Facing Threats, Embracing Opportunities By Jonathan (Toby) Mack
Article Date: 02-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
AED members traveled to China in December, meeting Chinese manufacturers, dealers - and the machines that are soon headed for U.S. soil.
With the specter of a burgeoning Chinese construction equipment industry breaking into the North American market, AED has been bracing for a replay of past experience when the Japanese and then Korean players made a major impact on our markets here. As it was before, depending upon where you are in the market, the outlook can be anywhere along the scale from threat to opportunity. But in neither event can you safely ignore it.
With these thoughts swirling, early last year AED seized an opportunity to do some first-hand discovery - looking directly at Chinese companies and products - in China. Our manufacturers' association, the Association of Equipment Manufacturers (AEM), was establishing a Chinese edition of the CONEXPO show, planned for Dec. 4-7, 2007 in Guangzhou, the city formerly known as Canton.
AEM asked if we would create an AED member-dealer delegation to visit the show and hold a symposium for Chinese dealers and manufacturers on distribution best practices in the U.S. and Canadian markets. We readily accepted, and our 14 slots were quickly snapped up.
On Dec. 1 we took a 14-hour nonstop flight from Chicago to Shanghai. Though somewhat bleary-eyed, our immediate reaction to Shanghai's scale and development was pure amazement. Spread out before us was a bustling city twice the size of New York, literally half of which (the Pudong District) is gleaming and new, having been built since 1990! And not on the cheap - spectacular infrastructure was everywhere, from a massive new airport far bigger than O'Hare, to five-deck highway interchanges, to a 260 mph magnetic levitation train connecting the airport with downtown (cost: $1 billion per mile). Making us feel right at home, 8 and 10-lane super-highways were clogged with late-model cars and trucks. Everywhere one looks, the horizon is a maze of tower cranes.
After a day of sightseeing, including a massive scale-model of a city plan to double again in the next 20 years, on Dec. 4 we flew to Guangzhou. We now had not the slightest doubt why world supplies of concrete and structural steel have been tight for the past few years.
Guangzhou is a "smaller" (population: 10 million) industrial city. CONEXPO was sited on a massive new trade exposition and hotel complex built on a large island in the Pearl River. For the next two and a half days, we split up and "worked" the show, coming together in the evenings for elaborate Chinese dinners, one hosted by our AEM sponsors, and one by Scott Brennan of GE Commercial Finance.
CONEXPO Asia was primarily for Chinese and global manufacturers selling to the Chinese customer base. Many U.S. players were present. To name a few: Caterpillar, Case, Bobcat, Terex, Link-Belt, Manitowoc, Multiquip, Dynapac, Vermeer. Some of the bigger Chinese manufacturers who are queuing up to enter the North American market were also there, including Sany, Zoomlion, and Sunward. Impressions of the Chinese products on display were generally very favorable.
Meeting with Chinese Distributors
A highlight of the visit was a conference on Dec. 5 at which I, ably assisted by my AED dealer companions, presented a review of distribution best practices in the U.S., along with information about the structure and operations of "typical" AED dealers. The audience was comprised of about 20 Chinese equipment dealers representing their dealer association, Distribution Council of China Construction Machinery. This was a three-hour, simultaneously-translated event that included much Q&A afterward. China is an immature market, and there was a very high level of interest in how things were done in the U.S.
Afterward, three Chinese manufacturers (Sany, Sunward and Zoomlion) made presentations about their companies' history and growth, product development and offerings, and plans to expand into global markets, including North America.
On Dec. 7, we flew back to Shanghai for a bit more touring, shopping and dining, and on Dec. 8, returned to Chicago.
I'd like to comment on AED's role in this undertaking, and summarize our collective impressions of the experience. First, AED and our participants are very grateful to our partner association AEM for providing this opportunity, for making arrangements and coordinating our travel and schedules, and for underwriting a major share of the expenses of the trip. Some of our delegation actually did, or initiated, business deals with Chinese companies. I believe we all left with a tremendously heightened appreciation of the massive scale of Chinese economic development - it's one thing to read about it but another to actually see and experience it. It is truly amazing, and it clearly will have an impact on our businesses and lives.
And last, I'd like to suggest that AED needs to, and will, continue to grow our footprint in the global marketplace. While we are a North American-based membership organization, global forces have had, and will continue to have, a large and growing impact on our industry. It behooves us to understand where the threats and opportunities are - to deal with the former and to capitalize on the latter. n
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