—— A Conversation with Zhang Jianguo, Senior President of Zoomlion and General Manager of the Overseas Company

 

    “Zoomlion will strive to rank among the global top three in the construction machinery industry within 3-5 years.” This was the strategic goal of Zoomlion that Zhang Jianguo, Senior President of Zoomlion and General Manager of the Overseas Company, mentioned when answering reporters' questions at the 2014 Las Vegas trade show.

 

    On March 4, 2014, U.S. time, the triennial Las Vegas Construction Machinery Exhibition opened. As a leading enterprise in China's construction machinery industry, Zoomlion made a splendid appearance with a number of products including concrete machinery, lifting machinery, earthmoving machinery, and environmental sanitation machinery, showcasing to the world the first-class quality of China's construction machinery equipment.

 

    “Chinese construction machinery enterprises are all trying to develop through internationalization strategies, and among these Chinese enterprises taking the path of internationalization, I personally believe Zoomlion is the most likely to become a truly international enterprise.” President Zhang Jianguo's words were firm and forceful, full of confidence in Zoomlion's position and competitiveness in the domestic construction machinery industry.

 

    Zoomlion's best operating performance in the industry last year gave this confidence a solid basis. “In 2013, Zoomlion achieved quality development.” Zhang Jianguo believes that Zoomlion will continue to operate steadily in the coming years, and the pace of Zoomlion's internationalization will also accelerate.

 

    The Strategy of a Pioneer in Overseas Mergers and Acquisitions

 

    Zhang Jianguo stated that Zoomlion's international development strategy has two important approaches: the first is overseas mergers and acquisitions; the second is investing in factory construction.

 

    On September 28, 2008, on the 16th anniversary of Zoomlion's founding, after more than a year of negotiations, it finally acquired Italy's CIFA, the world's third-largest concrete machinery manufacturer, for 271 million euros as it had wished. This acquisition, sufficient to change the competitive landscape of the industry, also made Zoomlion the world's largest concrete machinery manufacturer.

 

    For a long time, factors such as incomplete sales and service networks, low brand awareness and reputation, and unfamiliarity with the demand characteristics of target markets have constrained Chinese enterprises' overseas expansion. Zoomlion's acquisition of CIFA, in addition to consolidating its position as a leader in the concrete machinery industry, also gave it CIFA's brand influence in the international market and its complete marketing service system, which are clearly of vital significance to Zoomlion as it seeks to “go global.”

    

    “Overseas mergers and acquisitions are a very important method in Zoomlion's internationalization process.” Zhang Jianguo said that in the process of “going global,” Zoomlion not only attaches great importance to the construction of after-sales outlets and other related supporting services that consumers care about, but also adjusts the company's marketing strategy according to different regions. For different countries or regions, we adopt different approaches, including assembly bases, joint ventures, agents, and our direct sales model. For example, in Europe we choose CIFA as our base, including technology, sales, manufacturing, and so on; in India we set up a local manufacturing base through a joint venture with a local company; in Southeast Asia, we use Hong Kong as a bridgehead, and while building our dealer network, we leverage the advantages of China's manufacturing bases to radiate to surrounding regions.” Zhang Jianguo said.

 

    Zhang Jianguo told reporters that in the future, if there is a suitable target at a suitable time, Zoomlion's acquisition plans will continue.

 

    Breakthrough of a Newcomer in Earthmoving Machinery

 

    However, the ambitious Zhang Jianguo is also clearly aware that Zoomlion will still face many challenges on its journey toward becoming a leading enterprise in the international construction machinery industry.

 

    As a pivotal segment of the construction machinery industry, earthmoving machinery, due to its huge market demand and considerable profits, has always been a “contested ground” in the industry, and Zoomlion is no exception.

 

    “In the global construction machinery field, Caterpillar and Komatsu are Zoomlion's strongest competitors.” Zhang Jianguo admitted that compared with these two major international brands, Zoomlion still has a certain gap.

 

    Zhang Jianguo believes that earthmoving machinery and mining machinery are the strengths of Caterpillar and Komatsu, and this is precisely Zoomlion's weakness, because Zoomlion started relatively late.

 

    Although Zoomlion started relatively late in earthmoving machinery, the construction machinery industry has never been one that ranks people by seniority, and there are frequent examples of newcomers overturning traditional giants. Not willing to lag behind, Zoomlion is trying to become the next dazzling newcomer.

 

    “China's earthmoving machinery market already has a phenomenon of excessive sales.” Zhang Jianguo believes that under such a difficult situation of market oversupply and increasingly fierce industry competition, in the face of strong competitors, adopting conventional marketing strategies may find it difficult to achieve relatively outstanding results.

 

    Ultimately, Zoomlion proposed a “focus strategy” to cope with this situation. “Zoomlion's focus strategy is to adopt focused 'attacks' with key model products in key regions in the earthmoving machinery market, including focused 'attacks' on major customers.” Zhang Jianguo said. The “focus strategy” ultimately achieved very impressive results. At present, Zoomlion is striving to build earthmoving machinery into its third major star product segment after concrete machinery and lifting machinery.

 

    While the status of Zoomlion's earthmoving machinery continues to rise domestically, its performance in overseas markets is also advancing triumphantly. “Our earthmoving machinery has achieved very good sales results in the Middle East, South America, Brazil, Africa, and other places.” Zhang Jianguo stated.