Major factors boosting China's equipment industry's overseas expansion

16:00, December 14, 2009      

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China's heavy equipment industry is booming in overseas markets. This is due to political, economic and other factors before and after the financial crisis. Reporter from Economic Information Daily learned that the following three main factors have contributed to this:

First, moderately developed countries and the Middle East region increased demand for heavy equipment. Decrease in international demand for the equipment industry mainly comes from Europe and the United States. The potential for growth in demand for heavy equipment from China in these countries has been small. While in Brazil, India, Iran, Turkey and other countries, because of their construction, mining, the need for heavy equipment is strong, and orders from these countries are on the rise.

These countries are mostly mid-market, and the increase in demand from Chinese equipment stems from a variety of factors:
1. Political factors. Such as Shanghai Zhenhua Heavy Industry (Group) Co., Ltd. (ZPMC) and Iran signed a large order worth 2.2 billion U.S. dollars, which is due to the United States and other countries having imposed economic sanctions against Iran. Iran preferred products from European and American industry leaders in procurement of marine engineering equipment, but because of sanctions, their procurement was constrained. Product quality and corporate reputation of Zhenhua Heavy Industry have been recognized by Iran's clients, so this year they signed the world's largest overseas orders.

2. Building needs. Reporters learned that this year, Jiangsu Rongsheng Heavy Industries Group Co. Ltd. signed four ore ship orders with Brazil. It is because Brazil has a new mine, and requires large amounts of sand transport ships, but Brazil could not carry out such projects, so they urgently need a large number of new vessels.

Board chairman Xu Jianguo of Shanghai Electric Group co., Ltd told reporters the reasons why the Middle East market favors China's heavy equipment. In the Middle East market, the Western mainstream brands have relatively weak control of their market, and it is easier for Chinese products entering the market. "First of all, the Middle East markets are mid-market, product prices have some room for improvement, coupled with that they have a certain trust in the quality of Chinese products, so for Chinese enterprises there are more profits. Second, selling products to the mid-markets have less trade frictions and trade environment is relatively good."

China equipment industry's reputation is rising significantly overseas. After decades of development, the Chinese heavy equipment industry has made great progress. In the he past, when mentioning heavy-duty machines people think of Italy, Germany and Japan, but China's heavy equipment is now winning the world's recognition and its reputation is improving significantly.

Third, the financial crisis makes the price advantage of China's heavy equipment more apparent. The purchasing power of foreign enterprises has decreased in varying degrees during financial crisis; in this case, the price advantage of the Chinese equipment becomes more apparent. "With the shortage of funds, the price advantage weighs more," Liu Yi from Northern Heavy Industries Group Co Ltd (NHI) said. Northern Heavy Industries Group and Companhia Vale do Rio Doce (CVRD) from Brazil signed a big contract this year. The successful bid mainly comes from the fact that products of Northern Heavy Industries Group are about 20 -30 percent cheaper than the international prices.

By People's Daily Online
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