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Overseas Business Equals Big Projected Revenue for LiuGong

Due to LiuGong’s increased efforts and achievements in globalizing the company during the past dozen years, frequent influxes of foreign visitors has become the norm.

Fri September 11, 2015 - National Edition
Construction Equipment Guide

The company’s overseas sales volume accounts for one-third of LiuGong’s total revenue, and will undoubtedly contribute greater profits in the future.
The company’s overseas sales volume accounts for one-third of LiuGong’s total revenue, and will undoubtedly contribute greater profits in the future.

When major activities are in operation, more international visitors than usual will appear at the LiuGong International Industrial Park in Liuzhou, a southwestern city in China. They range from global dealers in the construction equipment industry, to end users from across the world. Due to LiuGong’s increased efforts and achievements in globalizing the company during the past dozen years, frequent influxes of foreign visitors has become the norm.

This internationalization and deep marketing network is evidenced by the fact that LiuGong has distributed its products to more than 130 countries, from the developed to the developing. LiuGong has directly engaged in competition with global giants, penetrating the traditional markets of North America and European enterprises with its lines of heavy equipment.

Zeng Guang’an has driven the success of LiuGong’s internationalization, and is expecting its operations to continue growing on a global scale. At the end of 2014, he was promoted to chairman of LiuGong Group and Guangxi LiuGong Machinery Co. Ltd., allowing him to focus on the strategic development of the company and the industry within the Chinese and global markets.

“China’s construction machinery market has been in decline for several years, but it is poised to change. LiuGong must adjust the position of its force, focus on the key point and open a brand new field,” said the chairman.

A series of corporate and management changes within the company have been in motion throughout 2014 and 2015, with top personnel being handed new responsibilities and roles. Manufacturing systems specialist, Yu Chuanfen has become the president of LiuGong Machinery Co. Ltd.; Vice President Hunang Haibo directly manages LiuGong’s core wheel loader business department and excavator business; Vice President Yu Yajun is responsible for marketing processes and Vice President Luo Guobing is in charge of overseas markets.

Outside China, LiuGong is building strong bridgeheads. Englishman Howard Dale has been positioned as vice president of LiuGong Dressta Machinery Co. Ltd. in Poland, and chairman of LiuGong Machinery Europe B.V., having previously worked with Case Corporation for several years.

LiuGong has transferred the product line and the capacity of its Tianjin base to Changzhou, which has geographical and supportive benefits. Meanwhile, R&D and the manufacturing of high-end products is occurring in its Liuzhou base, including heavy-duty loaders and new graders.

On June 15, 2015, LiuGong called a large and high-end product launch in Changzhou, the core base for LiuGong’s strategy in the East. Here, LiuGong successfully displayed the 8t and 12t H-Series wheel loaders; the 48t, 50t and 70t E-Series excavators; the TC550A and TC250A5 cranes; and the TD40E bulldozer. At the same time, 60 LiuGong excavators were distributed to clients on the American continent.

Having begun its internationalization strategy in 2003, LiuGong has become an example to other enterprises in the Chinese CE industry, demonstrating its advantages in both overseas sale volume and the ratio of export products compared to its competitors. With such sustained and stable status and acceleration, and with the further deepening of overseas deployment, Zeng Guang’an predicted, “in 2020, international business will account for 40 percent of LiuGong’s revenue.”

In the early years, this strategy drew interest from a number of overseas tycoons. Zeng Guang’an remembers one example in 2005, when the president of a world-leading European corporation called on him with the intention of acquiring LiuGong. However after this communication, and to the surprise of many, they gave up on this intention: “LiuGong has grand visions and ambitious goals, and we were determined to become a world-class corporation by ourselves, rather than to be acquired,” explained Zeng.

The rejection of acquisitions originates largely from the personality and character of Zeng Guang’an himself. Without concealing his ambitions, he hopes LiuGong and China’s CE manufacturers can be “immortal” in the industry, rather than regional representatives of a global industry that depend on the markets of developing countries.

The company’s overseas sales volume accounts for one-third of LiuGong’s total revenue, and will undoubtedly contribute greater profits in the future. In fact, the overseas markets for some units — such as wheel loaders and cranes — have displayed greater development than in the domestic market.

These successes are founded upon a deep understanding of and precise judgements in the global market. LiuGong’s most senior members have tirelessly gathered information from across the world to help inform its strategical moves. It is a strategy that Zeng Guang’an feels will become the new normal for the future development of Chinese corporations, but one that requires a long-term view. Zeng Guang’an knows that “the effect of LiuGong’s international development is not likely to burst in a short term. But once it bursts, it will bring us an unprecedented success.”

One example would be LiuGong’s experience in India. Before the Indian manufacturing base went into operation, LiuGong conducted a two-year in-depth feasibility study, with Madhya Pradesh eventually chosen for its location. In July 2009, the Indian Base went into operation after one year’s preparation and construction, making LiuGong the first Chinese construction corporation to set up a plant in India. At the opening ceremony, the Chief Minister of Madhya Pradesh asked Zeng Guang’an why he chose to set up the plant in India. Zeng Guang’an, painted with India’s traditional red symbol on his forehead, said: “India is a market that possesses tremendous demand potentials and scales in the global context. In India, LiuGong is the leading force in the 5t-plus wheel loader market with a market share of over 60 percent; 7 out of the top 10 contractors in India are LiuGong’s clients. In the future, India will become one of the backbones for LiuGong’s global development.”

LiuGong’s business in the advanced markets of Europe has developed too.

Despite the Chinese market following a downward trend in 2012, LiuGong invested more than RMB 300 million to acquire HSW (Huta Stalowa Wola) Dressta in Poland. More than a year later, LiuGong Poland acquired all assets and technologies of ZZN Transmission Plant, a world-class drive system manufacturer and the core supplier of US General Electric Company.

Poland, where HSW Dressta is based, is the gateway for LiuGong to succeed in western Europe, where demand is becoming diversified and Chinese products are growing in acceptability and recognition. In addition, Poland is extremely cost-effective for Chinese corporations entering Europe.

“With the synergistic effect from these aspects, the European business through HSW will bring LiuGong major breakthroughs in the European and American markets,” said Zeng Guang’an.

The long takeover process in Poland gave Zeng Guang’an and LiuGong sufficient time to think about the subsequent integration framework, strategies and courses of actions. Wheel loaders and excavators at the LiuGong Poland base were promoted to the market from the product line in just three months after the official signing of the agreement. Since then, with the further functioning of China-Poland synergistic effect, the products of LiuGong Poland have earned recognition in both the European and American markets.

Alongside the achievements in Poland, LiuGong has constantly enhanced its presence in Europe through other channels, including attendance at the INTERMAT exhibition, and by collaborating with dealers in Netherlands and Russia to frequently exhibit its products.

LiuGong’s most recent major global action was to establish a manufacturing plant in Brazil in March 2015, in an effort to penetrate the burgeoning South American market.

After more than ten years of traveling around the world, Zeng Guang’an is as enthusiastic as ever. Morocco, the first destination of LiuGong “going overseas,” is regarded by Zeng Guang’an as the blessed place for internationalization.

The chairman of the biggest contractor and LiuGong’s first local agent in Morocco was 80 years old when he met Zeng Guang’an, but still lived the life of a man half his age. Paying a visit to the chairman 10 years later, Zeng Guang’an found that the old man in his nineties still kept the same life and working habits. The chairman told Zeng Guang’an to “hold steadfast to your conviction and go for it.” Zeng Guang’an said: “If other people have confidence in us, we must trust ourselves and make every effort to do our best.” It is this notion that continues to drive LiuGong’s development into one of the world’s leading manufacturers of construction equipment.

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