XCMG: ‘We have much more room to grow outside of China’
17 May 2023
China-based construction equipment manufacturer XCMG has more room to grow overseas and regards North America as a key market.
That’s according to one of the company’s top executives, who was speaking to International Construction.
The comments from Jiansen Liu, vice president of the company and general manager of the XCMG Import & Export Co, come as the OEM posted record-breaking international sales earlier this week.
In the first quarter of 2023, sales from markets outside China exceeded 10.6 billion yuan (US$1.5 billion) for the first time and the company declared that internationalisation was its “firm strategic focus”.
Liu told International Construction, “Our overseas market share is still pretty low, considering we are the third-largest OEM in the world.
“We still have big room to grow in our overseas business. It has already grown very quickly but Caterpillar and Komatsu are still far ahead. It is only for us to catch up with our peers. It doesn’t mean that we aren’t very strong already but there is still more room to grow.”
Liu said that XCMG’s sales in North America were already “beyond expectations” and the business was seeing strong demand.
“The North American market accounts for 22-23% of the whole market globally so an important OEM like XCMG can’t ignore it – we attach much importance to growth in North America,” Liu said.
Acknowledging that North America is also a “high-end market” Liu pointed to the fact that the Chinese OEM has recently set up an R&D centre in the region, partly to develop new technology but mostly to modify its products to meet local demand.
The business claims to have increased sales volumes in North America by 230% year on year in 2022, having first entered the US market in the 1990s when it first shipped a batch of 100 CA25 road rollers to the country.
Liu said stronger supply chains would be critical to further growth. Over the past several years, the business has built its operation to cover a manufacturing base in Pouso Alegre in Brazil, sales companies, finance and leasing businesses, spare parts centres and a distribution network that covers key regions of the US.
Emphasis on innovation
Meanwhile Liu stressed the importance of continuing to innovative. “If an OEM is to be competitive, they must always be at the front line of science and innovation, otherwise they will not survive.
“Even in the Stone Age, 5,000 years ago, you needed a sharp stone,” he said.
In its latest trading update, the OEM revealed that in 2022 it invested 5.8 billion yuan (US$831.5 million) into R&D, a 6% increase year-on-year, and it accounted for 6% of total revenue for the year, compared to 4% in 2021.
XCMG had 5,767 R&D personnel as of the end of 2022, a 15% increase year-on-year, making up 21% of the total number of employees.
As well as acknowledging the importance of alternative ways of powering machinery, such as battery electric and hydrogen, Liu was particularly enthusiastic about the potential for automation.
“I hope we can liberate a lot of operators’ jobs [with automation]. The operator can be free to concentrate on more sophisticated skills and give their labour more value, instead of just holding the wheel while a loader is running,” he said.
“Eventually machines will be able to operate themselves, collect information with sensors and calculate according to the worksite environment whether to move or to just stand there. Eventually XCMG will become a robotics company.”
Recovery in China
And Liu predicted a strong recovery in the construction market in China in the second quarter of the year, with some classes of machines like cranes already starting to stage a recovery in the first quarter of 2023.
“That gives a lot of confidence to the Asian market, because China has been a real engine of growth,” he added.
The company is projecting a 10% revenue growth in 2023, based on overall industry, domestic and international trends.
XCMG currently sits third in International Construction’s annual Yellow Table, which ranks construction equipment OEMs in terms of size by annual revenue. The latest Yellow Table is due to be published later this month.