One Road” plan, infrastructure interconnection is the priority area of ​​the planning and construction: “On the basis of respecting relevant national sovereignty and security concerns, countries along the route should strengthen the integration of infrastructure construction planning and technical standards systems and jointly advance. The establishment of an international backbone channel will gradually form an infrastructure network connecting various sub-regions in Asia and Asia, Europe and Africa."

According to industry sources, the above-mentioned plans jointly issued by the three ministries and commissions, the “One Belt and One Road” roadmap require the promotion of infrastructure construction of international backbones, ports, ports, aviation, cross-border power and transmission channels, cross-border optical cables, etc. Benefit.

Some analysts also said that for Chinese construction machinery companies that have earlier internationalized arrangements, the above-mentioned national strategy is good for the medium to long-term. "China will prioritize its railway and highway projects with neighboring countries, which will drive the export of construction machinery."

In addition, the cooperation of multi-level financial institutions such as the Asian Investment Bank, Silk Road Fund, BRICS Bank, and local and foreign currency bonds will also provide important funding guarantees for future financing sources for project construction. This will be a big plus for the collective "going to sea" of Chinese machinery companies.

At present, the three major domestic machinery companies have overseas production bases and branches. Their overseas business experience can also help the "Belt and Road" national strategy.

Zoomlion has accumulated overseas for many years. The company has its own sales and service platform in nearly 80 countries. Last year it also completed the acquisition of German M-TEC company, Raxtar Construction Lift Technology and Chery Heavy Industry in the Netherlands. Indonesian subsidiary and financial company.

Zhang Jianguo, the company's senior president, said that for the “Belt and Road” initiative, many regions do have opportunities, such as Indonesia, Turkey, etc. However, overseas projects should be “accumulated” and companies can focus on key areas. “The current domestic industrial production capacity is a bit oversupply, especially the large construction capacity, and the “Belt and Road” can bring release to the entire Chinese production capacity.”

Another Zoomlion management team stated that currently, Zoomlion has not set up a special business unit for the time being. It will look at the progress of the project and will have more layouts in the future. In the first half of 2014, Zoomlion’s domestic and overseas revenues were RMB 12.4 billion and RMB 1.39 billion respectively, accounting for 88.5% and 9.94% of the total, and gross profit margins were 30.23% and 18.27%. Zhang Jianguo also said: "From a financial point of view, not only the country has a good policy support, our own financial company can also do lending, financial leasing and issuing bonds, which will be beneficial to the company to build a complete industrial chain."

Another domestic large-scale mechanical enterprise, Xugong Machinery, currently has its own parts production sites in the Netherlands and Germany, and hosts production plants in Poland and Iran. The bases in India and Brazil are being planned. In addition, its base in Urumqi is also in line with the "Belt and Road" strategic layout. XCMG also has SKD assembly plants in Central Asia such as Uzbekistan and Tajikistan. Its 51 first-tier distributors and 135 service networks are ready to expand into international markets. However, due to overseas economic slowdowns and other reasons, Xugong Machinery's overseas revenue share decreased from 22% in 2012 peak to 13% in mid-2014, but overseas gross margin was higher than domestic gross margin of 20.12%.

Sany Heavy Industry also has the advantage of overseas strikes. The company currently has four manufacturing R&D bases in India and the United States, and has six sales regions in Asia Pacific, Latin America, and the Middle East. The overseas region has achieved a breakeven. However, the UBS report pointed out that SANY's overseas gross profit margin is also lower than domestic gross profit margin. On the one hand, the overseas plant is small in size, and the supply chain is not completely completed. The cost is relatively high. In the future, as the output increases, its gross profit margin will increase. Gradually increased.

Under the dual advantages of national policies and cost-effectiveness of domestic construction machinery, overseas markets will drive a new round of growth in construction machinery. Its estimated export value will increase from the current US$19 billion to US$54 billion in 2020, and the export-driven industry. The income will also increase to US$10.5 billion, and the proportion of overseas exports within 5 years or 50% of the entire industry will exceed the current 28%.