Xugong Machinery's concrete machinery in the first half of this year is estimated to have RMB 4 billion to RMB 5 billion in revenue, which is at least 80% higher than last year. The annual target for this year is a year-on-year increase of more than 100%. XCMG’s acquisition was rumors for nearly half a year. The news of German machinery company Schweing finally settled on July 6. On the same day, the two parties held a delivery cooperation project in Hern, Germany. Xugong will have a controlling shareholding of 52% of Schwerin Co., Ltd. However, neither side disclosed the purchase price code.
The reporter of the "First Financial Daily" also learned that XCMG is expected to establish a joint venture with Shi Weiying in Xuzhou. The core product produced and sold will be concrete machinery.
Mutual leverage
Following the successful acquisition of the German FT company and Dutch AMCA company, this time again winning Shi Weiying is the third time Xugong has attacked overseas.
Compared to Sany Heavy Industry’s acquisition of Putzmeister in Germany and Zoomlion’s purchase of Italy’s CIFA, XCMG’s acquisition of Shi Weiying appears to be more low-key.
The acquisition partners of the first two major construction machinery companies include Mandalin, Goldman Sachs, Hony Capital, and CITIC Industrial Fund. Moreover, they all complete related acquisition agreements through listed companies, and therefore need to disclose relevant details to the public. However, Xu Gong won the Shi Weiying operation through the XCMG level, and thus does not require the public to understand more details.
However, informed sources disclosed to reporters that after this acquisition, the two parties will still have more moves.
"The two companies are deliberating to set up a joint venture. Xugong may take shares in existing assets, while Shi Weiying will use technology to participate in shares. Xugong will still be the holding company of this joint venture."
The aforementioned informed sources stated that the main direction of the two joint ventures is to make concrete machinery products. XCMG has a large number of concrete equipment on the market in China, but it is still less compared to Schwing.
Established in Hearn, Germany, Schwinger has established production bases in the United States, Germany, Austria, India, Brazil and many other countries and regions, and has its own in France, the Netherlands, Austria, the Czech Republic, Sweden, and South Korea. Sales and after-sales service center, also has agents in more than 100 countries. For Xugong, using Schweing's development capabilities in markets such as Southwest Europe and the United States can also make up for the shortcomings in its international markets and channels. Among the industrial equipment produced by Shi Weiying, the "shield grouting pump" is used in large quantities in China's rail transportation facilities. In recent years, domestic sales growth has been rapid.
In addition, Shi Weiying's mixing and conveying and stirring and conveying models also have a good development trend in China. Therefore, the development of these new models will bring greater profit growth to XCMG's concrete machinery business.
The aforementioned informed sources also stated that next Xugong also plans to strengthen technology research and development with Shi Weiying. At present, XCMG's R&D center set up in Germany is officially in operation. Through this center, it will improve its own high-end hydraulic and transmission technologies and complete machine technology capabilities. This will also bring convenience to the two companies looking for more new products and breakthrough technologies.
"In the channel development of the international market, the two sides will leverage each other." The person pointed out.
In the future, XCMG may also use the dual-brand strategy when it launches new concrete machinery products and promotes the market, that is, the “XCMG Group Schweining†brand. Of course, this brand must be a product line formed with the help of two companies' technologies.
Catching up with Sany and Zhonglian
In fact, Wang Min, Chairman of XCMG Group, has always been concerned that Xugong failed to seize concrete machinery business in previous years.
If traced back, XCMG's intervention in this field was in 2008 when the company's pump trucks and crawler cranes had just been spun off from Xuzhong Group. Prior to this, pump trucks did not attract sufficient attention within Xu Zhong. Talent and marketing strategies are not enough to place, resulting in the loss of the first opportunity for substantial growth, and handing over the market to Sany Heavy Industry and Zoomlion.
And when Xugong is now back to the times when God came to force concrete machinery, the entire market is no longer the same language.
“The overall market share of Sany Heavy Industry and Zoomlion in the first half of this year is estimated to be around 85%, and the market share of Zoomlion may have increased, but it is still slightly lower than Sany Heavy Industry. Concrete machinery currently has a national share of about 10%, said the person familiar with the situation.
According to many reporters, Xugong’s concrete machinery in the first half of this year is estimated to have a revenue of RMB 4 billion to RMB 5 billion, which is an increase of at least 80% over the same period of last year. The target for this year is a year-on-year increase of over 100%. However, from the sales base, it is still difficult to surpass its two major rivals in Hunan this year.
However, according to XCMG’s plan, the company will increase concrete sales by more than 20 billion yuan in 2015, so as to continue to reach the market share of Sany Heavy Industry and Zoomlion.
The reporter of the "First Financial Daily" also learned that XCMG is expected to establish a joint venture with Shi Weiying in Xuzhou. The core product produced and sold will be concrete machinery.
Mutual leverage
Following the successful acquisition of the German FT company and Dutch AMCA company, this time again winning Shi Weiying is the third time Xugong has attacked overseas.
Compared to Sany Heavy Industry’s acquisition of Putzmeister in Germany and Zoomlion’s purchase of Italy’s CIFA, XCMG’s acquisition of Shi Weiying appears to be more low-key.
The acquisition partners of the first two major construction machinery companies include Mandalin, Goldman Sachs, Hony Capital, and CITIC Industrial Fund. Moreover, they all complete related acquisition agreements through listed companies, and therefore need to disclose relevant details to the public. However, Xu Gong won the Shi Weiying operation through the XCMG level, and thus does not require the public to understand more details.
However, informed sources disclosed to reporters that after this acquisition, the two parties will still have more moves.
"The two companies are deliberating to set up a joint venture. Xugong may take shares in existing assets, while Shi Weiying will use technology to participate in shares. Xugong will still be the holding company of this joint venture."
The aforementioned informed sources stated that the main direction of the two joint ventures is to make concrete machinery products. XCMG has a large number of concrete equipment on the market in China, but it is still less compared to Schwing.
Established in Hearn, Germany, Schwinger has established production bases in the United States, Germany, Austria, India, Brazil and many other countries and regions, and has its own in France, the Netherlands, Austria, the Czech Republic, Sweden, and South Korea. Sales and after-sales service center, also has agents in more than 100 countries. For Xugong, using Schweing's development capabilities in markets such as Southwest Europe and the United States can also make up for the shortcomings in its international markets and channels. Among the industrial equipment produced by Shi Weiying, the "shield grouting pump" is used in large quantities in China's rail transportation facilities. In recent years, domestic sales growth has been rapid.
In addition, Shi Weiying's mixing and conveying and stirring and conveying models also have a good development trend in China. Therefore, the development of these new models will bring greater profit growth to XCMG's concrete machinery business.
The aforementioned informed sources also stated that next Xugong also plans to strengthen technology research and development with Shi Weiying. At present, XCMG's R&D center set up in Germany is officially in operation. Through this center, it will improve its own high-end hydraulic and transmission technologies and complete machine technology capabilities. This will also bring convenience to the two companies looking for more new products and breakthrough technologies.
"In the channel development of the international market, the two sides will leverage each other." The person pointed out.
In the future, XCMG may also use the dual-brand strategy when it launches new concrete machinery products and promotes the market, that is, the “XCMG Group Schweining†brand. Of course, this brand must be a product line formed with the help of two companies' technologies.
Catching up with Sany and Zhonglian
In fact, Wang Min, Chairman of XCMG Group, has always been concerned that Xugong failed to seize concrete machinery business in previous years.
If traced back, XCMG's intervention in this field was in 2008 when the company's pump trucks and crawler cranes had just been spun off from Xuzhong Group. Prior to this, pump trucks did not attract sufficient attention within Xu Zhong. Talent and marketing strategies are not enough to place, resulting in the loss of the first opportunity for substantial growth, and handing over the market to Sany Heavy Industry and Zoomlion.
And when Xugong is now back to the times when God came to force concrete machinery, the entire market is no longer the same language.
“The overall market share of Sany Heavy Industry and Zoomlion in the first half of this year is estimated to be around 85%, and the market share of Zoomlion may have increased, but it is still slightly lower than Sany Heavy Industry. Concrete machinery currently has a national share of about 10%, said the person familiar with the situation.
According to many reporters, Xugong’s concrete machinery in the first half of this year is estimated to have a revenue of RMB 4 billion to RMB 5 billion, which is an increase of at least 80% over the same period of last year. The target for this year is a year-on-year increase of over 100%. However, from the sales base, it is still difficult to surpass its two major rivals in Hunan this year.
However, according to XCMG’s plan, the company will increase concrete sales by more than 20 billion yuan in 2015, so as to continue to reach the market share of Sany Heavy Industry and Zoomlion.
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