2021 saw sales of construction machinery rise by 20.8% to a total of $232.7 billion for the world’s fifty largest producers in the sector. The latest Yellow Table ranking contains three Chinese companies in the top ten.
Fortune Business Insights believe that the market will increase by more than two-thirds on 2020 figures by 2028. Much of this growth will come from Asia and Africa due to population growth-associated development.
The Asia Pacific market is expected to become the dominant market in the sector and China is likely to emerge the winner. Aiding China’s growth in the sector is the One Belt One Road scheme which emphasizes large-scale infrastructure schemes.
Although the market leaders currently control around 40% of the world market there is much regional bias with producers tending to dominate their own backyards. According to Chris Sleight, Managing Director, Off-Highway Research:
“The biggest market for any of the indigenous Chinese manufacturers is China. That is not unusual – European manufacturers sell the most machines in Europe, American companies sell the most in America etc.”
Sleight adds that almost all the equipment sold in China was produced domestically either by Chinese or foreign producers. Exports from both have increased and now stand at around a quarter of all production. Since the late 2000s exports have steadily risen according to Sleight:
Exports have increased, but the health of the home market is still the defining factor for indigenous OEMs.
Based on the growth of the domestic market a number of large players have emerged.
Sany has its roots in a private welding material factory set up in 1986 which was renamed Sany in 1991. In 1994, Sany independently developed China’s first high-pressure, truck-mounted concrete pump with a large displacement. Today the company is headquartered in Changsha, the provincial capital of Hunan Province. The company is the fourth largest in the world by sales and has considerable operations in the US.
Sany is particularly strong in the area of cranes, both truck mounted and crawler cranes.
According to Shi Yang the Director of Research at Off-Highway Research,
“In its current product portfolio, the most important line is the excavators. Sany was the No,1 producer in the world in 2020-2021. It is indeed an important player in the mobile crane sector as well, which is however in second place next to excavators and falls behind XCMG in mobile types and Zoomlion in the tower type.”
Sany however operates in many areas some of which are more unusual than others; along with lines such as mining and tunneling equipment the company also produces wind turbine platforms.
More than 7,000 employees are involved with R&D and the company invests 5-7% of annual sales into these activities every year.
Xuzhou Construction Machinery Group (XCMG) is one of the oldest Chinese producers in the industry tracing its lineage back to 1943. Headquartered in Xuzhou in the north of Jiangsu Province the company is a large state-owned enterprise with multiple factories and product lines. During the 90s a number of joint ventures with companies including Caterpillar and Liebherr aided XCMG’s growth. This helped propel the company to be the third largest in the industry worldwide.
Today the company boasts sales of US$18.1 billion of which more than US$1.6 billion were exports. Products run a wide range of lines including tunneling equipment, road construction machinery, mining machinery, and piling machinery. More surprising lines include fire-fighting equipment and sanitation vehicles. Significantly XCMG produces its own lorries, rather than buying them in, for use in applications such as concrete machinery. The company’s HANVAN range of trucks was introduced back in 2014. The company’s XGC88000 is the world’s largest crawler crane with the largest lifting capacity.
Founded in 1992 in Changsha, Hunan Province, Zoomlion grew out of a subsidiary founded in Beijing in 1956. Listed on both the Shenzhen and Hong Kong stock exchanges the company grew from mergers and acquisitions of smaller companies. Significantly Zoomlion made early overseas expansion with the purchase of Powermole in the UK and Italian producer Compagnia Italiana Forme Acciaio SpA in the 2000s.
The 2021 Yellow Book saw Zoomlion fall from fifth place to seventh. The company had risen significantly in 2020 due to China being one of the few resilient markets in the face of the COVID downturn. As other markets recovered in 2021 the company saw its ranking slip with sales of US$10.4 billion. Zoomlion concentrates on the manufacturing of engineering and agricultural industry equipment. With an R&D team of more than 6,000 people, it launches 200-plus products globally every year. Currently, Zoomlion sells to more than 80 countries.
This year sees LiuGong celebrating the 20th anniversary of its globalization. Founded in 1958 in Liuzhou, Guangxi Province, the company became China’s first publically traded construction machinery producer when it was listed on the Shenzhen stock exchange in 1993. Helping drive the company’s success have been joint ventures with various western companies. Today these include JVs with transmission manufacturer ZF and engine producer Cummins.
LiuGong is the world’s largest manufacturer of wheel loaders. Today the company has 20 manufacturing facilities and employs 17,000 people. The company sells its products in 100 countries and offers a large range of products for applications in sectors including agriculture, mining, ports, general construction, and demolition.
Although Shantui in its existing form began in 1980 the company traces its roots back to Yantai Machinery Factory founded in 1952. Headquartered in Jining, Shandong Province, the company is a publicly listed state-owned enterprise.
The company is known for its bulldozers and for sixteen years has been China’s largest producer of them; currently annual production capacity of bulldozers is more than 10,000 units. Helping Shantui keep this leadership has been innovation. This includes the production of the world’s first 5G remote-controlled high-power bulldozer in 2019. The company is also working on electrified products including the SD17E-X electric bulldozer introduced in 2020 – Shantui claims the unit reduces operating costs by more than 60% compared to a fuel-powered equivalent. Shantui also produces equipment for use in areas such as mining and road construction.
The industry generally quite prices sensitive, however, producers at the top of the industry have more leeway. According to David Meade, Head of Procurement and Projects, Camamach:
“Tier 1 companies are increasingly competing on brand, quality, and service but the price point is still below international manufacturers whereas for tier 2 manufacturers and below price is the major selling point.”
In the future, we’re likely to see a shift towards greener machines such as the electrified products being introduced by Shantui. According to Sleight, the change is likely to be slow and dependent on purchaser circumstances:
“There has been some development of battery electric mid-sized wheeled loaders in China, which is a high volume product in the country. However, the appeal is limited to sites such as mines and quarries where a charging infrastructure can be installed cost-effectively as a long-term investment.”