By Eric Biegon in Jiangsu, China
XCMG construction Machinery manufacturer is growing its business operations in Africa. This endeavor by the Chinese multinational government-owned company is gaining traction given that the firm has expressed intent to develop a subsidiary in the region in order to strengthen its presence as a top construction equipment manufacturer.
At the center of this expansion strategy according to the company’s general manager and assistant president Liu Jiansen, is the process of setting up assembly plants in East Africa with a focus in Kenya. The company says this move has been necessitated by increasing market for its equipment in the region.
“We want to interact closely with our customers in Africa and gain deeper understanding of the needs in the local markets. This will help us to develop equipment that will better meet their requirements” He said.
The company produces hoisting machinery, earth-moving machinery, road building & maintenance machinery, concrete machinery, special vehicles, piling machinery, railway equipment and sanitary engineering equipment.
Headquartered in Xuzhou, Jiangsu province, the company acknowledged that the need to set up assembly plants in Kenya emanates from increasing costs of exporting machinery which would otherwise have been assembled in the local markets.
Addressing a group of journalists from Africa during a tour of the company’s parent assembly plant in Xuzhou, Mr. Liu confirmed that establishing operations in Kenya is both sustainable and beneficial based on analysis.
“We have been exploring possibilities to contact a number of East African countries, Kenya in particular, in our drive to expand our activities in Africa. The market is big enough, it is worth the investment.” He said
One of the company’s Africa market managers Chen Yuhao confirmed that “the roll out of this programs is already in motion and will be effected within the next 5 years”
“The good relationship that exists between the Kenyan government and some of the Chinese banks makes it possible for investments in the country to thrive.” Mr. Chen noted
He says the manufacturing, construction and machinery industry is heavily reliant on innovation. It is here that he singled out mobile money transfer services in Kenya as a testament of technological advancement that sets the country apart from its neighbors.
The company’s general manager says this move will create more job opportunities in the country as the company will seek to draw its manpower from the local communities. He however says there is shortage of skilled manpower in this sector.
“Skill for labor is what we are looking at for our investment. Our experience in the last 30 years is that lack of skilled labor is a real challenge” Liu noted.
He says the importance of technology in technical innovation industry cannot be overstated.
“Our target countries must invest more in developing skills in these machineries” he added.
But to further create a conducive environment for mega investments, Mr. Liu called on the target markets in Africa, including Kenya, to be firm on foreign exchange policies. He charged that volatility in this area affects operations of giant institutions keen to invest in the country.
XCMG is currently the 5th largest construction machinery manufacturer in the world. The firm leads the way and controls 50% of the Chinese market even as it spreads its tentacles wider. So far, statistics show that its set of machinery is gaining a foothold in Kenya and Africa. Liu says the intention is to close the gap and if possible dislodge United States’ “Caterpillar” as the world market leader.
He says this is inevitable as the company provides timely and cheaper services to customers.