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."

Customised for successOne of the ways that the Chinese manufacturers have made themselves so relevant in the regional market is through the thorough customisation of their products, and SDLG's Sun says: "Since the climatic conditions in the Middle East are hot and dusty, SDLG has made modifications to the air inlet and engine cooling systems of its equipment to increase reliability, performance and uptime."

Nadeem adds: "Shantui R&D supports us well to make our machines suit the technical demands of a market. For example, we’ve delivered our main SD32 dozers or SD-series Hydrostatic dozers in the region with original Cummins engines, and also provided component lines with Tier3 engines (Duetz Weichai) and Linde hydraulic pumps and motors, keeping markets like the Middle East in mind.

"Shantui has launched its concrete machinery in the region in the last four years and has succeeded with excellent after-sales support, listening to customers and customising products to their needs with the help of its design engineers."

In fact, Shantui concrete pumps and mixers are in operation in Dubai in a Guinness Book of World Records-listed project for the longest continuous concrete pour (19,793 M3) by Unibeton, one of Shantui's biggest customers.

Meanwhile, SDLG has seen strong demand in the region for its 5t L958F wheel loader, whose larger wheel base offers greater stability in harsher terrain and its engine and heat dissipation hood have gull-wing designs for easy access to the engine.

"The L958F is particularly popular among our customers not only because of its durability, but also because its configuration aligns with customers’ preferences," says Sun, adding that the company will soon launch the G9190 Auto VHP and G9220 Auto VHP motor graders here, with 164kW Dalian Deutz engines, ZF power shift transmissions and three engine power curves for fuel economy as well as the RD730 hydraulic double-drum vibratory asphalt compactor.

For Sany, truck-mounted concrete pumps have seen high demand, says Wang. "We’ve also introduced our wheel loaders in the region recently as now we want to provide total solutions instead of single products – so we aim to provide total earth moving solutions to the market."

One tag that plagues Chinese manufacturers still is the perception of being low-cost options. But that is a thing of the past, say the companies.

"Our present quality can compare with the Europeans and Japanese. As a matter of fact, end-users of our equipment quickly realise our product quality – and facts speak louder than words," says Wang.

Calling the low-cost tag "a myth", Shantui's Nadeem says: "The European, American and Japanese brands also use various component lines to meet the demands of various markets; Chinese manufacturers do the same. As we enter advanced markets in Europe and North America, we’re offering machines with many main components from the top global suppliers to make them fully acceptable anywhere. For example, our concrete boom pumps use all Rexroth/Vickers hydraulics, Japanese or European trucks, Swedish steel for the boom, and imported control valves, motors and pumps – therefore it is essentially a European product under a Chinese name."

According to SDLG, Middle East, customers prefer machines with lower initial cost, and this is where Chinese equipment brands have a competitive edge over the bigger names.

"Over the years, SDLG machines have proven themselves to be highly reliable and productive. After years of hard work, Chinese manufacturers enjoy a much higher level of brand awareness and recognition in the Middle East market than in the past," Sun concludes.

Shantui: Spreading its wingsWell-known as one of the world's premier bulldozer manufacturers, Shantui has been steadily extending its reach in the Middle East in other equipment categories.

The company started the year 2017 on a bright note with an order for 63 units of its wheel loaders from an undisclosed Middle Eastern customer. This follows a recent spate of success for the brand in the region.

Back in 2015, Shantui's SD32DQ desert-type bulldozer debuted in the Middle East market with a 10-unit order that was the first of its kind globally. The model was especially significant because it was designed and customised jointly by Shantui's Dubai branch and Shantui R&D centre to specifically meet the needs of the Middle East client.

The SD32DQ is an upgraded variant of the SD32D to confront the severe working conditions in the region. Its special features include a more powerful Cummins engine and upgraded air filter. The model's heat dissipation potential was increased 30% with an enlarged water tank, heat-resistant tubes and mechanical seals. It also employs a heavy-duty straight-tilt blade and a lubrication type extended track to improve working efficiency and prolong its life-span.

Being known for such high levels of customisation and attention to customers’ needs, it was no surprise when earlier this year, Shantui Dubai won a $7.25m dozer order for the North Africa market. Shantui Dubai received an inquiry from a local agent on the bulk purchase of the large horsepower bulldozers and developed customised product solutions for it.

This comes close on the heels of another big success for the company in Turkey where 10 of its SP90Y tracked pipe layers started working together on a Caspian Sea area natural gas pipeline last year. This was the SP90Y's debut and a successful breakthrough into a market segment dominated by Japanese and Western companies.

Shantui says its successes have come from attention to detail and customising its products – all while listening to its customers and providing the best after-sales support. Helping in this is regular training and upskilling of its support staff in the region. Shantui (Dubai) Parts and Service Training Centre held a Dealer Service Training Session last year with service personnel of 34 dealers from nine countries. This was followed by another training in Egypt this year for product knowledge and after-sales service skills for local agents and users.

SDLG: Flying highSDLG is a Chinese manufacturer on the up in the Middle East. The company has introduced several new models in the region recently and has been part of several big-ticket projects.

One of these is an ongoing large-scale, government-funded road maintenance initiative in Saudi Arabia involving 58 SDLG machines. Made up of 20 projects and spanning seven areas of the country, it aims to improve accessibility and connectivity.

Project contractor Shibh Al-Jazira Contracting Company (SAJCO) took delivery of the 30 SDLG LG958L wheel loaders and 28 SDLG G9220 motor graders late last year from dealer Al-Futtaim Auto and Machinery Company (FAMCO).

Motasim Abulhasan, SDLG central region sales manager at FAMCO, says: "In the beginning, SAJCO requested two and a half cubic metre loaders but we advised them to choose the LG958L because it has a three cubic metre bucket to handle greater workloads. As for the graders, SAJCO needed a machine with a 14ft plate and a power rating above 150kW; for that the G9220 grader was perfect."

After delivery, the machines were distributed to seven project locations: Abha, Qassim, Northern Borders, Eastern Province, Jeddah, Madinah and Riyadh. Over the next three years, SDLG's product support department will work together with FAMCO to ensure optimum performance.

Some graders and loaders have already clocked an impressive 1,000 hours in under six months, and Mohammed Al-Nahas, senior technical advisor at SAJCO, comments: "The machines have exceeded our expectations in terms of quality and performance, and we will definitely look to SDLG for more machines in the future. We are also very satisfied with the support we’ve been receiving from FAMCO."

Meanwhile in neighbouring Qatar, three SDLG LG958L wheel loaders have racked up almost 2,000 operational hours in four months at a quarry owned by Al Maram International, which uses crushing and screening equipment to reduce and sort limestone, primarily for asphalt applications.

Aby Joyce, head of Al Maram's crusher department, says: "We are using the LG958Ls to feed the crushers and mixing plant, and load the processed aggregate into waiting dump trucks and trailers. For the past four months, the machines have been working two shifts a day for 16-18 hours in total. During that time we have encountered very few technical issues."

Building on the success of its wheel loaders in the region, SDLG launched four new F-series models for the Middle East and Africa markets in April. The L953F, L956F, L958F and L968F feature modern designs and technical enhancements such as improved axle designs, higher breakout forces and enhanced operator comfort.