Sany builds on reform foundation for success

Achieving accolades and pioneering new initiatives are nothing new for Sany Heavy Industry Co, one of China’s shining successes both at home and abroad.

So much so, that four decades after China launched reform and opening up, the machinery equipment maker looks set to add another feather to its cap with recordbreaking growth in revenue and net profit for 2018.

Indications that the Changsha, Hunan province-based company was on the threshold of a huge success came after it said that its net profit for the first six months of this year was 3.389 billion yuan ($494 million), an increase of 192.09 percent over the same period a year ago. What was even more surprising was that the company had already achieved 161 percent of the total net profit it earned for 2017 during the first six months.

“The country’s reform and opening-up strategy has brought vitality to Sany,” said Xiang Wenbo, president of Sany. “2018 marks the country’s 40th anniversary in initiating reform and opening-up and it has been the best year so far for Sany, as we expected profit, cash flow and revenue to scale new peaks.”

Xiang said Sany’s success has largely been due to its ability to convert the opportunities arising from China’s reform push into tangible growth over the years.

“The five years after the 18th National Congress of the Communist Party of China held in 2012 was a period of rocketing growth for the country’s construction and machinery industry. During that period Sany not only upgraded its entire gamut of operations, but also shifted to a new phase of development.”

Explaining further, Xiang said that in 2012, China’s machinery industry was facing a winter of sorts as several real estate and infrastructure projects had been called off for economic reasons. “We decided to change tack and focus on the overseas markets, instead,” he said.

“That was surprising for many as until then, more than 90 percent of our revenue came from the domestic market. We decided that we had to accelerate our progress in global markets to get out of the rut,” Xiang said.

In 2012, Sany acquired German machinery maker Putzmeister, for 360 million euros ($440 million), the biggest Chinese acquisition at the time.

The real impetus for Sany came from the Belt and Road Initiative, as the trade plan was in sync with its growth blueprint. “About 70 percent of our overseas revenue is generated in economies along the BRI,” Xiang said.

“The initiative has provided a tremendous opportunity for raising our international production capacity and cooperation,” he said.

Currently the company has three industrial clusters in Changsha, Beijing and the Yangtze River Delta, three industrial parks in Shenyang, the Xinjiang Uygur autonomous region and Zhuhai, and four research, development and production centers in India, the United States, Germany and Brazil.

Qi Jun, president of the China Construction Machinery Association, said the overseas efforts of Chinese companies have played a big role in global industrial recovery.

Sany was ranked eighth in a recent global ranking of the top 50 construction equipment manufacturers in the world. “Of the 12 companies that saw a rise in sales of more than 40 percent, nine were Chinese. The combined sales of the 12 Chinese construction machinery manufacturers on the list reached $24.78 billion,” said Qi.

He added that infrastructure projects, aimed at boosting connectivity and unveiled as part of the BRI, have directly stimulated the country’s machinery equipment industry.

“There are at least $800 billion worth of infrastructure projects in the next decade in the economies along the Belt and Road Initiative,” he said, adding that the country’s opening up strategy has given Chinese machinery makers the impetus for long-term and sustainable growth.