After a period of adjustment, we have survived, profitability is gradually recovering, and levels in all aspects are improving.” said Xiang Wenbo, Vice Chairman and President of Sany Heavy Industry.
         In the first half of this year, Sany Heavy Industry achieved operating revenue of 11.22 billion yuan and profit of 156 million yuan, both declining year-on-year. However, compared with mid-2015, the decline has narrowed.
         Orders are shrinking
         The industry entered recession around 2011-2012, and machinery companies worldwide faced shrinking orders and declining revenues. The massive investments made during the boom became a burden during the downturn. Xiang Wenbo gave an example: previously, over a thousand pump trucks could be sold in a month, but after the end of 2011, the engineering machinery market began to decline, and now Sany Heavy Industry still has hundreds of units in inventory to be disposed of.
         However, the recession will eventually pass, and the engineering machinery industry is no exception. Regardless of how the Internet develops in the future, highways and infrastructure are necessary, and the Internet also needs to be built, maintained, and serviced on top of infrastructure. In South America, Africa, Southeast Asia, and “Belt and Road” countries, infrastructure remains very backward. These countries and regions will need urbanization, industrialization, and modernization in the future, which will require a large amount of engineering machinery, and the market potential remains significant.
        Despite overcapacity in the industry, engineering machinery is not a backward industry. Xiang Wenbo stated that technically difficult and large-scale projects such as the Qinghai-Tibet Railway, the Three Gorges Dam, and the high-speed rail system are all in China, and China's engineering machinery has fully replaced imports. China's engineering machinery industry has passed the harshest market test.
The industry downturn is both a challenge and an opportunity.
        Sany Heavy Industry used this period to rapidly capture the international market and significantly increase its market share. Last year, Sany Heavy Industry's overseas revenue accounted for 44% of total revenue, while before the economic crisis, 90% of Sany Heavy Industry's sales occurred domestically. Take excavators as an example: before 2008, Sany Heavy Industry's excavator market share was only between 12% and 13%, but now it has reached 22% to 24%.
       The rapid penetration of internationalization is inseparable from technological innovation, talent development, and strategic choices.
       Innovation is of great significance to advanced manufacturing. The future direction of innovation in engineering equipment mainly lies in product quality, efficiency, stability, and environmental protection. Xiang Wenbo gave an example: a mine owner in Yunnan compared Caterpillar and Sany excavators, and over three years, the Sany excavator saved 750,000 yuan in fuel costs, which is enough to buy a new excavator.
       In terms of basic components, domestic enterprises used to rely heavily on imports. To solve this problem, Sany Heavy Industry made significant investments in this area. Now, hydraulic components, pumps, valves, motors, etc. on excavators can all be self-developed and self-produced, greatly reducing costs.
       Today's machinery companies are all working on the Internet of Things and Industry 4.0, which is also a manifestation of technological innovation. Xiang Wenbo said, “Automation + informatization + big data is our understanding of Industry 4.0.”
       At present, Sany Heavy Industry has built an intelligent warehouse for Chinese machinery. With a floor area of 9,000 square meters and thousands of production lines, the on-time material delivery rate exceeds 95%, the electronic quality inspection rate reaches 100%, and operating costs are reduced by 20%.
       Since 2006, when Sany Heavy Industry began construction of the Shanghai Lingang factory, it launched a big data plan. All terminal customers can be connected, thereby bridging the connection between customers and the enterprise, and using big data to support enterprise management. Over the years, Sany Heavy Industry has connected hundreds of thousands of large equipment, continuously providing support for technical transformation, research and development, and innovation.
      Xiang Wenbo stated that according to the plan, the operating status of every piece of Sany Heavy Industry equipment in each province can be analyzed through data, which naturally allows understanding of partial economic conditions in various regions. In the past, data was reported once a month, but now it is reported to relevant departments every half month.
      Talent is key
      To do research and development, talent is naturally indispensable. Sany Heavy Industry's annual R&D expenses account for 5% to 7% of annual sales revenue.
      For many years, Sany Heavy Industry has attached importance to overseas investment and acquired Putzmeister in Cologne, Germany. Xiang Wenbo told the China Business News reporter: “Putzmeister made a profit of more than 30 million euros last year, a new high. In addition, Sany Heavy Industry is also carrying out some overseas cooperation, such as establishing a joint venture with Palfinger, and our sales in Europe and Russia are also conducted through this joint venture.”
      Under the influence of the “Belt and Road” initiative, Sany Heavy Industry is accelerating its pace of going overseas. The company's “Belt and Road” efforts are led by one director and three vice presidents. There are many projects involved, for example, the Algerian government is currently building a large port that requires a large amount of port machinery, a project involving 3.3 billion US dollars; local highways in Pakistan are also being cooperated on with domestic central enterprises, which has also brought Sany Heavy Industry sales of over 100 million yuan.
      The risks of overseas investment should not be underestimated, with issues such as exchange rates, laws, and politics occurring from time to time.
      For high-risk countries, Sany Heavy Industry does not invest heavily all at once but proceeds cautiously. “Although we acquired more than 800 mu of land in Brazil, our construction investment has always been cautious, without too large-scale input. The specific approach is to first develop the market, and only after market sales reach a certain scale do we build factories.” Xiang Wenbo stated.
      In addition to its main machinery business, Sany Heavy Industry has also made diversified attempts. In new energy, the trend of wind power generation is good; in the financial sector, the state has approved businesses such as Sanxiang Bank and Kowloon Insurance under Sany Group, and the financial segment is taking shape. Housing industrialization and industrial real estate also have certain prospects. “Now, many industrial parks have insufficient utilization rates. We are promoting industrial real estate, and Sany also shares this part of the business as a platform with society. One of our roles is an industrial incubator.” Xiang Wenbo said.