HSBC gives thumbs up to Zoomlion

Its equipment is bulky and difficult to transport unless broken into many pieces and re-assembled at construction sites. Higher transportation costs have led to lower profit margins, since Zoomlion frequently assumes responsibility for transport costs to attract more construction companies to buy or rent its equipment.

Scania AB has reduced costs for the company by building larger customized trucks that can drive on highways to carry the equipment, which include large-scale cranes. Meanwhile, Zoomlion plans to exhibit its world-class cranes at Bauma China, the International Trade Fair for Construction Machinery in Shanghai, scheduled for Nov 27-30.

"Zoomlion will display its recently designed 80Ust tower crane D1250-80 and all terrain crane ZACBO1 at Bauma China," as reported by the China Daily. "The D1250-80 tower has been tagged by Guiness World Records as having the world's largest radii."

Creating mass quantities of such heavy equipment for use in China infers that the company holds high expectations for a renewed construction boom in the domestic sector, despite a slowdown of the global economy.

The investment strategy poses a greater risk to Zoomlion, which might face overcapacity if a construction boom does not ensue. Accordingly, it's to early to tell if this business approach would succeed.

Yet some signals point to favorable conditions. Beijing officials are determined to create more sustainable development such as building more affordable housing, creating a stronger retail sales market and continue on with infrastructure projects that require more concrete. Zoomlion would be poised to benefit from such circumstances especially if the nationwide urbanization movement gains more momentum.

The views do not necessarily reflect those of China Daily.

McGregor@chinadaily.com.cn

 

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