The weak construction industry in China is affecting two heavy machinery companies here in Korea. Doosan Infracore and Hyundai Heavy Industries are thus making changes to accommodate their declining market share; Doosan held 18.9% of the market in China in 2006 but last year, the figure dropped to 8.5%

October 2, 2013 Leave a comment

2013-09-30 16:17

Slump in China hits Doosan, Hyundai

By Yi Whan-woo
The weak construction industry in China is affecting two heavy machinery companies here in Korea. Doosan Infracore and Hyundai Heavy Industries are thus making changes to accommodate their declining market share. Doosan Infracore, Korea’s largest construction equipment manufacturer, held 18.9 percent of the market in China in 2006 but last year, the figure dropped to 8.5 percent, according to latest data from the China Construction Machinery Association (CCMA).Hyundai Heavy Industries also saw a drop in its market share from 17.7 percent to 7.9 percent, according to CCMA.
The association said that China’s slow economic recovery is causing the problem.
Doosan Infracore runs two plants, one each in Suzhou and Yantai. To deal with the decrease in market share, the company plans to cut the number of excavators made per month at its Suzhou plant by half.
Hyundai Heavy said it plans to raise sales in India, Brazil and Russia instead of China, which the company considered its biggest overseas market with three heavy machinery plants.
The two companies are the only Korean heavy machinery makers in China, but statistics show other companies are struggling as well. The revenue for the top 13 construction machinery companies in China dropped by 3.68 percent in 2012 from a year earlier, according to CCMA. Plus, profits plunged by 34.2 percent year-on-year.
Hanwha Investment and Securities, a Korean brokerage firm, anticipates sales of excavators, a key piece of construction equipment, will hit 103,000 this year, down from 108,000 in 2012 and 172,000 in 2011.
The economy isn’t the only culprit; more competitors have entered the market as well.
“The number of such manufacturers rose from 13 in 2003 to 29 this year,” a Doosan Infracore spokesman said, asking not to be named. “Moreover, the Chinese government has stepped up its effort to protect domestic firms against international rivals, making it difficult for us to run business there.”
For example, the market share of Sany Heavy Machinery, a Chinese firm, soared from 1.2 percent in 2006 to 12.7 percent in 2012.

Filed under Macro Trends

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