EQUIPMENT
62
Lonking
international
construction
september 2013
Unlike many of his peers in China, Lonking
CEO Qiu Debo doesn’t believe in growth at
any cost, doesn’t want to acquire foreign
companies (for now) and doesn’t think the
industry as a whole has the management
skills to be truly international. Yet.
Chris Sleight
reports.
W
ith revenues last year
of US$ 1.27 billion,
Lonking is one of
the larger Chinese construction
equipment manufacturers. But at
no.23 in the latest Yellow Table
ranking of the industry’s largest
global players, it is some way
adrift from the Chinese big three
of Sany, Zoomlion and XCMG,
which were placed at no.5, no.6
and no.11 respectively.
Far from suffering an inferiority
complex, Lonking president &
CEO Qiu Debo does not subscribe
to the ‘big is beautiful’ doctrine
that has seen many of his domestic
competitors chase top-line growth.
Strategies of growth by acquisition
and rapid international expansion
need to be done right, he says.
Speaking through a translator,
Mr Qiu said, “In the last
couple of years, lots of Chinese
manufacturers have tried to go
overseas but found it difficult.
You need a lot of time to get the
product right and there are lots of
different requirements in different
regions.”
And on the subject of overseas
acquisitions he added, “I think
a lot of Chinese companies still
lack the ability to manage foreign
companies. Some of the big
Chinese companies in the industry
clearly don’t compare in terms of
management to other international
players of a similar size.”
Summarising the difference in
Lonking’s philosophy, he said,
“We have the same general aims
as most, but while most Chinese
manufacturers think about getting
big first and then getting stronger,
we want to be strong first.”
The Lonking way
Lonking’s plan for overseas growth
is to edge up from current exports
of some 4,000 machines per
annum to about 10,000 in the
next three to five years. That would
account for about 20% of the
company’s revenues, but the longer
term aim is to take the ratio of
domestic sales to exports to 50:50.
So how does Mr Qiu plan to
achieve this? At first it will all be
about organic growth. “We will
not consider acquisitions for the
next five years or so. We need to
work on management of what
we do right now. We are not
convinced that there have been
great successes for acquisitions
by Chinese companies overseas,”
he said.
Mr Qiu’s vision for Lonking is
for a more measured international
expansion. “We are putting
more resources into overseas
markets. We have strengthened
the management and, facilities,
and worked on product quality.
We believe you need to build
up our channels first, with the
right distribution and aftersales
support,” he said.
One day the company might
manufacture overseas, but for
now it is focussed on exporting
machines. “Before we manufacture
overseas we want to achieve a
certain level of market share in key
areas and sell a mix of products.
I am open-minded about all the
options, including joint ventures
or our own subsidiaries, but we
have not reached that stage yet,”
added Mr Qiu.
Domestic market
Meanwhile, the Chinese market
itself is readjusting to much lower
equipment volumes after the
remarkable stimulus-driven boom
of 2010 and 2011. Although
morale is low in some parts of
the industry, Mr Qiu regards the
current state of the market as a
return to normality.
“The situation is not bad – it
has returned to reasonable growth.
In previous years, growth was too
high to be sustained,” he said.
But that is not to say that it
hasn’t been a painful transition. “At
the start of 2012 we started some
changes. We are working more on
cash flow, financial management
and productivity, rather than
producing high volumes of
machines at any cost. 2012 was a
tough year.
“We made 5,000 redundancies
and our profit fell, but this year
you will see changes and the figures
will improve,” said Mr Qiu.
Looking ahead he concluded,
“There is still a long way to go
to move China to a consumer
economy, so I think for the
next few years our industry
will continue to benefit from
infrastructure building.”
“In five years’ time there will
be fewer Chinese manufacturers
but I believe Lonking will be one
of them and will be even more
healthy than now.
“Lonking won’t be the biggest
but we will be one of the strongest
in product quality, financial
management and internal
management.”
iC
Lonking president &
CEO Qiu Debo.
Daring to
be different
