How Zoomlion's Indian investment story is trusted

2022-06-29
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Zoomlion's Indian investment story: how to be trusted and respected

Zoomlion's Indian investment story: how to be trusted and respected

China Construction Machinery Information

two years have passed since August 2012, Zoomlion Co., Ltd. (hereinafter referred to as "Zoomlion") and Indo Electric Co., Ltd. (hereinafter referred to as "em") signed a joint venture plant construction agreement in India

Zoomlion Heavy Industries Co., Ltd., headquartered in Changsha, was founded in 1992. It is mainly engaged in R & D and manufacturing of major high-tech equipment required for infrastructure construction, such as construction engineering, energy engineering, environmental engineering, transportation engineering, etc., with an average annual compound growth rate of over 50% over the past 22 years

as the fastest growing construction machinery enterprise in the world, Zoomlion has been striving to build a global industrial chain. In 2012, Zoomlion plans to settle in India

before and after that, Zoomlion has successively taken such major measures as acquiring Italy's third largest concrete machinery manufacturer in the world, introducing German Jost technology and establishing a research and development base in Germany

although many enterprises have lost ground in the South Asian subcontinent, Huang Qun, vice president of Zoomlion and general manager of construction crane, whose degradation cycle is long, is obviously satisfied with the current situation of this attempt. "This cooperation is a real strategic and all-round cooperation, which has brought our overseas operations to a new level." She said

after all, although the enterprises of the two countries are highly competitive, the prospect of investment and cooperation seems more attractive. Imagine: what is the energy behind 1.3 billion people plus 1.2 billion people

I don't know what will happen next.

according to the survey report of Zoomlion, according to India's "12th Five Year" economic plan (year), India will invest US $1trillion in infrastructure construction within five years, accounting for about 10% of GDP

thanks to large-scale investment in infrastructure, the compound annual growth rate of Indian construction machinery market will reach 15% to 20%. In 2011, the sales volume of tower cranes in the Indian market, commonly referred to as "tower cranes", was about US $93million, and will maintain an average annual growth rate of more than 21% in the next 10 years

however, Huang Qun was not optimistic about the Indian market at the beginning. As early as 2007, when Huang Qun went to India for the first time, he was almost "ruined" by the environment here: there was only one highway from New Delhi airport to the urban area, "more than 200 kilometers for six or seven hours."

therefore, when Zoomlion research department took out the investment feasibility report in India and suggested Huang Qun to meet potential partners in India, she still had doubts in her heart

"many domestic enterprises have gone to India to invest, but many enterprises are worried about the administrative efficiency and integrity of the Indian government. Zoomlion has set up factories overseas and is taking tower crane production as a pilot, so it must be cautious. Especially in a mysterious country like India, I don't know what will happen next. The investment needs to be further investigated." She recalled her state of mind to outlook Oriental weekly

during his visit to India, Huang Qun focused on the local infrastructure and equipment construction level. "The degree of mechanization is not high, and most of the construction and handling rely on manual work. In the street, you can often see some very thin women who carry the whole bag of concrete on their shoulders, feeling back to the 1970s and 1980s in China."

through "close" contact with the local market, Huang Qun saw the broad prospects of the Indian construction machinery market and the hidden demand for tower cranes behind the backward lifting machinery

previously, Zoomlion had an exclusive agency in India, which had been selling tower cranes made in China. Zoomlion tower cranes also had a certain popularity and market share in India

at that time, more than 70% of India's construction machinery was imported from abroad, more than 50% of the tower cranes were from China, and 12.3% of the 50% were from Zoomlion. Based on the above conditions, Zoomlion will have certain advantages in brand awareness and customer relations if it builds a plant in India

the reason why Zoomlion is really determined to build the plant is the cost. "The threshold of the Indian market is not as low as the outside world thinks. It will never lower its requirements for product quality, but it regards price advantage as the first competitive factor." Huang Qun said

there are few local tower crane manufacturers in India. Not only the companies that once acted as agents for Zoomlion tower crane business have started their own business, but also other famous Tower Crane Companies in the world have successively built factories in India, and the price has become the weakness of Zoomlion tower crane

this kind of construction machinery has a large volume and occupies a large space, so the transportation cost is not cheap. "If we don't produce locally and only sell by transshipment, we have no competitive advantage in terms of cost." Huang Qun said

on the other hand, the labor cost in India is "much lower" than that in China. Huang Qun believes that this proportion may be about half. "Of course, due to the extremely strict and complex labor law in India, the efficiency of Indian workers is relatively low, but they have all received professional training and are very standardized in production and manufacturing, which is enough to ensure product quality."

complex tax issues

as a reflection of India's promotion of investment promotion in recent years, if the tower crane is produced locally, there will also be tax incentives. However, the tax issue is also a "double-edged sword" that prevents Chinese enterprises from integrating and optimizing the inspection and testing resources industry into India

"when Chinese companies come to India, they will encounter many startup problems. The most typical is that they cannot understand India's tax structure, the different access permits of different government agencies, and it is difficult to accept the fact that the Indian government hardly supports local industries." Said Tushar, executive president of Indian EM company, which eventually cooperated with Zoomlion

as early as the initial stage of discussing the details of cooperation, India's complex tax structure once made the cooperation close to collapse

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