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CAPITAL EQUIPMENT NEWS
APRIL 2015
2
human history
–
an estimated 150 million
people have left the rural areas to work in
the factory towns of the coast.
This influx of readily available labour has
created the explosion of manufacturing en-
terprises to accommodate the workforce that
has been unleashed, at least in the econom-
ic sense. So the products have to go some-
where; the global arena.
The world economy is facing tough competi-
tion from China, particularly the international
truck makers and construction equipment
manufacturers, as Chinese vehicles have
already cornered their domestic market and
are now poised for an assault on the export
market.
According to a report published by Alix Part-
ners, the automotive consultants, China has
year on year since 2010, produced almost
half the world’s commercial vehicles and
construction equipment due to strong local
demand and increasing exports to emerging
markets, where China’s products are priced
at least at half the price of that of global
manufacturers.
With the Chinese government providing the
correct stimulus, China, in 2009, was the
only major market to show growth in the
number of vehicles produced, while the rest
of the world was going through economic
anguish.This strong growth enabled China to
boost its share of the global market which
today stands at close on 50%.
The only area where global manufacturers
have benefitted has been Europe where
Chinese trucks cannot compete because
they do not meet the emission standards.
This will, however, not be the case in time
to come as more and more technology is in-
corporated in their vehicles as a result of the
JVs that most Chinese manufactures have
entered into with European manufacturers.
As far as construction equipment is con-
cerned, the Tier 3 engine specifications are
still acceptable for markets in Eastern Eu-
rope. Chinese equipment manufacturers who
have had joint ventures with USA companies
previously are now fully owned by their Chi-
nese partners as in the case of the Dressta/
Liu Gong who have set up their manufactur-
ing facility in Poland.
But in emerging markets, which Alix expects
to produce 58% of growth in commercial ve-
hicle demand by 2014 – China’s lower cost
and lower technology commercial vehicles
are posing stiff competition to global truck
makers. Chinese exports of commercial ve-
hicles, mostly to emerging markets in Africa
and south-east Asia, have risen since 2010
and are still on the rise.
At the moment, the cost factor gives Chinese
vehicles a distinct advantage but if market
forces dictate the need for more sophisticat-
ed, electronically controlled vehicles there
must be an inevitable narrowing of the price
gap to bring them in line with their European
counterparts.
Pierre Sanson, Editor.
C
hina as a country, to the outside world,
is definitely aiming to a brighter future.
Having travelled to China on a number
of occasions, I have experienced some of the
diversity that exists and seen development
in infrastructure to rival the biggest in the
western world.
The Red Dragon is definitely breathing
heavily at the moment and much of the fire
is blowing in the direction of the African
continent. It is well known that China is in
the forefront of development on the African
continent, having contributed favourably to
the economic infrastructure of many an Af-
rican nation. Now, with the signing of trade
agreements between South Africa and Chi-
na, further development in that direction is
no doubt imminent.
Not wanting to delve into the political arena,
I do believe that the resurgence of China as
a world power has only been in the post-Mao
era when total reform was initiated and free
market changes were introduced.
After a century of turmoil, Chinese history
has become the story of average citizens.
The 21 st century for China has been one
of very little political change which has giv-
en the nation an opportunity to transform.
Clearly there are factors that cannot be ig-
nored when looking for reasons why China
is striving for global economic acceptance.
For three decades the economy has grown at
an average of rate of nearly 10%, and more
people have been lifted out of poverty than
any other country at any time. China has
become home to the biggest urbanization in
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