Another in a series of byte-sized one-on-one visits with construction industry insiders. In light of recent movements into North America by SDLG (via Volvo) and LonKing (through ICP), as well as comments about Chinese manufacturers by established heavyweights Caterpillar and Case, I talked to Rhoda, the American point man for a Chinese company, for his perspective on Chinese challengers in the market.
1. You’ve worked for Doosan and now you work with a Chinese manufacturer. Is there a difference between the way the Koreans and the Chinese approach the North American market?
I think anyone who’s been in this industry for a few decades has seen this pioneering of the North American market, first by the Japanese, then by the Koreans, and now clearly by the Chinese. The interesting thing about it from my observation is that the pioneering time span is compressed. I think each successive wave learns from the previous ones, so things happen faster. In my opinion, there is inevitability about the Chinese construction companies coming into North America, as well as expanding outside China into other parts of the world. There have been some articles lately, especially around Conexpo time, that basically speculated on whether it will happen; whether there will be the arrival and the success of a Chinese construction equipment brand here in North America. Most of the folks fall into the “when” camp, not the “if” camp. I’m one of them. I believe it’s an arrival on the global stage, and that includes North America.
More 3-Question Interviews
2. One of the ways a Chinese manufacturer has entered the North American market is teaming with a manufacturer already established here to offer a premium brand/value brand choice. Where does Sany fall—is it a value brand?
I think Sany sees itself as a global brand. They’ve had tremendous success in China and the way they’re coming into North America is with the tools they have to work with. Anyone who’s spent time in Asia understands that the cost structures there, specifically in China, are going to present potential value propositions to contractors in North America and everywhere else, and that’s one of the tools they have working for them. But I think what’s special about Sany is they also understand they have to know what each specific market they get into demands. They have to know what the expectations are from contractors here in North America. How might they be different than expectations of customers in China? So we’re coming in not as a cutthroat, low-priced brand, we’re coming in, I think, with a position of strength in the quality of the products, based on their designs, and based on state-of-the-art manufacturing within Sany’s infrastructure in China. And we’re bringing people aboard who understand customer expectations, and primary among those are customer and product support. We’re trying to put together an overall value proposition for the customer that includes meeting that support requirement, and also giving them a more attractive entry. You can’t have one and succeed without the other, in my view.
3. Lack of dealer networks has been an Achilles’ heel for Chinese manufacturers in North America, or at least is still perceived as one, and now there’s even a business model where Chinese equipment is being sold online as opposed to through dealers. How important are dealers to doing business in North America?
I think they’re very important. There may be ideas for other kinds of models, but I think the one that works here in North America is a dealer that has a local touch to the contractor, to the project, to the customers, is attached to one or more OEMs, and really provides the front-line, first-line support for whatever happens, whatever challenges have to be overcome. I think it’s absolutely critical. For Sany America, it’s not about online sales, or not having machines or product support and infrastructure on the ground: We’ve already made those commitments. So it’s kind of the classic business model, where we’re working with an established presence in North America, working with dealers in North America, with dealer agreements, etc., and that’s the model we’ve chosen.