Sany is defensive of low profits

Sany America, the US-based subsidiary of Chinese construction machinery maker Sany Heavy Industry Co Ltd, said it will become profitable this year, after the Wall Street Journal reported that the company's market share in the US was "minuscule".

Zhou Fugui, senior vice-president of Sany, told Shenzhen-based Securities Times on Thursday that the Changsha, Hunan province-based machinery maker aims to achieve sales of 500 million yuan ($80 million) in the US market this year, which would make the company profitable.

He said Sany America's sales were almost 300 million yuan and the company came close to breaking even.

Zhou's remarks came just three days after the Wall Street Journal reported that Sany "has little to show for that investment (of $60 million)", with "only a few hundred excavators" sold in the US market.

Sany, the sixth-largest construction machinery maker in the world by revenue, began investing in the US in 2007 and has a factory in Peachtree City, Georgia. The company's US investment was between $50 million and $60 million, Zhou said.

He also said Sany's US business is more focused on cranes, and that excavators are only a small part of its business.

Jack Tang, general manager of Sany America, said that the company sold 90 cranes at a price of about 70 million, but the excavator business was just at the starting stage. A "minuscule" market share is natural at this stage, he said.

The company has been facing challenges in the domestic market as China's economy growth slowed down in the first half of 2012, and infrastructure construction was postponed or canceled.

In the first three quarters of last year, Sany, which is listed on the Shanghai Stock Exchange, reported revenue of 40.75 billion yuan, 1.4 percent lower than the same period last year.

Its operating profits also shrank sharply by almost 30 percent to 6.68 billion yuan, which was mainly attributed to the costs of its acquisition of German concrete pump maker Putzmeister Holding GmbH. The $500 million deal is regarded as a major breakthrough in the Chinese company's globalization.

Xiang Wenbo, president of Sany, said on his micro blog that in the past years, Sany America has mainly focused on product development, talent recruitment and after-sales services, and in this sense profitability is not a top priority.

"The value of Sany America cannot be weighed in dollars," Xiang said. "One of its functions is to look for international talent. For instance, there are dozens of personnel introduced from the US, including our chief engineer on the crawler crane."

The road to internationalization for Sany America has not been smooth, he admitted. However, he noted that "after entering the Chinese market, many foreign enterprises have also been losing money for years".

Zhou told the Security Times that its star product, the crawler crane, which was developed by US experts, has a nearly 15 percent market share in the US. However, the company's goal is to be the top supplier in the US market with 30 percent market share by 2015.

"The target markets for Sany's internationalization in the future are Europe and the US," he said. "Only if we occupy those markets well, can our internationalization be stronger. It's always bitter first and sweet later."

China Daily