Business / Companies

Sany's bid to usurp Caterpillar

By Tan Yingzi in Peachtree City, Georgia (China Daily) Updated: 2012-10-16 09:34

Sany's bid to usurp Caterpillar

Sany America employees gather for a photo at the company's Peachtree City office. The company employs about 100 people in the United States and plans to hire as many as 800 more within five years. [Photo/ China Daily]

After years of industry experience with US and European companies, Frank took a job as global strategy consultant, in Shanghai, for the board of Sany Group, the corporate entity that oversees Sany Heavy Industry and its various overseas units.

"My job was to develop the strategy ... and rapidly grow Sany's presence in North America," he said.

At Sany America, this means more than doubling sales each year and moving past five established competitors to reach the five-year target.

"It's a very, very aggressive strategy that has never been done by anyone in this space," Frank said.

As chairman, he faces two major challenges: technology and distribution.

Specifications on equipment vary by country or region, particularly those with engine emissions. What's required or accepted in China may be quite different from standards elsewhere, Frank explained. Sany America must work with its network of suppliers to modify engines and other parts in a nimble, efficient manner.

As a relative newcomer to the market, finding the right distribution partners and building reliable channels are just as critical.

Sany America already has its selling points, Tang said.

"Sany makes brand-new equipment to meet market demands. We work together with our dealers setting the price, and our quality guarantee is double the average standard of our competitors," he said.

The subsidiary tries to outdo rivals in customer service, offering warranties valid for two years instead of one year, or 4,000 hours rather than 2,000.

Along with conventional business-development strategies, such as securing dealers, Sany America also has "creative" plans in the works, according to Frank, though he and Tang declined to give details.

"We will take action in the near future to quickly expand the market," Tang said. "We are very interested acquiring some key parts suppliers and competitors. As the market is still slow in recovering, there are a lot of such opportunities out there.

"Some competitors are willing to consider the acquisition if the terms are OK," he added.

But the executive admitted there could be hurdles in buying up US companies, including what he calls misconceptions about Chinese companies.

"Though Sany is No 6 in the world, many American clients and peer companies don't know that we are a privately owned, publicly listed company," he said, adding that some in the United States consider working with a Chinese company to be taboo, Tang said.

On Sept 28, US President Barack Obama blocked the sale of four wind farms near a US Navy testing compound in Oregon to Chinese-owned Ralls Corp, citing national security concerns. Delaware-based Ralls is owned by two Sany Group executives.

Joe Hanneman, who joined Sany America this summer to lead its marketing team, said the company also needs to overcome negative opinions about goods designed or manufactured by a Chinese company.

"Many North Americans will automatically think that it's not something of high quality," he said. "It's a stereotype and inaccurate. So we have to get people past that idea."

In September, Forbes put Sany at 85th on its 2012 list of the world's 100 most innovative companies, the second year in a row Sany made the magazine's ranking.

Sany invests 5 percent to 7 percent of annual sales revenue in R&D, higher than the industry average. More than 7,000 Sany employees are involved in R&D, and half of them have master's degrees or doctorates, according to the company.

"People do overlook the fact that Sany is a private company, with no government ownership. This, along with Sany's decision to locate this facility during the largest global economic slowdown in the last half century, has somewhat overshadowed the company in the eyes of industry watchers," Matt Forshee, president and CEO of Fayette County Development Authority, told China Daily.

Forshee was the lead local person involved in the original recruitment in 2007 of Sany America to locate their US headquarters and manufacturing facility in his local community. He has traveled to Sany's headquarters in Changsha, Hunan province, and witnessed the facilities and production capabilities of the Chinese company.

He believes that Sany America will rapidly achieve its goal.

"They are determined, dedicated and primed for great growth and we are delighted that they chose Peachtree City, Fayette County in the State of Georgia as their home in the United States," he said.

In the first half of 2012, Sany's sales revenue rose 1.6 percent, delivering $1.3 billion in profit, while the average across China's construction-equipment market was a 28 percent decline in revenue due to reduced demand and slower economic growth.

To become a truly global industry power like Caterpillar, or CAT as it's known, Sany is striving for a balance in developed and developing economies to diversify its revenue streams, Frank said.

"Sany has benefited from its fabulous growth in domestic China, but they know that growth won't last forever," Tang said.

"When the day comes that China cools down, we don't want to wake up and find ourselves having 98 percent of our revenue in China.

"Personally, I would love to see Sany have more than 40 percent of its revenue outside China."

In 2011, less than 10 percent of the company's sales were from abroad.

Its Georgia-based US arm is a big part of Sany's global blueprint.

"Traditionally in our business, if you work successfully in Europe, the United States and Japan, you could become a global competitor. The rise of China has changed all that; you have companies like Sany that can dominate China and, in so doing, dominate the world.

"Sany is No 6 in the world. However, to ultimately become a top-three player, we have to have success in North America and Europe," Tang said.

tanyingzi@chinadailyusa.com

Previous Page 1 2 Next Page

Hot Topics

Editor's Picks