Chinese Equipment Manufacturers Making Inroads at CONEXPO
Looking out over the Silver Lot at the Las Vegas Convention Center during CONEXPO 2014, you'd be forgiven for assuming it was reserved for China-based heavy equipment manufacturers. Giant crane booms with banners for Zoomlion and Sany loom overhead, an imposing yellow booth for Lonking sits below, and a giant robot statue made to look like a transformed Sany excavator stood guard near the entrance to the lot. But it was more than a show of strength from Chinese equipment manufacturers. Lonking announced a deal with a new company, International Construction Products, to sell their wheel loaders in America through IronPlanet, and Zoomlion announced a $20-million crane order with their U.S. distributor.
Tim Frank, the former president of the American division of China-based Sany, is now serving as chairman of ICP, which has announced plans to sell heavy equipment from China-based Lonking in North America. Rather than start a dealer network from scratch, ICP is teaming up with online equipment auction house IronPlanet to build an online store for Lonking machines. "We'll be selling both online to customers and through some traditional dealer partners," says Frank.
Lonking is a major manufacturer in China, but it has had no real presence in the U.S. The company produces over 50,000 wheel loaders per year, by far its most popular product line. ICP is offering three models of Lonking wheel loaders initially, along with four models of Lonking excavators. Its offerings in North America also include dozers and forklifts, with future plans to bring over the company's skid-steer loaders, portable compressors and other equipment.
The Lonking machines will be manufactured in China, and shipped from Shanghai to U.S. ports with about a monthlong delivery time. Parts will be stocked in the U.S. facilities of TVH Parts Co. and a network of smaller dealers across the U.S. will provide service. Frank says ICP will be able to supply Lonking machines to roughly 80% of the North American market to start. In terms of prices, the Lonking CDM835 wheel loader is listed on IronPlanet at $85,000, while the higher-capacity CDM858 is listed at $124,000. IronPlanet currently has 19 Lonking models listed for sale, mostly forklifts.
"We prepared for many years to enter into the North American market," says Qui Debo, CEO and president of Shanghai-based Lonking, who spoke to reporters at CONEXPO through a translator. "ICP is a very young company, but they have a very professional and experienced team. They have a very good understanding of the market and its customers." ICP only launched the service on IronPlanet on March 4th, but expects to sell 300 machines by the end of 2014. "We believe we will do over $150 million of business next year," says ICP's Frank.
ICP itself is less than six months old, which may seem unusual for the U.S. broker of one of China's largest heavy equipment makers. Work on ICP began with its CEO Wes Lee, a veteran of Volvo, Komatsu and Case. But according to Tim Frank, the online direct-sales model with Lonking is something he tried to convince Sany to adapt. "I go directly to the chairman, and we talked about it for over a year within Sany," says Frank. "I showed them the map and said here's the dealers we can sign. Cat, Komatsu, Volvo, Deere have 85% of the market, you can't contract with any of them. 'Why not? We're Sany.' You just can't."
The ICP model is also hoping to target U.S. customers who want to snap up a few more machines that still have engines with Tier 3-compliant emissions. "Bechtel is on our board, and they want to buy Tier 3 until the end of it. It's easier to dispose of, they like the resell value." Frank adds that Lonking will be offering Tier 4 Final-compliant machines in the first quarter of 2015.
Other Chinese equipment manufacturers already have distribution in the U.S., and took the opportunity at Conexpo to renew these ties. Changsha, China-based Zoomlion announced it was signing a $20 million order during the convention with Global Cranes, its official international distributor. The deal includes crawler cranes and rough terrain cranes, according to a press release from Zoomlion.
