LiuGong builds a bigger global vision

In 2009, the domestic sales of loaders dropped by 12 percent because of the influence of the global financial crisis. LiuGong saw a rise of 4 percent in sales, the lowest in recent years.

"The time when construction machinery enterprises could rely on national macro-control policies is gone forever. We must be more responsive to market changes," said Wang.

Wang felt the looming crisis for construction machinery manufacturers as early as November 2008, when the central government's 4 trillion yuan stimulus package brought a sharp rise in investment in fixed assets. In 2010, the sales revenue of LiuGong amounted to more than 20 billion yuan.

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Most construction machinery makers in China increased their input and expanded their production capacity under the stimulus package of the central government.

"Some enterprises built big workshops even larger than 100,000 square meters. The (later) redundant construction sowed the seeds for future problems," said Wang.

From the second half of 2011, the construction machinery market in China started declining. With no more stimulus policies in 2012, the Chinese construction machinery industry's overcapacity became evident, and vicious competition developed.

"LiuGong only produced loaders before and gained its forklift truck and crane businesses through mergers and acquisitions," Wang said.

"The competition in the loader market at home was so fierce that LiuGong diversified its product portfolio to reduce risks. LiuGong sells its services separately from its products. We cannot put all our eggs in one basket."

Analysts believe the global construction machinery market witnessed its most difficult period from 2011 to 2013. LiuGong predicts a rise in sales in 2014 above the average national level and equal to what it was before. How well it will do will be determined by market changes this year.

"China's construction machinery manufacturers will enter a stage of merging and integration in future years. Compared with the past, the Chinese construction machinery market has entered a comparatively mature development stage," said Zeng.

"The rise of China's construction machinery will decline to a rational speed, and Chinese manufacturers will seek new export business opportunities from developed countries and emerging markets."

China produces 49 percent of global construction machinery in terms of numbers now, yet Chinese enterprises earn less than 20 percent of the profit in the global market.

"People always equate 'Made-in-China' with low prices and low quality," said Zeng. "It is time for Chinese enterprises to correct the misunderstanding by attaching more importance to research and development, innovation, brand-building and after-sales services. The quality and reliability of 'Made-in-China' will improve faster and faster."

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