Construction machinery firm riding wave of infrastructure building

Sany Heavy Industry Co Ltd, China's largest construction machinery maker by revenue, expects to double its sales in the Brazilian market from last year to exceed $200 million, further consolidating its market share in Latin America.

Sany currently has 21 subsidiaries across the globe and five factories in the United States, Germany, India, Brazil and Indonesia.

Sany Heavy Industry Co Ltd's assembly facility in Changsha, Hunan province. Sany currently has 21 subsidiaries across the globe and five factories in the United States, Germany, India, Brazil and Indonesia. [Photo/Agencies]

Sany's subsidiary in Brazil has experienced explosive growth in local sales since it was established in March 2010.

Its motor cranes, one of its major products, have a 30 percent share of the Brazilian market, ahead of competitors including Caterpillar Inc and Komatsu Ltd, the industry's leading international players.

One of Sany's business advantages is that "Brazil's market requires almost the same product models as China", which helps the company adapt quickly to the Brazilian market, said Xu Ming, assistant to Sany's president.

In the meantime, to host the 2014 World Cup and 2016 Olympic Games in Brazil, a wave of infrastructure construction is taking place in the South American country, which means enormous business opportunities, Xu added.

But despite the vast potential, Sany Brazil's sales in 2011 accounted for about 1 percent of the group's total sales of 50.7 billion yuan ($7.9 billion).

The company mainly relies on the Chinese market, and this situation is not restricted to Sany.

"A low level of market consolidation, simple product structure and low sales in overseas markets - these are the characteristics of China's construction machinery sector," Wu Huimin, an industry analyst at China International Capital Corporation Ltd said in an industry report.

Compared with the US market, where Caterpillar has a 40 percent market share, China's top 10 construction machinery makers collectively account for 60 percent of the market.

In the meantime, overseas income accounts for 10 percent of the total revenues of Chinese construction machinery makers such as Sany, while for Caterpillar and Komatsu, the figure stands between 60 to 70 percent, according to Wu.

"For further development, Chinese companies should follow Komatsu's model by improving product quality and becoming more internationally competitive," the report said.

To deepen its overseas development, the company made Latin America a focus of its investment, said Xu from Sany.

Sany Brazil will make use of its production base in Brazil and extend its networks to neighboring countries, including Colombia, Peru and Ecuador, all of which boast great market potential, Xu said.

In January, Sany bought Putzmeister, a major German producer of concrete pumps, for 525 million euros ($640 million) including debt.

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