Zoomlion Strategy: To Understand Local Market

Tao Siyang
In its quest to expand its business network across the globe, Zoomlion has fast paced the entire process by leveraging its global R&D platform, streamlining its manufacturing and marketing resources to offer best pricing and configuration solutions to its customers worldwide. In view of this, the company is investing heavily to augment the capacities of its local manufacturing facilities and also adding to sourcing, logistics, warehousing, information system, training and financial offerings to cater to the capacity enhancement. “India is one of our most important strategic markets with huge business potential and to make the most of the emerging opportunities, we are adequately expanding our product line by manufacturing more products locally. In this context, we are currently studying the exact requirements of local market and its customers and it will take a while to decide on the quantum of investment in the country. We work closely with our Indian partners and during Excon we will jointly participate,” says Mr. Tao Siyang, Deputy GM, Zoomlion in an interview with S.A Faridi.

It is now almost a year since you have forged a joint-venture with Electromech for tower cranes and with Universal for concrete pumps. How are these ventures firming up? Are you looking to manufacture some of the other products under same umbrella?
Yes, we have made a substantial progress to ensure smooth and normal operations of our joint ventures in India. Apart from setting up legal entity adhering to the local legal norms, accounting and taxation regulation, we have also created a local working team comprising professionals drawn both from India and China. More importantly, we are practicing to make it more local market-oriented that perhaps was the most important reasons to set up local joint ventures. It will take care of pricing pattern, configuration and service decisions before the cranes are actually manufactured in India. Taking tower crane as an example, after years of market study of local customers, our competitors and market potential, we are configuring to our potential customers based upon the fundamental functional requirement, as well as the local service solutions in terms of training and spare parts support with the right sourcing solution both from Indian market and our Chinese Manufacturing Headquarters. Our overall pricing will be competitive, especially on the basis of investment in our local manufacturing and assembling facilities, local sales and service team set up, local IT infrastructure implementation and on putting in place allied facilities.

Zoomlion is fast pacing its globalization process by emphasizing on leveraging its global R&D platform, manufacturing and marketing resources to offer best pricing and configuration solutions to its global and local customers. We are also investing heavily to augment the capacities of our local facilities in terms of sourcing, logistics, warehousing, information system, training, and financial offerings. We will not only have our local employees and business infrastructure set up, but also more crucially is to operate as a local company that has local economic, social and corporate responsibilities. India is one of our most important strategic markets and we perceive huge business potential here. Yes, we will have more measures to make more products manufactured in India only after we are able to address the exact requirement of the local market and its customers.

During the on-going slowdown in infrastructure sector; what has been the business performance of Zoomlion in the last one year?
You’re right. We are experiencing the slowdown in the infrastructure sector not just locally but also on the global platform. Certain customers and partners also adjust to the prevailing situation and make certain changes on orders previously planned. But the charm of global market is the balance of business requirement and demand scenario. Along with the general slowdown, we also experience the emerging market sectors in South America, Russia and South East Asia and new infrastructure projects in developing countries.

We still secured an increase numbers of sales orders in the first half of 2013 as compared with the corresponding period last year. Apart from the new market and projects identified, it also largely attributes to improvement of understanding of local markets and customers, improvement of technical innovation and product quality and also improvement in management efficiency to keep a pace with global and local competitors.

How has the fall of Rupee impacted Zoomlion India business operations? What enabling steps are being taken to minimize the impact?
Frankly speaking, we do suffer from negative impact due to the devaluation of Rupee. Our products have become less competitive to local competitors. At the same time, it is the fairly similar market situation to majority of players in construction machinery industry. Again, our way out is still try to make ourselves a local player in sales, service and on-site support, with a more powerful global players in R&D, sourcing, manufacturing and logistics solutions. As part of our aggressive business expansion strategy in India, we are speeding up the progress of local R&D, manufacturing and service facilities set up with our current joint venture partners in India to make our solutions competitive. Understanding local market, customer request, and make decision and investment matching local requirements. It is our strategy in India, regardless the devaluation or the appreciation of Rupee.

What kind of growth do you expect for your company in next two-three years in India and innovative strategies to stave off toughening competition scenario?
India is a great country with profound cultural impact upon human evolution history. Taking into account the sound legislation, accounting and financial system in place, second largest but still increasing population, lower urbanization rate and relatively poor infrastructure in both cities and rural areas, we expect the dramatic increase of business opportunities in India. Huge demand in residential housing, highrise buildings, railway, bridges, power stations and agricultural infrastructure to name a few hold huge business opportunities for equipment making players.

India will welcome its new government after the election in 2014. We are very optimistic and expect that economic development plans should be released by the respective parties separately before elections. More infrastructure projects, like the current two Corridor Projects between Delhi and Mumbai, Delhi and Calcutta, will be soon put on to the infrastructure building agenda.

Zoomlion  Crawlr Crane
Zoomlion has comprehensive project and product experience of infrastructure building in China and elsewhere of the world. We are more than willing to share our experience with Indian partners and customers aiming to improve the infrastructure facilities in urban and rural areas. We have already made the planning for the next three years and certain efforts already in place though the current market demand and sales orders are not satisfactory. In Chinese, we have a saying, which goes like, ‘Sharpening your axe will not delay your job of cutting wood’. We are more than happy to be a part of the progress of improving local infrastructure in India that by the end of the day will improve the living standard of Indian masses.

What are your company’s important technical services including system to promote effective customization and back-to-back customer support?
To offer a better customer support, in the first place we need to have the competitive, efficient and scalable technical platform that protects both quality and flexibility. Jost platform and standard for tower cranes and carbon fiber technology for concrete machinery are the type of our technical platform. It adds to our competitive edge in different market where we have manufacturing and assembly facilities. Being the birth place of Chinese construction machinery technology for decades and our over 60% CAGR business expansion practices in China and world market for the past two decades, Zoomlion is capable to lead and innovate the standard in the market we are more familiar than our nearest competitors.

Apart from the well defined R&D and technical strategy, choosing the right partner is also a crucial way to fulfill that. For example, partnership with ElctroMech and Universal will make it possible that our strategy and technical innovation is to be accomplished via our local technical professional employment, joint product features and performance study, technical documents formulation, business and cost structure optimization, sourcing solutions fix and service delivery system and process design, etc. We adopt a holistic approach to any customization solutions.

Trained operators & technicians and preventive & periodical maintenance play a big role in equipment performance. Please brief us on your services.
Well we have our dedicated service team in India based in Delhi, Mumbai, Chennai, and Calcutta. They also travel a lot within the region to offer warranty services, preventive maintenance services, on-site technical support and certain level of training services. Regular training program is arranged on customer side, our training center in Delhi and Mumbai, and our training center in China Headquarter, according to different service level requirement. It covers technical lectures, service operation instructions, interactive discussion, and operation on machinery simulators, etc.

Zoomlion Cranes

We do consider our service offerings being one of the edges over our competitors. Another effort crucially important is the timely supply of service parts, along with the regular training for service personnel of customers/partners. Other than direct transport from China Headquarter, we have a regional warehouse in Mumbai to offer service parts supply to customers in India, Sri Lanka, Pakistan, and Bangladesh. Due to our positive and optimistic perception of Indian market, we are currently enlarging our administrative, warehousing, and technical training facilities in India. You are more than welcome to our visit stall.

The equipment market has reached at such a critical point where key competitive differentiator would be after market and innovations. How are you looking on this aspect?
Again, we differentiate ourselves from competitors via our local penetration strategy. That is to taking into account local market and customer first, before coming up with our local pricing, configuration and service offerings. We we’ll keep achieving more regarding this by leveraging the R&D, manufacturing and marketing resources from business units, and more investment with our partners in local market like India in local facilities and platform enhancement, in terms of logistics, financial services, warehousing, trainings, and information structure.

Is Zoomlion participating in Excon 2013? What are company’s plans about showcasing new products and services and business deals at this mega show?
Zoomlion works closely with its Indian partners and we are jointly participating in Excon 2013. It is one of our measures for being local. Our main message this year is our determination of offering local products and service solutions to local customers, esp. for the crane business. We are currently under business negotiation for major infrastructure projects with one of the partners. Due to confidentiality purpose, sorry I cannot elaborate more on the issue. Welcome to Zoomlion stand to get more information about the company and its future plans.
NBMCW November 2013
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