We're All Curious About Chinese EquipmentBy Kim Phelan
Article Date: 07-01-2008
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
What would need to be right in order for you to look seriously at it? One dealer tells his story.
What's the first thing that comes to mind when you think about Chinese equipment companies entering the North American market? Do you wonder about the quality, or the product support, or do you wonder how they're going to overcome language and culture barriers in order to do business here successfully?About a month after the CONEXPO-CON/AGG show I had unrelated conversations with the presidents of two different AED member dealerships - funny thing is they could have been the same conversation because their comments were so similar. I'll paraphrase:Dealer says: I set aside some time at CONEXPO just to visit some Chinese manufacturers' booths. In each booth they would introduce me to the guy who was best prepared to speak with prospects. And each time I could not understand a word he said. So I would leave, shaking my head and thinking, "They're not ready."Perhaps it's obvious to you, but my feeling is that "ready" for North America will be defined by those companies that Americanize themselves in their marketing, branding and business approaches - all of which are accomplished with the right people in the right places. Dan Blade, president of Hi-Way Equipment Co. in Houston, affirmed that belief in a recent phone conversation - in fact, his experience is proof that the right people are absolutely essential to successful Chinese (or any foreign manufacturer's) transition into this market.Blade, an AED member, became a dealer for Chinese manufacturer LiuGong about six weeks after CONEXPO - but his journey of due-diligence and decision-making began a year prior to that. Initially the manufacturer had established a master distributor organization called The January Group, and while Blade was somewhat interested in the product line, he was less than enthusiastic about dealing with a middleman group rather than the manufacturer directly. However, when LiuGong dissolved the master distributor and created LiuGong Construction North America, appointing industry veteran Ron Hargrave as president, it was suddenly a new ballgame for Blade, who already knew Hargrave as well as George Lumpkins, director of Product Development and After Market Support, who also became instrumental in developing the dealer relationship. Veteran service and product managers were also hired, creating more confidence and credibility.Then all the planets started to align. LiuGong selected the Houston area for its North American headquarters, which meant product support was going to be a no-brainer. And the product is good and he can offer it to long-untapped customers for a good price - Blade was seeking to add an excavator to his mix, and LiuGong has been producing theirs since the mid-'90s; the 50-year-old company is also the world's second largest producer of wheel loaders, turning out 30,000 a year and 3,300 in the month of April alone.Now that some of Blade's customers have gotten a taste of Chinese, he's hearing positive feedback including that the wheel loaders are durable, have easy serviceability (not that they need much), and offer plenty of operator comfort. Blade admits that he's heard some jokes and stigmas, such as contractors asking if machines are painted with lead paint. (Remember the Chinese toy scare early this year?) But he believes that stigmas and hesitation will be short-lived, and that ultimately the AED dealer standing behind a reliable product is what will cause end users to embrace the line just as they did for Japanese and Korean products.Wondering how other Chinese manufacturers are strategizing for North American marketshare? You're not alone - so AED is inviting them to a panel discussion at this year's Executive Forum, where we'll ask them all the big questions. We'll take your questions, too, so please don't miss it. (www.aednet.org/execforum) Thanks for reading.
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