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Interpretation: Zoomlion's breakthrough under overcapacity of construction machinery

interpretation: Zoomlion's breakthrough under overcapacity of construction machinery

China Construction machinery information

Guide: see how Zoomlion takes the path of quality and benefit oriented industrial development, boosts the confidence of the construction machinery industry, gathers global factors, and builds the world's top three construction machinery industries. Affected by many factors such as development stage, development concept, system and mechanism, at present, some industries in China have strict production capacity

see how Zoomlion takes the path of quality and benefit oriented industrial development to boost the confidence of the construction machinery industry, "gather global factors and build the top three in the world's construction machinery industry"

affected by many factors such as development stage, development concept and institutional mechanism, there is a serious contradiction of overcapacity in some industries in China. The central economic work conference held in Beijing from December 10 to 13 showed the determination and courage to break the wrist and proposed "unswervingly resolve overcapacity and implement the central government's decision and deployment to resolve overcapacity" to curb the further intensification of overcapacity contradictions, guide the direction of investment, promote industrial transformation and upgrading, and create an upgraded version of China's economy

in the past decade, China's construction machinery market has developed at an alarming rate. Since the second half of 2011, China's construction machinery industry has experienced a significant adjustment under the influence of macro-control and overcapacity. In 2012, the industry entered a period of medium and low-speed growth. In 2013, there was no significant improvement, and the overall recovery of the industry was relatively weak

take excavators as an example. According to statistics, the planned annual production capacity of Chinese excavator manufacturers is about 600000 units, but the total sales volume in 2012 was less than 120000 units, and the annual sales volume of the excavator market is predicted to be about 150000 units by 2015. Construction machinery has a serious overcapacity, the industry has expanded blindly, market funds are extremely tight, a shares have plummeted, investor confidence has been hit hard, and many practitioners are worried

according to Zhan Chunxin, chairman of Zoomlion, "the contraction of the industry does not mean that the construction machinery enterprise is at a dead end, but an opportunity for enterprise development." Zoomlion, which has moved from inland underdeveloped cities to the international market, has such great confidence in dealing with overcapacity, which is inseparable from the enterprise's adherence to the transformation of mode, structural adjustment and quality-benefit development path for many years

diversification strategy steady growth

"Zoomlion's future development is not only in the field of construction machinery." On June 18 this year, at the shareholders' meeting of Zoomlion, Zhan Chunxin revealed that in the face of the problem of overcapacity of construction machinery, the company will carry out a diversified strategic transformation, from focusing on the development of construction machinery to engineering machinery, agricultural machinery, sanitation, heavy truck and finance, and the five sectors will go hand in hand

since last year, the domestic construction machinery industry has been in a continuous downturn. Zoomlion, as a Hunan Construction machinery giant, has also deeply felt the chill of the market. "We are prepared for today's market situation and can bear it." Zhan Chunxin said that although the current macro situation will still operate at a low level, it is not far from recovery. He judged that China's economy will maintain a growth rate of 8% to 10% in the future. "Moreover, China's agricultural modernization and urbanization will be a long-term topic, which will provide new market space for construction machinery."

Zhan Chunxin said that Zoomlion's future development direction will have multiple growth points to avoid risks caused by fluctuations in the construction machinery industry. "The environmental sanitation sector, agricultural machinery sector, heavy truck sector and financial sector will develop together with the construction machinery sector." He stressed that Zoomlion was not simply diversified, but the diversification of related industries. Agricultural machinery and heavy trucks are closely related to construction machinery. "The environmental sanitation sector is already doing business, and the financial sector is also related to the company's financial leasing business."

at present, environmental sanitation machinery will face a broader development space. The Chinese Academy of environmental planning predicts that during the "12th Five Year Plan" period, the investment scale of China's environmental protection industry will reach 3.1 trillion yuan, of which the solid waste treatment industry will reach 800 billion yuan

"previously, Zoomlion's sanitation cleaning machinery has occupied more than 60% of the domestic market share. The scope of environmental protection industry is very wide, including solid waste, sewage, air, photoelectric pollution and other categories." Sunchangjun, vice president of Zoomlion, said that the competition in the environmental protection industry is not as obvious as that in construction machinery, so Zoomlion has a greater grasp of giving priority to the development of this sector on the existing basis

"what Zoomlion pursues in the context of overcapacity is to control risks, truly achieve quality growth, and no longer blindly pursue the regulation of billet procurement and reduce mold and speed." Sunchangjun said that the company has listed the four major sectors of agricultural machinery, sanitation, heavy trucks and financial services as equally important as the construction machinery sector, and made efforts to cope with the "post growth" era

how to deal with overcapacity? Zhan Chunxin's prescription is: "if you are not hot headed, grasp the pace of development." Zhan Chunxin said that he actually raised the issue of overcapacity three years ago, "Because our industry is mainly driven by infrastructure investment, the country had a period of hot investment, and the supply of equipment was in short supply. At that time, people often asked me to open the back door to help him get the money in advance. This kind of hot let people misunderstand that there is a lot of space in this industry, so everyone is fighting for investment. We also felt this kind of hot at that time, but we were very calm, because there is still market space in this industry Limited. " Calm down, how does Zoomlion grasp the pace of development? Zhan Chunxin told several groups of data

first of all, don't invest. Zoomlion's fixed asset investment is more than 6 billion yuan from the 2011 Annual Report, which is more than 40% of enterprises of the same size. The data of the third quarter of 2012 showed that the total investment in fixed assets was still only more than 6 billion yuan. While the investment in fixed assets did not increase much, the number of enterprises increased from more than 28000 in 2011 to 35000, that is, 7000 in 2012. At present, when the cost of new degradable materials in the industry is slightly higher and everyone is shouting to reduce staff, why does Zoomlion move in the opposite direction

"first, the production of the enterprise is still developing, so we should meet the demand of growth; second, we should prepare human resources for the next growth of the enterprise." Zhan Chunxin said

as a leading figure in the industry, Zhan Chunxin has always paid attention to the industry with keen insight and forward-looking thinking. As early as 2009, Zhan Chunxin predicted the arrival of overcapacity. At the 2011 global construction machinery industry conference, Zhan Chunxin said, "capacity is increasing sharply, but now the prominent problem is overcapacity. If China's economy maintains a growth rate of about 8% in the next two years, China's construction machinery overcapacity will be very serious and competition will intensify." Zhan Chunxin sized up the situation, adjusted the development strategy of Zoomlion in time, practiced his internal skills hard, and promoted the enterprise to soar against the trend driven by innovation

since the fourth quarter of 2012, Zoomlion has actively adjusted its business strategy, changed its extensive development mode, and achieved self scientific leaps. From the pursuit of scale growth as the core, to the pursuit of business quality as the core, rely on management reform, reduce costs and increase efficiency, strictly control risks, strive to consolidate the foundation of sustainable development, and improve the core competitiveness of enterprises. In 2012, the company achieved sales revenue of more than 90 billion yuan, becoming the benchmark of profitable enterprises in China's construction machinery industry under the weak market. The 2013 semi annual report showed that Zoomlion's performance in the second quarter increased significantly month on month, and the operating revenue and net profit in a single quarter increased by 138% and 290% respectively; The net cash flow from operating activities was 1.157 billion yuan, an increase of 97.47% year-on-year. Zoomlion confirmed Zhan Chunxin's judgment with practical actions and achievements

"the construction machinery industry is bound to recover and get out of the market downturn, which has become the consensus of the industry. It is only a matter of time before Zoomlion, which takes advantage of the contraction period of the industry, realizes self-adjustment and consolidates the foundation of sustainable development, seizes development opportunities and successfully surmounts the difficulties of overcapacity with the new strategic layout of the" five sectors "and strong innovation driving power." Zhan Chunxin said with confidence

going out to expand the international market capacity

for the construction machinery industry, to make the production capacity curve closer to the market demand curve, on the one hand, we should control the production capacity, and more importantly, expand the market, especially grasp the current "Golden Window" and strive to expand the international market capacity

from the perspective of the whole industry, Zhan Chunxin believes that overcapacity exists in reality, but it is a dynamic situation. "The curve of production capacity is rising and the curve of market capacity is declining. If we can expand the market and control production capacity, the market demand curve and production capacity curve will slowly close, or the gap will narrow." How to raise the head of the market demand curve higher? Zhan Chunxin believes that there are two main ways: one is technological innovation to constantly upgrade their products and expand new market areas. Another way is to go out and strive for more space and market share in the global market

at present, Chinese enterprises' going out hinders more and more colleagues who have stolen goods between the force measuring cylinder and the piston. 2 however, in Zhan Chunxin's view, Chinese enterprises are facing a rare "Golden Window" when going out

from the perspective of the global economy, the economic recovery after the financial crisis is slow, especially the European debt crisis is still fermenting. Many European and American enterprises, especially small and medium-sized enterprises, are having a hard time. They hope to cooperate with Chinese enterprises or sell them. "Their advantages are exactly what Chinese enterprises need most, so this is a" golden window period "

in addition, Zhan Chunxin felt from Zoomlion's practice of going global that European and American enterprises are becoming more and more familiar with Chinese enterprises. "When Zoomlion just acquired CIFA, the world's third-largest concrete machinery manufacturing enterprise, a few years ago, people ignored us. Standing at the gate of an Italian enterprise, I felt that this enterprise did not belong to us." But now it's different. Foreign counterparts have higher awareness of China's economy and enterprises, and better cooperation

for the construction machinery and equipment manufacturing industry, the supply curve and market demand curve in 2011 and 2012 have opened a large gap. However, Zhan Chunxin has great confidence: "the whole market curve is still going up, one is foreign and the other is domestic, so I found on time at school that if the foreign market is included, the market capacity curve will rise faster. In a few years, the market capacity and capacity curve will be close, and the problem of overcapacity will be alleviated."

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