Capital Equipment News April 2018

EDITOR'S COMMENT

DRAGON’S REWORKED APPROACH

W hen you make a mistake, there are three things you should always do about it: admit it, learn from it and don’t repeat it. This is exactly what several Chinese OEMs have done in their quest to seize a sizeable share of the local capital equipment market over the years. During their early days into the market, Chinese offerings were viewed with disdain, and rightly so. We would all agree that

there were genuine concerns around the quality of the products. Added to this was the lacklustre support structures. However, I am of the view that the days when Chinese gear was viewed with contempt are long gone. There is no doubt that the Dragon has upped its ante as far as quality of product is concerned. Most Chinese OEMs have established themselves in the value end of the market. They are armed with a rugged and simple product, not as sophisticated as some of the premium offerings. The approach is to offer a straightforward product, a workhorse with no extra bells and whistles, which is mostly targeted at emerging contractors and entry- level participants into the construction and mining industries. Despite a significant improvement in the quality of their products, it took some time for them to understand that aftermarket support is a key business driver in export markets, contrary to the approach in their domestic Chinese market. Parts supply and service support are key considerations in local customers’ buying decisions. Nonetheless, I believe that most of the early flaws of the Chinese brands have since been remedied. They have had a greater focus on boosting their aftermarket support structures over the past few years, establishing themselves as forces to be reckoned with in the process. A case in point is XCMG. In 2014, the OEM abandoned its dealer model to establish a subsidiary, XCMG South Africa. The move was aimed at re-strengthening the brand in the local market through several initiatives, anchored by the immediate establishment of strong backup support infrastructure. The first initiative was to establish a massive parts warehouse in South Africa to support its customers

across southern Africa. As you will see in this edition of Capital Equipment News , four years later, XCMG’s move has paid substantial dividends. Last year, XCMG SA saw a big jump in its market share. In excess of 100 units were sold in 2017 alone, with the export value exceeding US$5-million for the first time. The company expects to triple its 2017 sales figures this year, considering that a total of US$5-million sales deals were concluded during the first day of bauma CONEXPO AFRICA alone. As you will read in the Cover Story of this edition, Ever Star Industries’ (ESI) success story in recent years has hinged on significant investments into aftermarket infrastructure for its Shantui and Powerstar brands. One of ESI's first initiatives when it took over the distribution of Shantui was to commit a substantial R80-million investment into its parts stockholding. The results of the relentless focus on customer satisfaction are there for all to see. Today Shantui is among the top three dozer suppliers in South Africa. The customer-centric approach has also propelled Powerstar to the summit of the local construction vehicle market, breaking the dominance of premium offerings in this market segment. To date, it holds the second-largest market share in the extra heavy construction vehicle segment. It has taken time for Chinese OEMs to grasp that the success of any brand in the capital equipment sector hinges on the supplier’s ability to offer unparalleled backup support. However, it is encouraging to see that they have corrected their early mistakes and their solutions have become the product of choice for emerging construction contractors and junior miners who often lack the financial muscle to afford premium offerings.

Munesu Shoko – Editor

capnews@crown.co.za

@CapEquipNews

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