LiuGong Global Dealers Meet Outlines Company’s Five Years Expansion Strategy

LiuGong 2016 Global Dealer Conference

The LiuGong global dealers' conference took place at Liuzhou in China very recently. Top LiuGong officials addressed the myriad challenges on way of the company for attaining optimum growth due to mixed demand from the global market. It also outlined a broad business strategy addressing the challenges that will enable the company to have heightened business growth for the next five years. P.P. Basistha had an opportunity to visit the mega event.

The 13th LiuGong Global dealer's conference saw participation of more than six hundred guests from various parts of the world at Liuzhou, LiuGong's hometown. The attendees were mainly from key companies' officials, dealers & customers from Australia, Hongkong, India, Bangladesh, Russia, Brazil, Mexico, Argentina, Armenia, North America, United Kingdom, Poland, Turkey, Netherland, Africa and Middle East.

Addressing the gathering, LiuGong Chairman, Mr. Zeng Guangan says, "LiuGong which started its business as a wheel loader manufacturer in 1958 has metamorphosed itself into a full-line equipment manufacturer, making major strides in construction and mining with a global presence in 150 countries accounting for almost 22% export share among other Chinese manufacturers and a sizeable domestic presence as well. However, there has been decline in demand of equipment from the Chinese domestic market during the past two years. Further, demand from the global market has continued to remain sluggish. This has been posing challenges for business expansion. However, we have seen scope of business expansion through mergers and acquisitions, sustained product innovation and dealer development despite the prevalence of the mixed situation. This underlies the fact that the scope for business expansion coexist amidst challenges. Taking note of the mixed demand scenario, we have formulated a broad global strategy for market expansion which will enable us to internationalize LiuGong further and altogether hedge business risks." One of the main reasons for the formulation of strategy is the decline in China's GDP from 10.6% in 2010 to 6.5 percent in 2016.

Global Expansion Strategy

LiuGong has manufacturing facilities in India, Brazil, Poland, and Argentina. Sharing details of the global expansion, Mr. Zeng says, "Our strategy for market expansion till 2020 will position us as full range solution provider by then. The idea to drive business will be through sustained focus on product innovation and through comprehensive Research & Development. To strengthen our R&D, we have commissioned our multibillion product R&D centre last year. Based on the expansion strategy, we have set a target to generate 15 billion RMB of revenue in the next five years, where in 45% of this revenue will be from the domestic market, 40% from overseas market and another 15% will be from service support. To drive business both at domestic and global market, we will deepen our sales and marketing besides focusing strongly on indigenous manufacturing in various regions. Based on our focus of regional manufacturing, we have made good progress in expanding our wheel loaders sales. However, business has been quite modest towards promotion of excavators and other equipment verticals. Regional manufacturing in a bigger way will help to leverage sales where we are not stronger. We will also set up regional headquarters which will provide our officials with greater autonomy to take decisions for prompt product marketing."

Complete Solution & Total Lifecycle Costs

While the four marketing strategies are expected to play a major role towards the company's domestic and global expansion, LiuGong is also looking towards more value creation in its products to drive business. This will be through placement of product solutions for quarry, construction, and cement sectors. Value creation will also be through integrated aftermarket support. This will be mainly through timely parts and product support, remanufacturing and rebuilding and financial assistance to customers and dealers for making business viable.

Mr. Zeng informs the gathering, "As part of value creation, we will provide total lifecycle costs of the equipment. One of the major initiatives in this direction is introduction of ‘intelligent solutions' which will monitor the performance of the equipment. It will generate data on fuel consumption and will be vital for dealers, operators, and contractors to undertake timely or preventive maintenance. Looking forward for value creation, we will also focus on intelligent manufacturing through enhanced automation of our manufacturing process by introducing robotics for quality manufacturing."

New & Larger Equipment

Based on the company's business expansion strategy till 2020, LiuGong will take on the demand from the global CE market, which is expected to touch 500,000 units, through introduction of newer products.

Addressing the gathering, Mr. Yu Chuanfen, President, LiuGong says, "Introduction of our new H-series wheel loaders, E-series excavators, and tier-IV products for the advanced market is an initiative towards this direction. We have launched 11 new products in 2016 comprising four wheel loaders, three excavators, two cranes, and two rollers. LiuGong will continue to launch new solutions based on our expansion strategy. We are also looking to support our products in a bigger way working in various markets; for this we have set up a dedicated global aftermarket support centre besides a dedicated team for the same. The centre and the team will be supported by a dedicated system and document management department. Further, to expand business, we will emphasize on sales of larger size equipment. We have successfully sold 200 large sized units in 2016 which comprised crushing & screening equipment, rigid dump trucks, and wheel loaders.

Aftermarket Focus

Mentioning about the overseas business trend, Mr. Luo Guobing, Vice President, Overseas Sales, LiuGong, says, "There is a global trend in demand shift. Customers are now looking for larger and medium sized equipment besides multiple products as part of total solutions. This is precisely in quarry and road construction sector. With demand of equipment, there is a heightened requirements of aftermarket solutions. The trend is highly visible for wheel loaders and excavators. We propose to build up sales and strengthen our aftermarket by adding new dealers. We have added 25 new dealers making it 233 for the overseas markets across regions. Eleven dealers have been added to promote and serve our Dressta dozers worldwide. As part of product support, we have established seven Cummins engine training centers besides setting set up 24 overseas dealers to service Cummins engines. For improvement in products support, we will undertake more dealers grading programme in 2017."

Looking forward to expand overseas business, to attain the target, the company will launch 31 new products across various verticals. Many of these will be large sized machines targeted towards the specialized market.

The global dealers' conference also coincided sessions on product application and branding where LiuGong officials showcased and discussed on products applications comprising drilling equipment, cranes, and forklifts. It also had sessions on dealership and branding. The event concluded with dealer awards across categories of equipment along with presentations from dealers on best practice sharing for product support.

NBM&CW December 2016

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