One manufacturer may have found a way in. In 2006, Volvo Construction Equipment Co. bought a 70% majority share in Shandong Lingong Construction Machinery Co. (SDLG), based in Linyi. At the time, SDLG was the smallest of four major domestic wheel-loader manufacturers in China, and it was looking for more market share, says Benoit Rimaz, president of Volvo's China regional headquarters. "They were quite interested in doing business with Volvo," says Rimaz.

SDLG management wanted to open China to Volvo and create distance between themselves and the other big-three Chinese players, adds Rimaz. "Volvo injected a huge amount of money and expertise into SDLG," adds David C.A. Phillips, managing director Off-Highway Research Ltd., London. Leveraging Volvo's research and development lab, SDLG improved its product line.

As foreign and domestic manufacturers vied for Chinese market share, Volvo's SDLG presence helped it corner the wheel-loader market in China. "If you were a Chinese operator, you weren't looking at CAT or Volvo or Komatsu because it didn't make financial sense," says Rimaz.

Over the past five years, SDLG has moved to first from fifth place in China's domestic wheel-loader sales, reaching 150,000 units last year, according to data from trade group China Construction Machinery Association. SDLG also takes the highest percentage of China's 20,000-unit wheel-loader export market, distributing worldwide from remote regions such as Iraq to rising markets such as Brazil, where the firm opened its second plant last summer. Tapping the Chinese market paid off: Volvo's ranking among global manufacturers rose to fourth place from fifth place in 2009, according to trade publisher KHL's International Construction Yellow Table ranking.

"Then Al came along and said we should enter the North American market," says Rimaz, referring to Allen Quinn, director of SDLG North America. Quinn is trying to break into the North American market by pairing SDLG's inexpensive manufacturing costs and Volvo's distribution system to introduce two medium-size wheel loaders.

"We're creating a new market segment," says Quinn. "None of the other big four [U.S. manufacturers] are doing anything like this." The segment appeals to a value buyer: construction and agriculture operators that have never bought a new machine or only buy used. By pricing the machines 30% lower—$144,500 for a 4-cu-yd loader and $94,500 for a 2.5-cu-yd loader—and offering no frills, Volvo avoids head-on competition with premium brands. "Chinese [original equipment manufacturers, or OEMs] have tried this in the past," says Dobre. SDLG's trump card is the support of an existing Volvo dealer network.

"There's nothing wrong with the product that I've heard of, and I would have by now," says Yengst. "It's a plain, vanilla wheel loader." In this case, "vanilla" means the units have dry disc brakes, manual transmissions and open-loop hydraulic systems. "It's not as fast to operate," admits Quinn. "If you run a mine where the machines go 24/7, it's not the machine for you."

A typical Volvo unit has three computers, while an SDLG machine has one—and only for emissions requirements, notes Dean Wolfe, sales manager at Redhead Equipment, Saskatchewan, Canada, one of the 11 North American SDLG dealers. "But if I put just 500 to 1,000 hours a year on a machine, I'd buy it," says Wolfe, who claims he sold five units since the Oct. 24 official release date. At 30% less, buyers can have three discount loaders for the price of two premiums, notes Mike Vorster, owner of fleet consultant CEMP Central Inc. "That means the bells and whistles are going to have to justify themselves," he says. On the other hand, premium brands command a premium resale value.

Even if SDLG and other Chinese companies gain footing in America, their home market now dominates the global scene. The Western world saw sinking equipment sales from 2007 to 2011, while Chinese sales nearly tripled, to $36 billion, making up a full third of total world sales, according to Off-Highway Research. Flush with profit, Sany bought Germany-based Putzmeister for $475 million in 2012. This followed Zoomlion's 2007 purchase of Italian concrete-machinery manufacturer Cifa for $567 million.

The message was "if you can't beat them, buy them," says Mark Irving, sales manager at Irving Equipment, a Tiffin, Ohio-based pump dealer.