Joint venture will produce thousands of truck cranes

The Finnish company Cargotec Oyj, one of the world's leading providers of cargo and load handling solutions, has set up a joint venture with China National Heavy-Duty Truck Group Co, China's largest heavy-duty truck maker by revenue, and also known as Sinotruk, in the company's home province of Shandong.

The venture, Sinotruk (Shandong) Hiab Equipment Ltd Co, has secured combined investment of 120 million yuan (14 million euros; $19.3 million).

Under the deal, Cargotec owns half the joint venture, and its equity investment in the first year is about 10 million euros.

In the future, total investment will be about 100 million euros. Once the venture is in full swing, it is expected to produce 4,000 truck cranes and all-terrain cranes a year and have revenue of 3 billion yuan, the company says.

"Sinotruk's leading position in the Chinese truck market, together with Cargotec's deep knowledge in load handling equipment forms an excellent product and technology match that will offer unique competitive advantages," says Tapio Hakakari, vice-chairman of Cargotec's board.

The venture plans to produce 2,000 small and middle-sized truck-mounted cranes by the end of the year and is expected to bring in 300 million yuan in revenue.

"It (the joint venture) represents an important strategic step for Cargotec, demonstrating our full commitment to grow our offering and presence in the Chinese load handling market," Hakakari says, adding that the company had started to explore the best way to expand its presence in China five years ago.

Sinotruk, founded in 1956, was a pioneer in China's heavy-truck industry and has held the biggest share of the domestic market for years.

Cai Dong, general manager of Sinotruk, says the company has developed more than 1,500 key sales centers across China. It sold 165,237 vehicles last year, 20 percent more than the year before, he says.

The company previously concentrated on heavy-duty trucks but is now committed to developing a full range of commercial vehicles, including heavy, middle and light-duty trucks, passenger cars, special purpose vehicles and construction machinery, he says.

"The partnership with Cargotec is crucial for us to diversify our product portfolio and sharpen our competitive edge in different market segments. By combining both companies' technical know-how and global sales networks, we hope the joint venture can become one of the big players in the global mobile crane business in the near future."

With operations in more than 100 countries, Cargotec is one of the biggest providers of cargo and load handling solutions on land and at sea. Its brand Hiab has more than 70 years' experience in making lifting equipment and has a share of more than 22 percent share in the global loader crane market.

The Asia-Pacific region, especially China, has long been identified as one of the company's most significant overseas markets. It now has five factories in the Asia-Pacific region where 25 percent of the professionals it employs work.

China is the world's largest crane market, having developed by leaps and bounds since 2001. Total sales were 40,000 units in 2011, compared with 4,800 10 years earlier, the China Construction Machinery Association says.

However, the industry has faced difficulties since 2012 caused by tightened monetary policy adopted by the Chinese central government, a slowing economy and excess capacity.

Even so, foreign participants in the industry say they are confident China's economy and the domestic market will bounce back.

In December, one of the world's biggest lifting machinery makers, Palfinger AG of Austria, expanded its partnership with Sany Heavy Industry Co Ltd, China's largest listed construction machinery maker, by investing 110 million euros for a 10 percent stake in Sany's two lifting machinery subsidiaries. In return, Sany Heavy Industry bought a 10 percent stake in Palfinger AG for 108 million euros.

Wangqian2@chinadaily.com.cn

(China Daily European Weekly 05/16/2014 page22)