Electric, agile, and global: LiuGong’s new president sets sights on growing sales to rental firms

Once a modest regional player offering a limited range of wheel loaders, LiuGong has grown into one of China’s most formidable names in construction equipment manufacturing.

Over the past decade, LiuGong’s revenue has more than doubled, from US$1.7bn in 2015 to US$4.2bn, ranking 18th in the latest Yellow Table.

For Luo Guobing, the company’s newly appointed president and vice chairman, charged with continuing this trajectory, one of the company’s key priorities must be to grow its share of international revenue to a target 60% from its current level of 52%, especially in mature markets like North America and Europe where rental customers remain the key customer base.

Mature markets

“When we talk about total values, they are very big markets and should be part of our business,” he tells Rental Briefing. “The mature markets also have a requirement for a high standard of technology, that can help us keep growing.”

Profit margins in these regions are also stronger, and performance there can boost the company’s image globally.

For Luo, who joined LiuGong in 1994, but in May this year stepped up to replace long-term leader Zeng Guang’an, one of the key ways in which LuiGong plans to differentiate itself is through tech.

LiuGong’s new president and vice chairman Luo Guobing (left) with retired CEO and chairman Zeng Guang’an (Image courtesy of LiuGong)

“I am actually very optimistic about the automation and the semi-automation of products and technology,” he says. “This is the future not only because the technology is advancing but because it is connected to the labour shortage and can offer safety and efficiency improvements. There is a lot of cost pressure, especially for high labour cost countries, so this will support its development.”

Nonetheless, Luo says that in order to attract rental customers, the emphasis must be on strong customer support, brand trust, localised production and service, and improved product quality.

At Bauma this year LiuGong said announced regional hubs in Italy, France, and Germany, which will support localised R&D and customer service. The company said it was expanding its dealer network in Europe, as well as strategic partnerships in the rental, aggregates and mining sectors in an attempt to provide greater customer support in the region.

LuiGong reached a series of agreements during Bauma, including equipment sales to Rental Group in Norway, and an expansion of its dealer network in northern Germany with the appointments of SI Consulting and Baima Vermiet- und Handels.

LiuGong’s commitment to innovation is backed by increased R&D spending—from 3.5% of revenue to 4% in recent years. “We have world-class R&D facilities – we spend lots of money on them. These are not only in China – we also have international R&D centres,” says Zeng Guang’an, who led LuiGong from 1999 until this year and remains a senior consultant to the company.

R&D spending

“We started from low levels compared to European, Japanese, and American manufacturing 20–25 years ago,” says Zeng. “But in the last ten years, we spent a lot to invest in intelligent autonomous manufacturing systems, especially for the big wheel loaders and excavators, and some components.”

Joint ventures with suppliers like ZF, Cummins, and Rexroth are central to LiuGong’s quality strategy. “These joint ventures are very important. They don’t only provide for LiuGong, they provide for the industry,” Zeng says.

LiuGong has now launched electric machines in about 50 countries. “I think we have played a major role in changing the world’s industrial technology. We have good cooperation with components suppliers to build a worldwide component system for electric equipment,” says Zeng.

He continues, “LiuGong will accelerate the new technology development, especially for electric systems. We almost have a full range of electric machines. There is a package to support the customers already, but still we need some final developments to create more advantages for the electric machine technology and intelligent products.”

LiuGong unveiled its T-Series wheel loaders at Bauma in Munich, Germany (Image: LiuGong)

“If we think, ‘Oh, we are the leaders in electrification technology’, then maybe next year, you will fail. So we have to keep investing, keep moving fast, and have more innovation in these areas to keep LiuGong as the leader in the global market,” he says.

He admits that fully automated products can currently only be used for very specific applications and situations but further development is likely to see intelligent products and systems proliferate.

One application where automated processes are increasingly being used is the mining sector which LiuGong describes as a strategic growth area.

“Mining equipment is a difficult product group but we already have a good foundation and I think Luo will continue this strategy to become a leading manufacturer in the next ten years,” says Zeng.

The company is also developing articulated dump trucks to complement its existing rigid and wide-bodied trucks.

But despite LiuGong’s clear plans to increase its focus on Europe and the USA, the company concedes that the increasing introduction of global trade tariffs is likely to have an effect on sales.

“Every government is starting to focus on the regional,” says Zeng. “The US is fighting with every country and has increased tariffs, they have the anti-dumping policies. So the market will change. In Europe, there is something similar in terms of actions against other countries’ manufacturers. The emerging markets are not as stable as Europe and North America but markets like India will keep growing. I think this will have a lot of influence on our industry.”

The company sees promising opportunities coming up in some emerging markets including India, the Asia Pacific region, and Africa.

Looking ahead, Luo expects moderate global growth of 3–5% per year, driven by emerging markets like India, Latin America, and Southeast Asia. In mature regions, replacement cycles should help revive demand.

He also points to evolving customer expectations. Intelligent machines, lifecycle support, and local responsiveness are increasingly non-negotiable—especially for rental.

“LiuGong will speed up the R&D overseas, as well as manufacturing and marketing and sales. And we will have some capital support to do that,” says Luo.

Local talent

“It is very important to use local suppliers and local talent. Currently, 24% of our people are from outside of China. I think that will increase to 40%,” he adds.

In India, for example, the company employs 1,000 people but just seven of those are from China. Mr. Luo met with representatives of the Indian government earlier this year and notes that there is strong support for Chinese investment in the country. “We are training a lot of skilled people and have very good cooperation with the government. Of course, we have provided a lot of tax to support the country’s development too.”

Domestically, LiuGong sees signs of stabilisation in the domestic Chinese market after years of volatility.

“Machines, especially small machines, are a very effective way of reducing the labour requirement,” says Luo. “This year, the demand for mini excavators and other smaller machines has been very good. I think this kind of situation will keep going.”

Competition within China remains intense. “Some companies are doing very well. Some have problems. I think companies that have the global rollout like LiuGong will get better. At the same time, those who depend on the Chinese market will have some problems.”