In 2013, wheel loaders —this 'most fully and fiercely competitive sub-sector of construction machinery'—ushered in a turning point. From a 'golden decade' to a deep downturn, from the changing of the 'Big Four' to the rise of new forces at home and abroad, China's wheel loader industry has unfolded a dramatic, sweeping, and cyclical grand narrative.

    The Changing of the Big Four

    For decades starting in the 1960s, China's wheel loader industry was known for its 'Big Four': Liugong Group (hereinafter Liugong), Xiagong Group (hereinafter Xiagong), Yigong Group (hereinafter Yigong), and Chengdu Chenggong Engineering Machinery Co., Ltd. (hereinafter Chenggong).

    Half a century later, the wheel loader industry has undergone fundamental changes, and the edifice of the original 'Big Four' is now precarious.

    In the wheel loader industry, Liugong and Xiagong have long been known together as 'Liu-Xia'. As evenly matched rivals, 'Liu-Xia' have maintained a fierce competitive relationship. In the 1960s, the two companies vied for the title of 'China's first wheel loader'. For about 40 years thereafter, they essentially took turns holding the industry's top position.

    2005 marked the turning point in the 'Liu-Xia' rivalry.

    In 2005, Liugong sold 16,000 wheel loaders for the year, with a market share of 18%, surpassing Xiagong's 17% for the first time. In terms of profit, Liugong left Xiagong far behind, earning 200 million yuan that year, six times that of Xiagong.

    From that year on, Liugong embarked on a journey to become a world-class enterprise. Four years later, Liugong rose to the top spot in global wheel loader sales. In 2012, Liugong still held the top position, achieving sales of 32,000 wheel loaders that year.

    Yigong and Chenggong faded out even earlier.

    On the 2012 wheel loader sales ranking, Chenggong's sales were just over 6,000 units, ranking only eighth.

    Although in 2010, Yigong once put up the banner 'Yigong is back', and the following year the Yichun Heavy Industry Group Co., Ltd. Construction Machinery Industrial Park, with an investment of over 1 billion yuan, was completed. It claimed an annual production capacity of 20,000 wheel loaders, 10,000 excavators, 5,000 special vehicles, and 2,000 concrete machinery units, with an annual output value exceeding 10 billion yuan. However, on the 2012 top 20 wheel loader sales ranking, Yigong was nowhere to be seen.

    Like a stage under the spotlight, some fade away while others make a shining entrance.

    Shandong Changlin Machinery Group Co., Ltd. (hereinafter Shandong Changlin), founded in 1943, is a leading enterprise in China's hand tractor industry. Before 2004, they did not produce wheel loaders or any construction machinery products. However, starting with small agricultural wheel loaders, after several years of development, its construction machinery division has grown to rival its original agricultural machinery segment. Road rollers, wheel loaders, and excavators have become core products, and its wheel loader sales rank among the top ten in the industry.

    Also originating from an old state-owned enterprise, the Zhengzhou Engineering Machinery Manufacturing Plant, founded in 1958, after some twists and turns, was restructured in 2003 into Zhengzhou Yutong Heavy Industries Co., Ltd. (hereinafter Yutong Heavy Industries) and returned to the construction machinery industry, with wheel loader sales entering the top ten. In 2012, Yutong Heavy Industries' planned new factory area of over 2,000 mu was under full construction, and the company entered a new historical stage of development.

    Rise of New Forces

    With the changing of giants in the wheel loader industry and the rise of new forces, the industry has evolved from the original 'Old Big Four' to a 'New Big Five': Liugong, Shandong Lingong Construction Machinery Co., Ltd. (hereinafter Lingong), XCMG Construction Machinery Co., Ltd. (hereinafter XCMG), Lonking Holdings Limited (hereinafter Lonking), and Xiagong.

    In 2012, Lingong entered the top three of China's wheel loader industry for the first time. The market competition pattern in which Liugong, Xiagong, and Lonking had firmly held the top three leading enterprise positions for over 10 years was thus broken.

    Lingong can be called a 'dark horse' in the wheel loader industry.

    Just three years ago, Lingong was still far behind the top three industry leaders. In 2009, Lingong's wheel loader sales were only 16,000 units. In 2012, its sales nearly doubled.

    From January to June 2013, Lingong's wheel loader sales reached 17,000 units, already ranking first in the industry, slightly surpassing veteran powerhouse Liugong by 370 units.

    'Secure second, strive for first' is Lingong's ambitious goal for 2015. 'If nothing unexpected happens, by the end of this year, Lingong is very likely to become the industry leader,' commented Liu Liangchen, advisor to the Construction Machinery Parts Branch of the China Construction Machinery Association.

    Another dark horse in the industry is XCMG. Since 1998, they have continuously introduced high-end and large-tonnage products: the first 'third-generation' wheel loader, and the domestic largest-tonnage wheel loader—LW1200K. Meanwhile, a series of key components such as newly independently developed electronically controlled transmissions and wet drive axles have been introduced.

    In 2012, XCMG took even bigger strides in investing in the wheel loader industry. That year, XCMG's intelligent manufacturing base for large wheel loaders was completed and put into operation. With a first-phase investment of 1.5 billion yuan, covering 600 mu, and a joint plant of 230,000 square meters, it has an annual production capacity of 40,000 units, making it the world's largest and most automated wheel loader factory.

    Breakthroughs in sales further demonstrate XCMG's strength and development momentum. In 2011, XCMG-brand wheel loader sales exceeded 20,000 units. In 2013, rumors circulated that XCMG's sales might have ranked in the top three of the industry.

    Foton Lovol International Heavy Industry Co., Ltd. (hereinafter Foton Lovol Heavy Industry) also attracted attention with its brilliance on the wheel loader stage. In 2004, when competition in the wheel loader industry was white-hot, they entered at a high level and achieved sales of 3,000 wheel loaders in 2005. According to the latest data, Foton Lovol Heavy Industry's wheel loader sales are steadily ranked in the top ten in the domestic industry. 'Foton Lovol wheel loaders are positioned in the mid-to-high end, not purely chasing output and market share,' said a Lovol executive, revealing a clear development philosophy.

    Overall, the continuous emergence of new forces in the wheel loader industry fully reflects its characteristic as the 'most fully and fiercely competitive sub-sector of construction machinery'.