Firm building a solid foundation

A Shantui bulldozer on display, May 7, 2012.[Photo/IC]

Heavy machine producer succeeds in South Africa by setting up subsidiaries, report Xing Zhigang and Li Jiabao from Johannesburg

Taking the road less traveled can not only lead to profits but also help build sustainable relationships, as Shandong Shantui Construction Machinery Import & Export Co Ltd, a Chinese producer specializing in heavy equipment, has discovered in South Africa.

What really makes Shantui different from its global and Chinese peers is its foresight in setting up a network of

Decoding China's investment in Africa

Setting in train Africa's railways

Also in the cards are steps to broaden the network in Africa by having its own distributors, company officials said.

"We are totally focused on Africa, as we believe that it is an emerging market that offers immense long-term growth potential for our products. Our strategy hinges on setting up subsidiaries and, later, distributors in strategic markets so that we can be closer to the markets and customers with our products," said Dylan Chicken, general manager and director of Shantui Equipment South Africa (Pty) Ltd.

Chicken, who has worked for more than seven years with the Chinese company, including three as a dealer, said that Shantui had anticipated it would succeed in the long run.

"When our parent started its African operations in South Africa in 2009, like most of its peers it was also reliant on a network of local dealers to push its products. But it was a bad time for the company as most of the dealers were hit by the global financial crisis and eventually shut up shop," Chicken said during an interview at the company's expansive office in Kempton Park in the Gauteng province of South Africa.

"Luckily for us, the parent company had decided to register a subsidiary in South Africa in 2009. This became fully functional in 2010," he said.

Explaining the difference between the two approaches, Chicken said that dealers are generally independent individuals or entities associated with several companies and products, whereas a subsidiary is a divisional company that is owned by the parent company.