Equipment makers look west

Zoomlion Heavy Industry Science & Technology Co Ltd equipment on display at a trade show in Shanghai last year. The company recently acquired M-Tec, a German leading dry mortar producer. Provided to China Daily

Chinese firms make overseas acquisitions as domestic market becomes saturated

Despite the economic slowdown and overcapacity issues, China's market for construction equipment will likely recover from lackluster growth, as major companies in the sector have been busy with overseas acquisitions, industry insiders said.

The latest example of Chinese machinery makers expanding overseas amid a tough domestic market is Zoomlion Heavy Industry Science & Technology Co Ltd, one of the country's largest machinery makers, which has acquired German leading dry mortar producer, M-Tec.

Financial details weren't disclosed, as the deal is still subject to regulatory approval. The deal was finalized on Dec 20, according to a statement released by Zoomlion on Wednesday.

"Our company is going through an industrial transformation and upgrading, and the purchase of the Neuenburg-based M-Tec will help the company to complete that process, bringing in a new growth engine in the dry mortar equipment sector," said Chen Xiaofei, vice-president of Zoomlion, which is listed on the Hong Kong and Shenzhen stock exchanges.

Chen noted that there's huge demand in China for dry mix mortar - a new and eco-friendly construction material, which is already widely used in the United States and Europe - as the nation is building more "green" projects.

China's demand for dry mix mortar is expected to rise to 190 million tons by 2017, with the annual growth of sales of equipment for dry mix mortar plants estimated at more than 70 percent by then, experts said.

The two companies have already entered into an agreement, but the delivery of equity is still underway, said He Wenjin, vice-president of Zoomlion's investment and financing department. He said he expects the deal to be finished in March.

In the first three quarters, the net profit of State-owned Zoomlion, which is based in Hunan province, fell 45 percent to 3.80 billion yuan ($620.90 million).

Germany-based M-Tec, which was founded in 1978 and sells its products in 55 countries and regions around the world, was unable to be reached immediately for comment.

Related readings:

Zoomlion speeds up overseas expansion
Zoomlion sets up overseas JV with Indian partner
Zoomlion: Global integration key to success
HSBC gives thumbs up to Zoomlion