18.11.2011

Zoomlion warns on China

Zoomlion chief executive Zhan Chunxin helped depress construction related shares on the Hong Kong stock market this week, when he announced that equipment demand in China had slowed drastically and that the downward trend would continue well into next year.

The slowdown comes from a massive cut in railway spending, following a major accident earlier this year and a slow-down in residential building and other construction projects.

As a result of the slow-down in the domestic market, China’s second largest construction equipment producer, along with several other companies, is looking to expand overseas. Realising that doing this with its own Chinese built products will be a slow process, it has been pursuing overseas acquisitions and has already opened discussions with at least a couple of manufacturers in the crane and access arena.

At the same time it is adding production facilities in fast growing developing markets such as India. Its aim is to expand international revenues from the current five percent to around 35 percent.
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Zhan Chunxin

Chunxin also hinted that achieving the company’s full year revenue forecasts of 50 billion yuan ($7.9 billion) this year, might be a challenge. The company has said that sales for the nine months to the end of September were 33.2 billion yuan ($5.1 billion) up 39 percent on the same period last year.