A Kazakhstan businessman tries to get information from a Chinese staff member about a China-made tractor during a trade event early this year in Guangzhou, Guangdong province. (Photo provided to China Daily)
Chinese construction equipment company rolls out agricultural vehicles to beat the property slowdown
A leading Chinese construction equipment company is switching its focus to the farming industry by rolling out tractors instead of cement mixers as the property sector slows.
Zoomlion Heavy Industry Science and Technology Development Co is expanding its overseas presence and targeting Southeast Asian and Central Asian countries such as Cambodia, Vietnam, Pakistan and Kazakhstan.
Last year, the company, based in Changsha, Hunan province, exported more than 4,600 combine harvesters and tractors worth 300 million yuan ($47.2 million).
Although overseas orders accounted for just 10 percent of the company's overall business in 2014, Zhang Jianjun, a senior executive at the company, is confident that figure will increase to between 30 percent and 40 percent during the next five years.
"We believe the agricultural equipment market will be a major force in driving growth," he said.
"This is all part of the company's long-term strategy of global expansion in countries involved in the Belt and Road Initiative. This should help us secure huge overseas orders."
Zhang was referring to the blueprint unveiled by President Xi Jinping in 2013. The Belt and Road Initiative is a trade and infrastructure network that includes the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
The network connects Asia, Europe and Africa, and passes through more than 60 countries and regions with a population of about 4.4 billion.
"We have kept an eye on the markets which are being targeted by the Belt and Road Initiative," Zhang said.
In a move to stay competitive, Zoomlion diversified its business in 2012 after reporting sluggish profit.
A year later, the company, which employs nearly 30,000 workers, set up its first agricultural machinery plant in Bishan, a district of Chongqing.
Zhan Chunxin, chairman and CEO of Zoomlion, pointed to the huge growth potential, which might even surpass the company's core business of construction machinery in the years ahead. "The move is expected to help build a regional industry cluster worth 10 billion yuan," he said.
From January to June this year, the Chinese manufacturer reported revenue of 10.6 billion yuan, a drop of 24.4 percent compared to the same period in 2014, according to the company's mid-term financial report.
"The decline was mainly due to slowing sales of machinery to make concrete, and cranes amid the economic slowdown," Zoomlion said in a statement.
Despite squeezed profit at the core business, sales of Zoomlion's agricultural equipment jumped by 35 percent for the first half of this year, raking in 2 billion yuan in revenue.
Compared to the construction machinery industry, which is burdened with chronic overcapacity, the agricultural equipment sector has grown rapidly over the past few years.
In 2014, the market value for construction machinery hit 600 billion yuan, official data showed. During the same period, that for the farming equipment sector topped 380 billion yuan, and by 2018 it is expected to surpass 500 billion yuan.