Li Zhigang: Big Fortunes in Small Rural Markets for Construction Machinery

2013-08-13 666 0人评论
    Meeting Li Zhigang for the first time leaves an impression of plain honesty. Always smiling, his optimistic attitude toward life is admirable. Three entrepreneurial ventures have tempered this man into a "general" in the business world. For most people in the construction machinery industry, Li Zhigang is a newcomer. He only bought his first excavator in 2010. The construction machinery market had begun to decline in the second half of 2010, so entering the industry at this time should have meant facing enormous resistance. Yet through conversation, the reporter found that between 2010 and 2013 Li Zhigang not only made money but also expanded his business on a small scale. How did Li Zhigang achieve wealth accumulation in the face of adversity?

  Li Zhigang and his LiuGong excavator

  Entering the construction machinery industry was an accident

  First encounter with an excavator: its work efficiency won me over

  Recalling the purchase of his first excavator, Li Zhigang describes it with the word "rushed." Before buying, he had done no market research and had no recommendation from anyone in the industry; it was entirely based on his own feel for the market. In 2010, proper excavators were rare near Dachang County, Hebei; there were only modified excavators known as "earth scratchers." By chance Li Zhigang came into contact with his first excavator, and it was precisely this encounter that made him determined to buy one. In 2010, Li Zhigang's village hired a large excavator from elsewhere to assist with construction. "This thing works really fast!" Li Zhigang thought to himself. "There are no excavators in the nearby market, so why don't I buy one? If I had an excavator, nearby projects wouldn't have to go elsewhere to hire someone else's equipment." With this idea, Li Zhigang went home and discussed it with his family, hoping to put his plan into action...

  The abandoned breeding farm

  Overcoming all objections: I am going to buy an excavator

  Contrary to his own idea, the result of the discussion at home was that the votes against far outnumbered the votes in favor. The family's opposition was not without reason. In 2010 Li Zhigang's business was at its lowest point. In 1994, at the age of 19, Li Zhigang began working in the breeding industry. In the era of "soaring pork prices" Li Zhigang earned a great deal of wealth. However, from 2008 to 2010 he ran into difficulties. "From 2008 to 2010, after years of accumulation my breeding farm had begun to take shape, and I had put almost all my funds into it. But when natural disaster struck, I really couldn't hold on... In 2010 swine fever hit the pigs, and 40 sows all went down in one week. In 2010 my breeding business lost almost 300,000 yuan," Li Zhigang recalled. In 2010 Li Zhigang did not have very sufficient funds on hand, and under such circumstances spending more than 300,000 yuan to buy an excavator was indeed "crazy." Yet how could he easily give up on a business he was optimistic about? In the end Li Zhigang did not adopt his family's suggestion. The road of entrepreneurship in the construction machinery industry set sail

  Love at first sight with a LiuGong excavator at the machinery city

  His mind was made up, but which brand of excavator should he buy? After making many inquiries, accompanied by a friend, Li Zhigang came to the Jingkai Wanjia Machinery City. The many brands opened his eyes, but similar designs and performance parameters that differed little left Li Zhigang facing a difficult choice. After a day of observation, listening to introductions, and test-driving evaluations, Li Zhigang finally fell in love at first sight with the LiuGong CLG906C excavator. In order to bring the CLG906C excavator home as soon as possible, Li Zhigang did not hesitate to use his brother's house as collateral to obtain a loan of more than 300,000 yuan.

  LiuGong service personnel come to help the user inspect the equipment

  Deep cultivation of a small market: making a fortune in the countryside

  As the first person in the surrounding market to buy an excavator, Li Zhigang undoubtedly held an absolute market advantage. Yet once he actually owned the equipment, Li Zhigang found that there were many operational problems he had not anticipated. As a newcomer to the industry, Li Zhigang was clearly unprepared. "I encountered many difficulties. The first was that I had no market accumulation of my own; very few people knew I had an excavator. Second, there were no excavator operators locally, and I myself did not know how to drive an excavator at all." Therefore, in 2010 Li Zhigang did not make money. In 2010 Li Zhigang focused his work on promoting his equipment. The stable product quality and fast working efficiency of the LiuGong CLG906C filled Li Zhigang with confidence in the future market. Li Zhigang's reputation in the surrounding market also rose step by step. As excavator operators were recruited and came on duty in Jixian County, Hebei, Li Zhigang made full preparations for a bumper year in 2011.

  Li Zhigang with his family

  As the pace of construction in Beijing's suburbs accelerated, in 2011 Dachang County in Hebei, as the area closest to Beijing, was undergoing great changes. The "urbanization policy" was like spring rain, and project construction blossomed everywhere in Dachang County. What made Li Zhigang most proud was the greening project at the beginning of 2011. "At that time I contracted the greening project for a nearby road section, mainly responsible for digging tree pits. From 4 a.m. to 9 p.m. I was unwilling to stop work for a single moment. At 2 yuan per tree pit, on the best day I could earn 4,000 yuan. I really tasted the sweetness of the excavator." At the same time, Li Zhigang also revealed to the reporter the secret of operating a small excavator: "You can't just take projects that pay by the hour; you can't make much money from those. You have to find more odd jobs." He gave us a very simple example for comparison. At present, the price for small excavator construction around Beijing is 100 yuan per hour. After deducting 30 yuan per hour for fuel and the workers' wages, the excavator operator does not have much left. Odd jobs are different. Take digging foundations for rural houses as an example: generally a foundation only takes 2 hours to dig, yet one can get a return of 600 yuan. In 2011 alone, Li Zhigang used the CLG906-C excavator to bring his family more than 100,000 yuan in wealth.

  When talking about his secret, Li Zhigang smilingly told the reporter that he has two principles in his work: "First, I never pick jobs. Whether it is a contracted project or a small rural earthwork job, I do it. This keeps the machine running without stopping. Second, I don't take projects too far from home. Considering my financial strength, I only take on projects where payment is convenient and quick."

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