The dragon flies steady: Chinese equipment manufacturers’ expansion in Middle East

After weathering the recent dip in the Middle East’s construction and equipment sector, Chinese manufacturers have settled on a path of slow and stable expansion in the region

The Middle East market may not be what it was two years ago, but that is not deterring the big-ticket Chinese equipment makers from betting on the long-term prospects of the region. Adding value, quality, capacity and technology to their products and services is the recourse that Chinese manufacturers are taking to try and remain at the levels of market traction they are accustomed to.

“We all know that the market is going through a lean period. The GCC countries, however, have their commitments to developmental projects related to infrastructure, education, health, housing, public transport, etc. with a fixed time horizon. Hence, there can a bit of a delay but development activities have to carry on,” Kamil Nadeem, area manager, Middle East, at Shantui tells CMME.

Sounding quite optimistic about the future, he adds: “Now the time is coming again where we can see a spurt in activities after a brief lull in the recent past. If you look at the UAE, it is committed to the Expo 2020 which is bringing in a lot of projects related to infrastructure and construction. We are getting inquiries regularly for various equipment, from earth-moving to concrete machineries, in the year 2017 and we hope to see a lot of activities just after the holiday season. We do expect some more cash flow and liquidity in the market in the coming time.”

Agreeing with him is the Sany Group’s customer support manager for the region, Charlie Wang. Speaking in a personal capacity, he tells CMME: “The market can now be expected to go on a growth path, at least for the next few years. The main reason is that Dubai government will still invest in infrastructure for the EXPO 2020 and Qatar is also accountable to deliver on its promises for the 2022 FIFA Wold Cup.”

“At Sany, our sales have gone up in the last two years, but profits have not increased too much. All competitors are making a beeline for the region and for manufacturers to survive, we are having to engage in a price war of sorts. I expect demand to increase in 2017-2018 but don’t expect a change in the price and payment terms.”

Over at SDLG, Jackie Sun, region manager for Middle East and North Africa, says that demand has shrunk in the Middle East region due to persistently low oil prices in recent years. However, the Volvo-owned company does have a silver lining of its own.

“Over the last two years, SDLG has enjoyed the largest market share in the Middle East among all the Chinese construction equipment brands. We remain optimistic about our prospects as we continue to introduce new products to the market, including backhoe loaders and motor graders, to continue to meet customers’ needs,” Sun adds.

Shantui, meanwhile has not done poorly, despite the constraints. “Our sales have been comparatively stable thanks to a good product mix and excellent customer support in the MENA region,” says Nadeem. “We supplied a good number of our 90t pipe layers here, which is a high-value product. The SP 90Y pipe layers are currently working at an oil pipeline project in the Caspian region.

“We have also done well in the concrete segment, developing large (12M3) transit mixers at extremely competitive prices, which benefited customers by being able to carry 25% more load than conventional 9-10 M3 drum sizes. With low spare parts costs and 24×7 after sales support from Shantui’s Jebel Ali depot, we have brought down customers’ total cost of ownership drastically, enabling them to recoup their investment in 12-18 months.

“We also have executed fairly good numbers on wheel loader and mid-range motor graders. And we started well in 2017 with a big deal on bulldozers.”