Chinese machinery manufacturer makes headway in Brazilian market

RIO DE JANEIRO -- With global ambition, Chinese machinery manufacturer Sany Heavy Industry has quickened its expansion overseas in recent years.

Back in 2007 when Sany first arrived, Brazil's construction industry had been dominated by US, German and Japanese companies for decades.

Eight years later, however, Sany's crane products have managed to take at least 40 percent of the market share in Brazil.

How can a Chinese enterprise develop so fast in a distant market so different from China?

Xu Ming, regional general manager of Sany Latin American, gave his answer: providing high-quality, low-cost products as well as excellent and catered pre-sale and after-sale services for the clients.

"At the first two years, it was very hard," said Xiao Hua, marketing manager of Sany Brazil. "The most frequently asked question I got was 'Is Sony from Japan?'" Xiao recalled.

Like many other Chinese firms, Sany faced numerous challenges including complicated local tax laws and regulations, problems with labor unions and low-efficient negotiations.

"When we first arrived, we didn't have experience in working with local commission agents. Eight out of our first 10 agents were delinquent on payments. It took us almost three years to solve these problems and partnered with agents with good reputation," Xiao said.

In addition to choosing the right partners, knowing the local laws well and learning to negotiate with labor unions, Sany developed its effective pre-sale and after-sale service system, which helped a lot in winning clients in the market.

"To big machines like cranes, downtime means huge loss," said Xiao. But since the parts of those big machines are very expensive, the operators usually don't have standby parts in their inventory. If there is something wrong with the machine, they have to turn to the after-sale service. "The sooner we get there, the earlier the machine can get back to work, and the less the loss would be."

During the first three years, Sany only had three clients in Brazil. But in order to provide the best service, the company sent three engineers from China to where the clients were to monitor the operations of Sany's equipment.

"Sany's reputation was built in the past years in this way, one client by one client," said Xu. The company redefined the service standard of machinery industry with its advanced call service, GPS-locating and remote-examination-system, as well as the 48-hour-quick-response after-sale service in Brazil.

Excellent service and high-quality, low-cost strategy helped Sany gradually take root in the Brazilian market.

In 2014, Sany signed an agreement with the Sao Paulo investment bureau to invest about 300 million to build a new plant in Jacarei, close to the Dutra highway connecting Sao Paul and Rio de Janeiro, with an area of 560,000 square meters.

According to Yuan Jinhua, chairman of Sany Brazil, the first phase of the plant will be put into operation in early 2016, when the annual production capacity of Sany Brazil's large-scale construction machinery products is expected to reach 3,000 units, and sales to increase to 20 billion yuan ($3.2 billion).

The 2014 FIFA World Cup and the 2016 Olympic Games were huge booms to Brazil's construction equipment market. In 2013, Brazil became the largest importer of Chinese truck cranes, and Chinese crane enterprises claimed an 85 percent market share of Brazil in 2014, according to Sany.

Earlier this month, a China-backed transcontinental railway project was put into Brazil's national infrastructure program, Brazilian President Dilma Rousseff has announced.

Rousseff highlighted the importance of the proposed transcontinental train to improve Brazil's trade prospects. "By linking the Atlantic to the Pacific, Brazil gains special access to the Asian markets, and given international trade transactions, that represents something extremely strategic."

"With our excellent service and products with high quality and low cost, we will be a strong competitor for the construction of this project," said Xu.