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The euphoria concerning China, which international manufacturers of construction equipment and building material machinery showed for quite some time, now is nearly entirely gone. Making business is increasingly getting difficult due to plagiarism, stronger competition in the region and quite a big number of legal uncertainties. However, hardly any company seriously thinks about withdrawing from the Chinese market. They all want to get their share of the biggest growth market in the world.
When Hermann Moll was asked by journalists at the trade fair “bauma China” in Shanghai four years ago, why his company had decided to also produce directly in China, the Managing Director of Liebherr Hydaulikbagger GmbH put it in just a few words: “China is a must for us.” Today, four years later, his answer is not any different. Although in the meantime, the German manufacturer of construction machinery made his very own experiences on the Chinese market. But, according to Mr Moll, “we need to face these challenges.” And this is true for all internationally operating manufacturers, says Mr Moll. According to him, this is the only way companies could, in the long run, keep and expand their relevant positions on the market wordwide. But Mr Moll also states that there is a limit: “The risk needs to be foreseeable.” Nearly all big manufacturers of construction equipment and building material machinery share Mr Moll’s views. In their strategies also, China plays an important role.
The construction market in China has been growing enormously for quite a number of years already. Whether we take Shanghai, Beijing or any of the other big cities: There are cranes in action everywhere to be seen, high-rises spring up like mushrooms and one entire town after the other is being built. Although the restrictive policy of the Chinese government, applied when it comes to the distribution of land and the allocation of loans, has put a bit of an end to the overwhelming construction boom, experts still believe there will be an annual increase of nearly ten per cent each year until the year 2010.
“The demand is still incredibly high,” says Joachim Schmid, Managing Director of the construction equipment and building material machinery association which is part of the German Engineering Federation (VDMA – Verband Deutscher Maschinen- und Anlagenbau). His association represents more than 90 per cent of the German construction equipment and building material industry. Nearly two thirds of these are already active on the Chinese market. According to Mr Schmid, withdrawal is nowhere to be heard of. Rather on the contrary. “Our association’s policy is not to give up but to support as much as we can the companies which decide to go to the Chinese market.” This is why the association opened an office in Beijing already some time ago and it actively supports the trade fair “bauma China” as well. The total exhibition space, which the currently biggest trade fair on construction equipment and building machinery in all of China now occupies, has increased by 40 per cent to nearly 140,000 square metres compared to when it last took place. Also the number of exhibitors has increased from 738 to currently nearly 900. For Mr Schmid this proves that presenting one’s own products in China is worth it despite all difficulties.
Dr. Reinhold Festge, Managing Partner of the internationally operating Haver & Boecker Drahtweberei und Maschinenfabrik, thinks that “it does not make any sense to withdraw from the market if a company is afraid of the challenges and difficulties it might have to face there.” Mr Festge, who sells, among other things, cement packing machinery worldwide from the company’s headquarters in the little Northern German town of Oelde, opened a final assembly plant in the Chinese city of Shenzhen only last year. Plagiarism for him surely is a “serious problem”. There are, however, possiblilities to protect your company and products against it, he believes. He recommends, among other things, to develop machinery which cannot be sold worldwide if it should get copied. Mr Festge: “We need to be around on the Chinese market and learn from the Chinese people how to live and make money in their country”. When it comes down to it, what is currently happening in China can be summarized as “attacking the wealth of the Western industrial nations.” And this is, so Mr Festge says, “what we should not hide away from.” He thinks the order of the day can only be to present our companies and their products accordingly.
Mr Walter Hess, Managing Partner of Hess Maschinenfabrik GmbH & Co. KG, is a German person who “does not worry much” when looking at his activities in China. His company produces machinery for the concrete stone industry. Their export quotas are nearly 100 per cent. Mr Hess has been active on the Chinese market since 1980. In 2003, he left a joint venture with a local company and founded his own firm. Today, his company, located near Beijing, produces different moulds for concrete stone, block making machinery and handling systems, occupying an area of 5,000 square metres. Mr Hess’s successful strategy is in fact quite simple: He actually does exactly the same thing the Chinese do – with the exception of one major difference. He also “copies” – but not other people’s, only his own products. And very successfully so.