Craning up to be a giant

Xiang Wenbo attributes Sany's success to overseas expansion, a solid domestic market and innovation. Goh seng Chong / Bloomberg

Construction machinery boss strong on concrete values as foundation to growth

Like its huge, record-breaking construction machinery, Xiang Wenbo has been taking the Sany Group to new heights over the past 20 years. Yet, in terms of achievement, he has set his sights much higher.

When he joined Sany in 1993, it was still a small basement welding workshop in Changsha, capital of his home province Hunan in Central China. Now the company, of which 50-year-old Xiang is president, is the country's largest construction equipment manufacturer and the sixth largest in the world, with revenues of 80.2 billion yuan ($12.6 billion, 10.2 billion euros) in 2011.

The company's founder and chairman Liang Wengen - ranked by Forbes magazine as the richest man on the Chinese mainland with wealth of $9.3 billion - credits Xiang for Sany's giant transformation.

"It was Xiang who proposed that Sany should take the construction machinery industry as its major business in 1993," Liang says. "Without his insight, we could not have gained today's achievement."

Against the advice of friends and relatives, Xiang quit his stable job at a State-owned machinery company where he had worked for seven years to join Sany.

Within a year or two of his joining, Sany became the first manufacturer in China to produce a high-pressure and capacity concrete pump. In 1998, at Shenzhen in Guangdong province, the company set a world record for producing a 301-meter-high truck-mounted concrete pump for steel-structured buildings.

Xiang and Sany continued to pump up the volume, and in 2007, a new record height of 492 m was set by a single pump during the building of the Shanghai Financial Center.

"These figures were miracles. When Xiang put forward the targets, lots of people, including many of our employees, doubted that Sany could do it. We also experienced many failures before we succeeded, but because of Xiang's persistence, we didn't give up and finally made the records," says Yi Xiaogang, executive president of Sany, who is in charge of technology development.

It is these combinations of ambition and innovation, insight and opportunism, patience and persistence that many say make Xiang a master of development strategy.

"To succeed among fierce global competition, one has to be both ambitious and practical. We have already made some achievements, and it just takes more time and patience to realize our goals," says Xiang, president of Sany Heavy Industry Co Ltd.

The latest major achievement is Sany's acquisition in January of one of Germany's leading concreting machinery companies Putzmeister for 360 million euros ($472 million).

Xiang was born into a farmer's family in Hunan province and went to Hunan University in 1980 to train as a machinery engineer, at a time when university education was out of reach for most Chinese youths.

In his strong Hunan accent, Xiang says that a bigger picture Sany wants to convey through the German deal is that Chinese companies have arrived on the global center stage.

"The deal has given Sany a foothold in foreign markets and boosted our overseas sales by combining Putzmeister's international brands, global sales and distribution network. It also reflects the rapid strides made by Chinese construction equipment manufacturers, not only in sales but also in branding," says Xiang, adding that more mergers or acquisitions are on the cards.

Putzmeister accounted for 40 percent of the global concrete machinery market in 2010 and about 90 percent of its sales came from the overseas market, according to Yengst Associates, an American market research group.

Xiang attributes Sany's success to overseas expansion, a solid domestic market and innovation.

"Overseas markets are really significant for Sany, and the revenue gained from them is expected to reach 10 percent this year, doubling that of last year, and 30 percent by 2015," he says.

Xiang says as part of Sany's global strategy, the company will focus on emerging markets. "Because of the eurozone debt crisis, the US and European markets may remain stagnant next year, while some emerging economies such as Africa and Latin America will see robust growth driven by the construction projects there," Xiang says.

"In the business world, a good entrepreneur should be decisive, strategic and perceptive, making sure no opportunity is missed. Overseas markets provide golden opportunities for us. There is absolutely no doubt that strength in overseas markets will determine which construction machinery companies occupy the top ranks."

To date, Sany is represented in more than 150 countries and regions. It has set up construction machinery research and development centers in India, the United States and Germany. And its products are exported to more than 110 countries and regions.

But Xiang admits that in its expansion, Sany is confronted with many challenges and misconceptions surrounding Chinese companies abroad.

"Entering a foreign market and finding the right people to manage the business is the toughest challenge for us.

"Foreigners think Chinese companies come and grab their market share and make their workers jobless. Such perceptions create more hindrance for us," he says.

But Xiang is adamant that Sany's globalization strategy is conducted in an open and inclusive manner. Since it acquired Putzmeister, for instance, Sany has not sent any Chinese employee to its German base to take any position. "We want to leave it where it is to maintain its features as a German company," he says.

Back in China, Sany is also making efforts to consolidate its position in the domestic market.

"The first five months witnessed a slowdown in the construction machinery industry, but since China is still in the middle of urbanization, construction and infrastructure development will continue to get top priority," Xiang says.

Despite the slowdown, the group's listed unit Sany Heavy Industry took in revenue of 14.68 billion yuan during the first quarter of this year, a 4.9 percent increase on the same period of last year.

However, Xiang still worries about his company's competitiveness in technology.

"Chinese construction machinery equipment is very competitive in price, but in terms of core technologies, we lag behind the competition," he says.

For this reason, the company has increased investment in recent years in developing key components and parts using its own intellectual property rights. Sany so far has applied for 1,560 patents, with more than 862 approved.

About 5 percent of Sany's sales revenue goes toward research and development, and the group now has a R&D team of almost 10,000, one-sixth of its total workforce.

Contact the writers at huhaiyan@chinadaily.com.cn andfengzhiwei@chinadaily.com.cn