China's largest

15 April 2008

Strong growth characterises recent progress at XCMG. The company was established 63 years ago and the crane factory was set up in 1963, manufacturing its first hydraulic crane, a 5 tonne capacity truck mounted model, in 1965. Now there is a staff of 3,300, 500 of which are engineers or technicians. Products include crawler cranes, fire trucks & concrete pumps. The revenue target is RMB 10 billion for the next four years for the crane division.

“In 2002 our largest crane was a 50 tonne capacity model. Now we have a 300 tonne capacity crane, so there's been a very big change. We have 80, 100 and 130 tonne capacity truck cranes now, and we have 130, 160, 200, 240 and 300 tonne capacity all-terrain cranes for both Chinese customers and for export markets.

Historically we have had about a 55% share of the Chinese truck crane market and this year (2006) it is a bit better than that. In 2006 we will manufacture 7,500 cranes in total, compared to 5,600 in 2005.

The total crane market in China this year will be about 13,000. The 16, 20, 25, 35 and 50 tonne capacity models are very popular, and 12 and 18 tonne cranes are also very common in China. But there are more and more customers in China buying the larger capacity models – the 80 to 300 tonne cranes.

Exports

In the past these larger size cranes were only available from European, Japanese and US manufacturers. The fact that we are building these sizes of AT cranes now is significant for China, but also for the global market.

From January to October 2006 we exported 600 cranes around the world. The figure for the full year will be about 800 cranes, which is about 95% of all the cranes exported from China. Excluding China, the global market for mobile cranes is about 7,000 to 8,000 units, so we have a market share of about 10%. We are aiming for about a 30% share of the world market.

Our biggest market is the Middle East. We will sell 400 cranes there this year (2006). Places like Dubai are really booming. We are also doing well in Argentina and Brazil – we will sell 160 cranes in ethose two countries this year. Australia is also going very well. Two years ago there were no Chinese cranes in Australia, but in 2006 we will sell about 80 machines, which is about a 20% market share.

Our main export products are 25, 45, 50 and 70 tonne cranes – we've sold out of those machines this year. Now we're seeing more overseas customers buying 80, 100 and 130 tonne cranes. We are pleased about that, because in the past I do not think our overseas customers believed we could make these larger cranes, and did not believe the quality would be good enough. The fact that we are selling these machines shows we can build good quality machines.

We are seeing opinions change, and we believe we are winning market share from some of the established players – Tadano in the Middle East and Grove in South America for example. We now have CE Certification, so the door has opened for us in Europe.

We have set up a service centre dedicated to international markets, which is based in Xuzhou, and we have nine international representatives in our major export markets – Australia, Brazil, Dubai and so on. This is separate from our Chinese network.

Looking ahead

The Chinese market is completely different to our overseas markets, because it is so closely linked to China's wider economic development. Ten years ago the Chinese crane market was only 1,000 machines, now it is 13,000, which shows what a big change there has been. I think our economy will continue to strengthen, and we want to maintain our market share around 55% to 60%.

In AT cranes we will soon move up from our current 300 tonne capacity model to build 400 and 500 tonne models. In the longer term we plan to produce an 800 tonne capacity crane within five years. In the crawler crane range we currently have a 450 tonne capacity model, and in 2007 we plan to build 600 and 700 tonne models. By 2010 we plan to have a 1,000 tonne crawler crane.

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