Alex Dahm speaks to Zoomlion senior managers about its tower crane business
By Alex Dahm26 July 2011
Chinese crane and general construction equipment manufacturer Zoomlion is pushing to make serious inroads in long-established international markets. For the tower crane angle Alex Dahm spoke to senior representatives about its Construction Hoist Machinery Branch
Just as mobile crane sales in China are measured in tens of thousands a year, tower crane volumes are on a similarly vast scale. The commonly used figure is 100,000 units a year. Even though many of these are small construction hoists and not cranes, the number of towers is still huge.
Its daily output of 13 units helps put Zoomlion as China's largest producer of tower cranes. In her position heading up the giant Chinese manufacturer's tower crane division, Helen Huang estimates that the Chinese tower crane market was worth RMB 25 billion (US$ 3.9 billion) in 2010. That figure is for all categories of tower crane sold in China by all manufacturers.
Zoomlion's 2010 sales from tower cranes, produced by its Construction Hoist Machinery Branch, were RMB 3 billion ($ 500 million), a 15 or 16% share of Chinese market, Huang says.
Compared to the previous year, Huang puts the growth rate at 20%. Her estimate for annual growth in the Chinese tower crane market over the next two to five years is to continue at that rate, with 20% a year as an average. "I forecast that the Zoomlion growth rate will be higher than this figure. We have a target to reach 35 or 40% market share in the next two to five years," Huang continues.
Chinese manufacturers already export more than $ 300 million a year in tower cranes, Huang says. The forecast is to more than double this by 2015. Mergers and acquisitions are among the strategies to achieve growth, both inside and out of China. "We are exploring international co-operation in international markets from all aspects, including research and development and the supply chain. We are open to many different kinds of co-operation. Zoomlion's strategy is to improve areas such as brand value, product quality and so on in the market. We are looking for possible partners who are also in leading positions in the industry in different sectors."
As part of its drive to develop business outside China, Zoomlion bought Italian concrete pump manufacturer CIFA. "CIFA has become the platform for Zoomlion for the development of the European and North African region, not only for concrete machinery but for the other business. As a starting point we have started to develop the crane business in Europe because we feel and we know that the gap to fill is smaller than on other products so we are concentrating on tower cranes," explains Delfino Corti, chief operating officer.
"At the moment we have me and a small office in Italy but the base will be not only sales and service, we are seriously considering using the facilities at CIFA also for other businesses. At least for the assembly of some products - it could be mobile cranes, it could be tower cranes."
First steps are to set up local bases for spare parts warehousing, training and for service support to dealers. "What we have already started to do in Europe is to set up service centres: one for tower cranes and one for mobile cranes, in partnership with some of our existing dealers," Corti continues.
Product is the other area for attention. "Europe from the Chinese perspective is not interesting in terms of volume because it is a small market and it is a very difficult market because of regulations and the traditional competition."
It is an interesting market because it is the best place to achieve an improvement in the level of quality of products and customer approach, Corti says. "We would like to aim at being recognised by European customers as the most European among the Chinese players. It means that we will have to narrow the gaps in product, customer approach and service."
Holland is home to the new tower crane service centre, a new company set up with dealer Kranenbouw's support. "It will be a significant step in getting closer to the customer. On the product side, as this issue went to press, a technology transfer agreement had just been signed with German tower crane manufacturer Jost. The 21 June contract transfers all the rights for the current Jost range of flat top cranes to Zoomlion.
"We have also other approaches in terms of partnerships with smaller players in different segments of the value chain which will help us to improve and fill gaps in our product line, improving the technology, to comply with the European regulations," Corti continues.
Huang adds, "The European market is critical for us to improve the general quality and brand value for Zoomlion tower cranes."
Zoomlion's model range reflects the fact that China is mainly a hammerhead market with some flat tops and a few luffers. Considering its export drive, the strategy is to have a full range of products. "Now we are turning more and more to international orientated markets from the development point of view."
An example is luffing jib towers. "We have dedicated a specific team for the development of luffing cranes so we are aiming to complete the product range of luffing cranes in the near future." Existing models are at the upper capacity end. A 630 tonne-metre model was added recently and a 1,250 tonne-metre rated unit is at the component testing stage.
On luffers for sale outside of China, Corti says, "We are in contact with a possible partner to have specially developed models for Europe with all the documentation and related accessories to comply with the EN regulations." The timescale is to have the first model in a European luffing jib range by the end of 2011 or the beginning of 2012. A major benefit and target, Corti says, is "to have the improvement level in China - improved technology fused with Chinese manufacturing."
Self erecting and mobile folding tower cranes are a lower priority. "The market is not so promising. First we will do luffers and then maybe self erectors. Europe is the main market. It may be that we could develop these products with a local partner," Huang says.
Optimisation for transport is a consideration that begins at the design stage. "We have a dedicated team working on it," Huang says. A recent new model saw a big rush in demand from Chinese rental companies because it was designed for easy transport. "When we started designing it, the requirement was to put the whole crane on one truck in China," Huang says. It uses a 1.2 m mast section (instead of the 1.6 m of the old model) so two sections can be loaded side by side on a truck in China.
Another customer requirement is the best quality at the lowest price. "Cost should be reduced but not at the expense of quality," Huang says. "At the design stage we try to minimise the amount of material used on the cranes to make them more cost effective. When we use materials during manufacturing we are continuously monitoring and modifying the process to reduce the amount of material waste." There is an automated production line and painting is done on a 500 m automatic and enclosed line which helps avoid environmental pollution.
An appropriate combination of these and other ingredients will be fundamental to Zoomlion in developing its export business.