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Changsha wants the eyes of the construction world

Updated: 2012-07-04 11:10
By Hu Haiyan and Feng Zhiwei in Changsha ( China Daily)

Changsha wants the eyes of the construction world

Zhang Jianfei, the mayor of Changsha, Hunan province, says that by the end of the 12th Five-Year Plan, total sales in the city's construction equipment sector will have hit 300 billion yuan. [Photo / China Daily]

The mayor of Changsha has revealed an ambitious industrial blueprint for the city in Central China's Hunan province, which he says will firmly establish it as one of the world's top manufacturing centers for construction equipment.

Zhang Jianfei, a former director of highways at the Ministry of Transport and World Bank adviser on transportation, said that by the end of the 12th Five-Year Plan (2011-15), total sales in the city's construction equipment sector will have hit 300 billion yuan ($47 billion).

The sector will also have created a research and development capability to rival anywhere.

By 2015 the city's construction machinery products will account for almost a third of those sold globally, rising from its current 9 percent share, according to his plan.

The mayor said major efforts are also being taken to develop other industries, such as automobiles and tourism.

Home to 30 major construction equipment manufacturers, "Changsha will become a global construction machinery center by 2015, similar to Detroit in the United States, which is famous for automobile manufacturing", Zhang told China Daily.

His global thinking is already shared by the city's two main companies, Zoomlion Heavy Industry Science & Technology Development Co Ltd and Sany Group, but it is crucial that more local companies in Changsha develop their ambitions far beyond China.

"Going global cannot only expand Chinese companies' market share," he said, "but also bring back advanced technologies and management expertise, which contributes to the sound and sustainable development of construction machinery industry here".

Zhang himself has a rich international pedigree.

After graduating from the University of California, Berkeley with a PhD in transportation engineering in 1991, he joined the World Bank as an adviser on transportation.

He returned to China and became director of highways at the Ministry of Transport, before in 2008 taking on the reins of mayor of Changsha.

His vision for Changsha, far from a household name outside of China, is already well in motion.

During each of the past five years, construction manufacturing sales have grown by more than 50 percent.

The total value of the city's construction machinery industry hit 186 billion yuan, accounting for more than 30 percent of its GDP last year.

Zoomlion has expanded through some heavyweight alliances in Europe, forming a joint venture with Powermole International Ltd of Britain in 2001 and with Compagnia Italiana Forme Acciaio of Italy in 2008, which has a 20 percent market share in Western Europe, and ranks third in the global concrete machinery sector.

Sany Heavy Industry paid 360 million euros ($475 million) in January for concrete-pump maker Putzmeister Holding adding considerable technological know-how and international scale in the process.

Clearly with those international deals in mind, Zhang explained that to realize his global aspirations for the city, the Changsha government has already been working closely with companies to help encourage further international expansion.

Xiang Wenbo, president of Sany Heavy Industry, echoes Zhang's sentiment, adding that having global ambitions has been a significant part of its success.

"Take the acquisition of Putzmeister. It has given Sany a foothold in key foreign markets and boosted our overseas sales by combining Putzmeister's international brands, global sales and distribution network."

Xiang said Sany's overseas revenue is expected to account for 10 percent of its total this year, that's double last year, and he expects it to hit 30 percent by 2015.

Zhang said that to help companies better achieve their global strategies, the Changsha government encourages them to participate in international trade shows, such as the Intermat expo, one of the world's main exhibitions for the construction sector held in Paris in April.

"We also hold international industry events here to provide platforms for local companies to communicate with overseas partners, such as the 7th Central China Investment and Trade Expo held in May."

Zhang added that within the machinery sector as a whole, it is particularly important to invite more component suppliers to invest in Changsha. Compared with the rapid development of local machinery manufacturers, the growth of its component suppliers - particularly engines, torque converters, transmissions, drive axles, slew rings, and high pressure hydraulic components - lags behind.

A number of initiatives have already been started to encourage component suppliers to settle in Changsha, including providing set-up funding, and other help with recruitment, said Zhao Yuesi, director of the Changsha commission of industry and information technology.

Zhang said the aim is to create "a component supply industry zone" by 2015 in the city.

"By then, the total value of the component industry in Changsha will hit 100 billion yuan," Zhang added.

What marks out the city, however, is its strength in research and development, he said.

Zoomlion, Sany and Sunward already have their own national or province-level technical center, and have dedicated research teams focusing on mechanical, electronic and hydraulic expertise.

The Changsha government also encourages close cooperation between manufacturers, schools and research institutes.

"The government provides financial incentives and special funds for manufacturers to develop new technologies," said Zhang.

Away from the key construction machinery sector, the Changsha government is also investing in other industries such as automobiles and tourism.

Cars and auto parts generated output valued at 24.56 billion yuan last year, a year-on-year increase of 13.7 percent.

"The construction machinery industry is highly sensitive to the macroeconomic environment, especially regarding the building of infrastructures" added the mayor.

"To maintain the sustainable development of a city of 7 million people, Changsha's economic development cannot rely on one industry."

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