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China's biggest machinery manufacturer LiuGong is eyeing the
world market, targeting an increase of around 40 percent in its
overseas sales this year.
LiuGong's manager for overseas business Huang Zhaohua recently told a
small group of Indonesian journalists in Liuzhou, China that the
company's overseas sales revenue reached US$70 million last year. He
said he was optimistic that figure could reach $100 million in 2007.
Last year, the company's total domestic and overseas sales revenue was
$716 million. The company is hoping to increase that figure to $1
billion this year.
"Our goal is to be in the top 15 in the industry by 2010 with total
sales revenue of $1.25 billion, including overseas sales revenue of
$0.2 billion, by selling 35,000 units of machinery," he said.
"By 2015, (our target is) to be in the top 10 in the industry. By then
we're hoping to be able to sell 50,000 units and to earn $2 billion in
sales revenue," he said.
The company, which listed in 1993, is 44 percent owned by the Chinese
government. LiuGong plans to focus on sales in developing countries in
Asia and Africa before moving on to developed nations in Europe and
America.
"From 2006 to 2010 we're focusing on penetrating developing countries.
After we prove ourselves and gain customers' trust we will attempt to
penetrate the developing countries," Zeng Guang'an, president of
LiuGong said.
Heavy machinery, such as wheel-loaders, excavators and rollers are
essential for the construction of infrastructure such as roads and
bridges, which are essential for nations' economic development.
According to the World Bank, infrastructure building in developing
countries could reach $10 billion per year within the next two years,
up from $7.4 billion in 2005.
LiuGong is setting its sights on that opportunity. The manufacturer is
second only to U.S.-based machinery manufacturer Caterpillar in the
scale of its overall production. The company produced 22,500 units of
machinery last year.
Zeng said that in order to spread its wings globally, the company has
established 40 dealers around the world, including two subsidiaries in
Australia and India.
Zeng said most of China's infrastructure development, which has
benefited from two-digit economic growth and low inflation, uses
LiuGong's heavy machinery.
However, penetrating the global market poses a whole new set of
challenges. The company suffers from the widespread perception that
many Chinese products are cheap and of low quality.
Desmond Yee of PT Indo Traktor Utama, LiuGong's Indonesian dealer, said
this perception caused many firms to second-guess buying LiuGong's
products.
"Not wanting to take risks, people usually choose brands that are well
known like Caterpillar and Komatsu, even with much higher prices," he
said.
Zeng said this year LiuGong is investing $32 million to improve
fabrication quality and capacity here in Indonesia.
"In Semarang, Indonesia, there is a LiuGong wheel loader that is still
working in perfect condition after operating for more than 10 years or
20,000 hours. This shows the quality of the machinery is actually
good," Desmond said.
Desmond said the company aims to sell 130 wheel loaders in Indonesia
this year. Last year, Indo Traktor Utama sold 26 units.
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