Extending the industrial chain, the road to continuous development for the construction machinery industry

Last year, the domestic fixed asset investment was 22.5 trillion yuan, an increase of 5.8 times over 2000. During this period, the market size of the Construction Machinery industry increased by 5.46 times. In the “Twelfth Five-Year Plan”, China’s market demand for construction machinery will reach 900 billion yuan in 2015. Large-scale investment in urbanization construction, highways, wind power and nuclear power construction will drive the construction machinery industry to achieve rapid growth in the next five to ten years. In the fierce market competition environment, "big fish eat small fish" is inevitable, extending the industrial chain will undoubtedly become a winning "magic weapon" for construction machinery companies to reduce risks and seek sustainable development.

In order to achieve the sustainable development of enterprises, construction machinery companies are aiming at goals, or mergers or cooperation "extension of the industrial chain." On August 26, Liuzhou Ovimu Machinery Co., Ltd. and Guangxi Liugong Group Co., Ltd. held an equity transfer ceremony. This is Liugong Group's effective integration of excellent corporate resources and the extension of the industrial chain. Owinge is the largest professional manufacturer of prestressed products in China. Regardless of product sales or influence, it ranks among the top national brands in the industry. Rapid growth of an enterprise depends solely on its own equipment and production capacity. It is impossible to achieve breakthroughs in quantity. Only by effectively integrating upstream and downstream fine resources, can the industry scale be enlarged and strengthened quickly.

Driven by the National Good Policy, Zoomlion seized the opportunity to realize a substantial increase in production and sales scale and market share. After the merger and acquisition of CIFA, synergies in R&D, supply, manufacturing, and markets gradually emerged, and internationalization was achieved. Professional docking and industrial chain extension to promote the construction of a global manufacturing and sales system, improve the overall level of the company, and further laid the world's largest and most extensive product coverage of the status of the leading enterprises of concrete machinery. On September 26, Valin Henggang and Zoomlion signed a strategic cooperation agreement. Zoomlion will increase the amount of steel pipe purchased from Henggang Steel by 10 times per year, and some varieties of steel will be used instead of imports to achieve cost reduction. To make use of the competitive advantage of the supply and demand sides, the two companies will realize complementary advantages and effectively avoid market risks. During the period, the two companies will also join forces to organize technical personnel to carry out in-depth "docking" in the research, development and application of new products and new technologies, and achieve rapid development in the industry through win-win cooperation.

Liugong and Zoomlion are only part of the development of the industry chain in the industry. They extend the industrial chain through vertical and horizontal extensions, promote the development of the company, and move toward “globalization”. In the future wave of domestic and international integration, more and more perfect industrial chains will be able to withstand the test. More companies in the construction machinery industry are eager to go this route and plan to become bigger and stronger.