Shantui plans eastern European venture

Chinese manufacturer Shantui is currently in negotiations to acquire or partner with an un-named construction equipment manufacturer in eastern Europe.

The acquisition would be part of a wider internationalisation strategy of its parent company, Shandong Heavy Industry Group (Shandong), which aims to generate 20% of total sales from export markets within five years.

Mr Jiang Kui, president of Shandong, told International Rental News (IRN) at BICES that the plan was to start manufacturing machines in Europe, although he could not give a timescale. "We are trying to acquire some foreign companies. We are not certain what products - but we will try to find products that relate to our existing products."

He said that although Shandong's businesses were targeting markets in South America, India and elsewhere, "maybe Russia is the biggest market for us."

Shantui was one of the largest producers of bulldozers in the world last year. Sister brands in the Shandong group include JCM and Strong - both of which produce earthmoving equipment - and engine manufacturer Weichai Power. Shantui is also the export brand for the earthmoving machines.

Mr Jiang said that export was already a very important market for Shantui, with half of all bulldozer production in the past four or five months going to export markets.

Shantui reported at BICES that the second quarter of 2011 had seen a slowdown of the Chinese market for construction equipment after a long period of rapid growth.

However, Mr Jiang said he forecast that China's construction equipment market will continue to be very strong in the coming years. "We have a five year plan that is very strong and ambitious...I very strongly believe that the market will grow in the next three or four years."

He acknowledged that some aspects of the Chinese economy - such as the property market - were causing concerns, but said that China was such a vast country and with so much infrastructure work and development still required in the west of the country, that the construction market would continue to be strong.