Business / Companies

Taizhong does heavy lifting for China's industrial sector

By Li Yang in Taiyuan (China Daily) Updated: 2014-02-25 07:29

Changing environment

According to Wang Weiguo, director of sales, Taizhong's export revenue hit a record high of 1.6 billion yuan in 2008, although it declined to just 300 million yuan in 2009 as the global downturn hit.

"Export revenue recovered later and remained at about 1 to 1.3 billion yuan from 2010 to 2013," Wang said.

"Times have changed. Heavy equipment isn't as important as before in the US. And rising heavy equipment suppliers like Taizhong in emerging economies are taking developing countries' markets away from European companies, another result of the 2008 global crisis," Wang said.

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After 2008, the Chinese central government's stimulus package not only boosted economic growth - it also led to serious overcapacity among heavy equipment producers.

Fierce price competition to sell large excavators, cranes and forging mills turned the business into a losing game for all.

"I won't mention any names, but there's a company in Northeast China. To win the bidding to supply a portal crane in Shanghai, the company offered a price only two-thirds of ours," said an anonymous engineer at Taizhong.

"Our price is already so low that we can't even figure out how to make money on the deal."

With competition getting so intense in the industry, Taizhong turned to new products. It invested 2 billion yuan to establish a Tianjin branch in 2011, which produces wind power and nuclear power equipment.

The branch also began making coal chemical equipment for foreign markets starting in 2012.

Also in 2011, Taizhong bought an Australian coal bed gas mining equipment producer, Valley Longwall International Pty Ltd. Taizhong said the acquisition will build up its competitiveness in China's coal bed methane sector and allow it to enter Australia's coal cutter market.

In terms of corporate structure, Taizhong - with 14.6 billion yuan in total assets and 14,000 employees - has its heavy machinery companies in Taiyuan and Tianjin, coal- mining equipment companies in Taiyuan and Australia, and a rail-related equipment enterprise in Taiyuan. It also has a hydraulic equipment company in Yuci, Shanxi.

According to the company, its most competitive products include wind power and nuclear power equipment, coal-mining and chemical industry equipment and high-speed train wheels, axles and wheel sets.

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