Firm building a solid foundation

What makes the subsidiary option more viable is that it enables companies to alter their marketing and distribution strategies quickly, according to fast-changing market needs, he said.

"Shantui took the latter option so that it could reach out to more customers and also strengthen and be closer to the market and its customers in Africa. The South African subsidiary is much like the firstborn child of our global subsidiary network," he said.

"Success is ultimately all about being present in the right markets with the right products and at the right time.

Decoding China's investment in Africa

Setting in train Africa's railways

The parent company has 10 subsidiaries around the world. Three of them are in Africa, with Ghana and Kenya being the other two locations on the continent. The South African subsidiary is based in Johannesburg and covers the Mozambique, Namibia, Botswana, Zimbabwe, Zambia and Madagascar markets.

"Apart from sales, the subsidiary also functions as a center for support, services and training," said Yue Peng, the representative for Shandong Shantui Construction Machinery in South Africa. Yue said that the subsidiary accounts for half of the parent company's overseas revenue and has more than 14 South African employees. The subsidiary imports construction machinery and small-scale mining equipment from China and distributes these products in the local markets.

"Our main goal is to be a key player in the market by setting up a proper distribution network."

While setting up the distribution chain is still top priority, it does not mean that Shantui is skimping on innovation or quality, Chicken said.

The Chinese company is now the third-largest bulldozer supplier in South Africa, after Caterpillar Inc from the United States and Komatsu Ltd of Japan.

In excavators, it is pitted against brands such as Hyundai Motor Co Ltd of Japan and Doosan Corp from South Korea, and in the loaders market, against Chinese peers like Guangxi LiuGong Machinery Co Ltd and Shandong Lingong Construction Machinery Co Ltd. The company also faces tough competition from German companies in the construction machinery sector.

"Though the competition is stiff, we have some inherent advantages in South Africa. The dealer network has already provided a solid platform for us to build upon," he said.

"We did not come with zero machines. Rather, we had several machines in the market already. The other advantage is that we are here as a fully owned subsidiary. So we have common objectives, strategies and purposes with the parent company. Dealers, on the other hand, are interested in making profits for just themselves," Chicken said.