LiuGong Zeng Guang’an: Growing Globally, Chinese Enterprises Should Understand and Respect International Markets

LiuGong Chairman, Zeng Guang’an, had an interview with China Construction Machinery at the beginning of 2018, the following script is edited according to the interview.

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CCM: What adjustments or changes do you think a Chinese CE manufacturer need to do during its globalization?

Zeng Guang’an: The priority is to know our advantages and disadvantages. In my experience over the past years, the Chinese CE manufacturers do have space to promote. The first thing is to change the ideas. The “low price” tactic, which normally used in domestic and emerging markets, is quite different and less persuasive in overseas markets, especially in developed markets where price is not the only evaluation of value. Perhaps in the past, manufacturing cost is our major advantage and has helped us to produce competitive products with a lower cost. However, with the increase of both visible and invisible costs, this model is no longer sustainable, which requires us to create new value from technology innovation, management and a company’s operations.

Then, how to choose your foothold overseas? Whether to enter the developing markets or the developed markets or together? These questions also need to be considered carefully before action. Chinese brands are still in a weak position in Europe and America, thus to break these prejudices Chinese enterprises must be aware of and ready for a long process, during which we should constantly invest in R&D, talent cultivation and build an internationalized operating system.

One of the important experiences that LiuGong learned from its global business is the expansion must keep pace with the company’s strategy. The strategy should be step-by-step and consistent; otherwise the internationalized efforts will be blind and risky. Because of this, early in 2002, LiuGong initiated to build “an open and internationalized LiuGong”, which we have strived to follow from then on. LiuGong always treats the overseas markets with awe and respect. We study the marketing regulations and its differences to the Chinese market before entering a foreign market. We strive to build a respectful and international brand, reflecting our values no matter the way we do our business or the way we think and act.

CCM: What do you think of LiuGong’s development in 2017?

Zeng Guang’an: 2017 is a turning point. The market is recovering and LiuGong has seized the opportunity. In the market, our R&D has made several breakthroughs after long-term dedication to innovation; and in the company, our organization is more effective than ever and renewed with vitality. We had our wheel loaders’ accumulated sales exceeded 350,000 units and a year-on-year increase of 150% in the excavator sales. The total revenue of LiuGong Group reached 15 billion RMB.

In conjunction with national structural reforms of the supplying side, LiuGong has carried out an action of “second-time undertaking”, not only created new growth points in the strategic emerging industries, but also upgraded its traditional manufacturing through integrating the intelligent manufacturing and technology innovation. Last year, LiuGong launched 26 new products. Our large-scale wheel loaders and excavators gained good market position and our revolutionary vertical lift wheel loader, VL80A, is listed in the National Innovation List as a major achievement. All these have showed our determination and strength to build a sustainable developing company.

In addition, in 2017, our globalization also stepped into a new era. To embrace the national initiative of "The Belt and Road", LiuGong has optimized its global sales and support network and reinforced its channel construction. LiuGong has kept a higher growth rate than the world’s average, among which, LiuGong India maintained its growth in both production and sales in 2017 whilst LiuGong Poland extended its manufacturing capabilities and strengthened its presence in Europe. LiuGong has a localized business network consists of more than 300 dealers in over 100 countries globally.

CCM: How is LiuGong preparing to meet with the future challenges? What’s LiuGong’s next goal?

Zeng Guang’an: We will maintain our “developing” perspective. The economic developing mode and structure should adhere to the macro environment and to improve the efficiency and the execution of the national supplying side structural transformation. LiuGong has been dedicated in improving efficiency, quality and sustainability. Through the implementation of company’s 13th five-year strategy and the execution of “second-time undertaking”, LiuGong is to increase its global competitiveness of both products and service, to improve the operating efficiency and profitability, to optimize the industry and investment structure, and to actively develop new businesses like robotics, agricultural equipment and others. 2018 is the 60th anniversary of LiuGong and we determine to challenge a 20 billion of sales revenue in the year.