�山ǿ��

Mr. Yang Dongsheng, Chairman of XCMG (Photo: XCMG)

The dizzying pace of change in China in recent years seems to have left much of the rest of the world in its wake.

It wasn’t that long ago that non-China-based OEMs dominated equipment sales in the country, something that has now altered drastically. A decade ago, the country had approximately 16,000km of high-speed rail lines – that figure is now around 44,000km, comfortably the most in the world.

Thirty years ago, where there was farmland, there are now cities teeming with millions of inhabitants and packed with high-rise towers stretching towards the sky.

The latest ranks XCMG as China’s largest OEM and the world’s fourth largest, and it has also undergone rapid change – for instance, 10 years ago it was ranked number eleven in the 2014 table. Of course, such fast growth both at a country and a company level is unsustainable long-term. Mr. Yang Dongsheng, chairman of XCMG, in an exclusive sit-down interview at the company’s headquarters acknowledges this.

He says that the sector is entering a “new adjustment period” that has partially been brought on by the troubled real estate market and the fact that many large infrastructure schemes in the country have now been completed.

“In recent years, the Chinese construction market has seen great changes. China is now undertaking gradually some reconstruction and adjustment. We are heading for the high-quality development,” he says, via an interpreter.

“From 2022 Chinese construction machinery went into a new adjustment period compared with the period between 2016 to 2022, which is a high-speed development. From the OEM standpoint, I think this is very natural. My opinion is that, in the near future, the whole market will be growing steadily.”

High-quality development

When asked how he defines high-quality development he says, “I think firstly it would be embodied in construction machinery sales, I think people will be more reasonable. No more pricing war, commercial terms war or to lower the configuration. It’d be more on value creation, technical improvement, overall capability improvement, as well as the after-sales market.”

XCMG was ranked as the world’s fourth largest OEM by sales in the most recent Yellow Table

Another big change that XCMG (and many other Chinese OEMs) have experienced in recent years is an increased level of globalisation. “For XCMG, we are a global enterprise aiming at total globalisation in future. In terms of the European and North American market, XCMG has been constantly focusing, investing and learning,” he says.

“Europe and North America are the most high-end markets in terms of technology products and the market itself. Europe and North America combined exceed 50% of the global market, so they are markets that XCMG places great importance to and markets we have constantly invested in,” he comments.

The company also has specific objectives in relation to its sales targets for these regions, and for export markets. “We have set up our goals in the next few years; we’re preparing that by 2027 the percentage of the European and North American market sales revenue would account for 25-30% of our total export revenue. And, in that target, the total export revenue would exceed 50% of XCMG total revenue,” he reveals.

For XCMG to have over half of its sales coming from export markets would be a major change for the company. What opportunities and challenges does increasing export sales to over half of revenue pose?

Mr. Yang Dongsheng says that ensuring there is a robust system in place to support the global operation is important. A global operation risk control centre is vital to navigate different laws, taxes and regulations. Understanding that countries have different cultures and ways of doing business is vital. He makes the point that the challenges they are facing are ‘normal’ but that the company is also facing some issues beyond its control.

XCMG is seeing sales increase in overseas markets

“All of these challenges are the challenges that every enterprise or company trying to go global will meet, and we are fully prepared. In addition to these, there are some factors or challenges that are out of our control. For example, the trade war, the increased tariff, the anti-dumping investigation, which are totally out of any companies or enterprises control. And I believe this is one of the major risks,” he comments.

Construction technology developing rapidly

The advantages of electric equipment have been frequently espoused in recent years: zero emissions, lower noise, lower total cost of ownership, and high reliability are some of the more common benefits. Another factor that helps – at least in China – is that prices for electric equipment are often not too much higher than traditionally powered machines, and are not two or even three times as expensive, as can be the case in other markets. Despite this, price is still a barrier.

“The purchase price is higher than the diesel equipment but [some customers] didn’t make calculation of the total cost of ownership, TCO. These items you purchase at a high cost, but use at very low cost; so we need to change their opinion and view on the electrified equipment, the total ownership cost,” he says.

Mr. Yang Dongsheng acknowledges that there are other issues with electric powered equipment, such as a lack of infrastructure charging. However, he says that technology is rapidly advancing and will, if not totally eradicate some of these issues, then alleviate them.

“Chinese battery technology is developing very fast in terms of the cost and the technical issues. All of these aspects will help promote the sales of electrified equipment. Currently, we are using lithium iron phosphate technology in batteries. But, in the future, we will implement more solid battery on our equipment, which will increase the hours of operation and security. All these factors will help to increase the expansion and grow market share of electrified equipment,” he says.

“As the technology improves, opinions will change when people realise what benefits they can get from purchasing electrified equipment. In three to five years’ time, my estimate would be 20 to 25% sales of the equipment in China will be electric.”

One of the other benefits of electric is that this type of equipment is easier to automate – this technology could make the industry look very different in the future. XCMG already has some fully automated equipment and have plans for more development.

“XCMG has a vision to make our equipment an automated robot, a heavy construction robot, fully automated,” he says, before adding that, regarding the development of the company as a whole, “In the next five years, you will see more great changes.” As already established, the rate of change in China seems to be faster than anywhere else in the world so it will be interesting to revisit this in 2029 and see just how great the change has been.