With the first tier network in the capital Riyadh as the core, the second tier network in 11 cities including Dammam and Jeddah as the support, and the third tier network in 4 cities including Mecca as the extension, a service network covering the main areas of Saudi Arabia has been formed, which can provide customers with timely host sales, technical support, parts supply, and service guarantee. In recent years, with the continuous improvement of the local business system, Zoomlion's performance in the Saudi market has continued to increase.
In December of this year, Zhan Chunxin, Chairman and CEO of Zoomlion (000157. SZ), and relevant executives went deep into the front line of overseas markets to directly communicate and exchange ideas with Saudi customers. This is a silhouette of domestic construction machinery giants continuously deepening their localization construction of overseas business.
Unlike previous years, top manufacturers are accelerating their shift from "product going global" to "industry going global". Industry insiders interviewed told Caixin reporters that objectively speaking, the supply chain advantage of Chinese manufacturing is very significant, with overseas markets being three times larger than domestic markets. The market space in Europe and America is very large, but local manufacturing needs to be done well. Firstly, it can better cope with trade barriers, etc; Secondly, it can significantly save on delivery costs. To meet localization needs and truly achieve products that are both good and affordable.
The domestic construction machinery market has entered the era of stock, and by 2024, "going global" will still be the first choice for domestic construction machinery OEMs and supporting manufacturers to compete for profits. A person in charge of a host factory told a reporter from Caixin that the gross profit margin of domestic products is much lower than that of overseas products, and there is no way out without going abroad in the future.
For 2025, many industry insiders believe that the certainty of incremental demand in overseas markets is higher than that in domestic markets, and it is expected that the export growth rate can be maintained at over 10%. Regions with faster incremental demand include Latin America, Africa, Brazil, India, etc. In the domestic market, earthmoving machinery represented by excavators has taken the lead in achieving recovery. Against the backdrop of equipment updates and policies aimed at stabilizing the real estate market, the demand in the domestic market will remain relatively stable next year.
By 2024, increase overseas market share and stabilize gross profit margin
It is expected that overseas sales will reach 65 billion yuan this year, accounting for nearly 50% of the total sales, but the proportion of overseas profits will exceed 50%. "This is the overseas" report card "of Sany Group in 2024.
At this stage, if Sany leaves globalization, our profits will decrease by 60%, and if we don't go global, we may be eliminated, "said Tang Xiuguo, the rotating chairman and president of Sany Group, to the outside world recently.
In 2024, when domestic demand is relatively weak, going global has become the first choice for construction machinery manufacturers seeking to break through.
Taking excavators as an example, in the first 11 months of 2024, a total of 181762 excavators were sold, a year-on-year increase of 1.9%, including 91231 domestic excavators, a year-on-year increase of 10.8%; 90531 units were exported, a year-on-year decrease of 5.7%. The export sales growth rate of excavators turned positive in August this year, ending a 14 month period of negative growth.
The overseas sales data of top manufacturers is about 20 percentage points higher than the industry average statistical data, "an insider from a construction machinery company analyzed to a reporter from Caixin News Agency.
The public financial reports also confirm the above viewpoint, with XCMG Machinery (000425. SZ), Sany Heavy Industry (600031. SH), Zoomlion Heavy Industry Science and Technology, and Liugong (000528. SZ) showing varying degrees of increase in overseas sales amount and proportion compared to the same period last year in H1 2024.
Taking Zoomlion as an example, the company's overseas revenue has exceeded its domestic revenue, and its overseas product gross profit margin is nearly 10 points higher than its domestic gross profit margin. In the first three quarters of 2024, the company's overseas revenue accounted for 51.31%, a year-on-year increase of 35.42%. The company stated that in terms of regions, the overall average growth rate of Southeast Asia, the Middle East, and Central Asia still maintains steady growth, which is better than the industry average level; South America, Africa, and South Asia are becoming new drivers of overseas business growth.
XCMG Machinery also believes that key domestic enterprises are adjusting their global production capacity plans, implementing localization strategies, and accelerating their global layout. The company expects that the overseas market will continue to maintain a good trend, and international revenue will continue to grow well.
Tang Xiuguo said, "In the past six years, the compound growth rate of our (Sany Group) overseas business has reached nearly 40%, especially the countries along the" the Belt and Road "have contributed 75% of our overseas sales."
Referring to the development process of the global construction machinery industry, the current stage of China's leading enterprises is similar to the development path of Caterpillar, the world's largest construction machinery manufacturer, in the 1950s. Faced with intensified domestic competition, Caterpillar has implemented a globalization strategy. This also applies to the Chinese construction machinery industry: utilizing the technology and capital accumulation in the local market, expanding to areas with weaker technology, and ultimately achieving global layout.
Trillion overseas' cake ', manufacturers accelerate' industry going global 'by 2025
The recovery of domestic demand is expected to be a slow process, and the overseas market is not solely determined by the growth rate of demand in the market itself. In the process of competing with European and American companies on the same stage, it is more about the increase in the market share of Chinese construction machinery products in overseas markets, "a person in charge of domestic construction machinery told a reporter from Caixin News Agency.
He also stated that statistics show that the overall market capacity of construction machinery is about 180 billion US dollars, and the overall proportion of Chinese enterprises in overseas markets is not high. Firstly, how to achieve a wider regional coverage; The second is how domestic enterprises can quickly promote customized development of overseas products and expand their product portfolio.
Several domestic giants are accelerating their efforts to expand their industries overseas. Zoomlion stated that since the beginning of this year, more and more overseas new branches have been planned and implemented, accelerating the development of the European and American markets and completing the layout of multiple first level branches. As of the end of September, the company has over 3000 overseas employees, with a localization rate of about 90%. Its products cover about 150 countries, and about 400 overseas branch layouts have been completed; Liugong has established regional R&D institutions in the UK, US, Poland, India, Australia and other places, and more overseas regions are still being planned.
Based on the public statements of several leading domestic manufacturers, emerging markets remain the main drivers of overseas business growth. Liu Gong stated that the growth drivers are still mainly in markets such as India, Africa, and Latin America, with Indonesia gradually rebounding and opportunities in Asia Pacific and Central Asia; XCMG Machinery stated that the company's main export regions currently include Southeast Asia, Central Asia, Africa, South America, Europe, North America, West Asia and North Africa, Central America, Oceania, etc. The key areas for future development include Latin America and Asia markets, while continuing to focus on high-end markets in Europe, America, and Australia.
The expected increase in overseas market penetration rate has also given some confidence to the top domestic construction machinery for next year's "harvest". Liugong has presented his business plan for 2025. The company's budgeted operating revenue for 2025 is 34.6 billion yuan, with a net profit margin increase of over one percentage point. The company's 2024 business plan is to ensure that its marketing revenue exceeds 30 billion yuan by 2024.