XCMG eyes new model for momentum

Chinese construction machinery manufacturer Xuzhou Construction Machinery Group is aiming to lead industrial chain development from the nation's "dual circulation" strategy, said its chairman.

Amid global uncertainties, including the COVID-19 pandemic, XCMG is keen on seizing new opportunities emerging from the new development pattern that allows domestic demand and external demand to complement one another.

"Although the overseas market is challenged amid the pandemic, the sizable market scale of the domestic market is bringing huge opportunities for Chinese construction machinery producers," said Wang Min, group chairman.

The global construction machinery sector has been on a downward trend since last July and some developed markets have seen a sales drop of more than 20 percent in the period between January and August. In contrast, XCMG recorded a historic growth of more than 30 percent year-on-year in sales revenue, according to Wang.

As the largest construction machinery market, China accounted for more than 60 percent of global sales of loaders and excavators, and 70 percent of cranes, according to public information.

Headquartered in Xuzhou, Jiangsu province, XCMG is a leading domestic machinery manufacturer, having the largest market share in cranes, road machinery, piling machinery and other equipment. Its sales of aerial work platforms soared 104.6 percent year-on-year in the first six months, said Lyu Juan, an analyst at CITIC Construction Securities.

Analysts noted the impact of COVID-19 has been merely temporary. As the contagion is being contained, a recovery in demand for construction machinery and equipment is expected, said Xu Hao, an industrial analyst at Minsheng Securities.

Along with the promising domestic market, the overseas market is equally important.

Considering the growing competitiveness of Chinese construction machinery manufacturers and their comparatively low market share in the global market, Lyu sees an acceleration of XCMG's overseas development in the future.

"The global market potential is so great that XCMG should not miss it," Wang said.

He added that less than 30 percent of XCMG's revenue is currently generated from overseas, and the group is looking to raise its overseas revenue to 50 percent in the coming five years.

In fact, regardless of the ongoing COVID-19 pandemic and global economic uncertainties, the multinational heavy machinery maker is sticking firmly to its internationalization strategy. So far, the construction machinery maker has established more than 10 overseas manufacturing bases, and has exported its products to 187 countries and regions worldwide.

Construction machinery holds a core position in the manufacturing sector and plays a vital role in the manufacturing industrial chain, wrote Li Liang, an analyst specializing in machinery research at China Galaxy Securities.

XCMG has recognized the significance of building a complete supply chain in improving the country's construction machinery industry's competitiveness.

In the past few years, XCMG's optimized industrial chain has attracted more than 2,000 enterprises and over 500 distributors, and created up to 40,000 jobs at its Xuzhou headquarters since January, Wang said.

As a result of its efforts, XCMG has already achieved its goal of raising its global ranking in the construction machinery manufacturing sector to among the top five this year, and it is on track to make the top three by 2025 as the group forges a world-class enterprise with great competitiveness.

The group has held the top position among China's construction machinery manufacturers for 31 consecutive years, according to a ranking released by KHL Group on the world's Top 50 construction machinery manufacturers in 2020, and its global ranking moved up two places to fourth from a year ago, only behind Caterpillar, Komatsu and John Deere.

"The world as a whole needs construction machinery and this will always be a sunrise industry," Wang said.