As a leading manufacturer of construction machinery industry in China, Guangxi Liugong Machinery Co., Ltd (LiuGong) has made abundant preparation to face with the challenges brought by the global financial crisis.

Recently, the President of LiuGong received the interview and showed his views on the current situation.

According to President Zeng, as sub-prime lending crisis of America and the influences of global economic crisis further expanded, the substantial economy of China has been affected and it was also quite difficult for construction machinery enterprises to get away from the crisis. Among the main operations of construction machinery industry such as real estate, construction material, mining and so on, most of them were in a quite struggling situation. However, infrastructure construction continued to increase investment, especially in terms of transportation, which showed great vigor. This impacted great on the development of construction machinery industry. How to handle the changing market has become the focus of enterprises.

The sales of loaders in China began to slide down since August, and then speeded up every month till 50% decreasing in November while the sales was just equal to that in 2005. LiuGong was affected to the downturn of the whole industry that the stocks from October was a little higher. However, LiuGong will handle such stocks in November and December as the overseas operation is stable.

The production and sales of domestic excavator industry declined 40% in 2008. Thanks to the large export volume to the international market in the second year, the excavator sales in LiuGong was still satisfactory except the deficiency demand of small excavators. Moreover, business of road machinery, forklift and cranes were not influenced as others. 

LiuGong has adjustably lowered the production volume in order to reduce the stocks, and put forward relative policy, trying the best to guarantee the life quality of the staff.

President Zeng emphasized that the conference held by the States Council in November had discussed to further expand domestic demand so as to improve the stable economic development. Six of the ten measures defined in the conference were related to infrastructure construction, and two of the ten were helpful for the capital flow of the enterprises. LiuGong believed in the country’s policies and convinced that the economy of China will break through the stagnant situation in January, 2009. After consuming the stocks at the end of 2008, LiuGong is expected to reach the normal production volume by January, 2009.

LiuGong now put their emphasis on the following tips as to control costs, especially purchase cost; to grasp the opportunity to improve the product quality; to maintain the equipment; to develop more products suitable for the demand; to enhance the effectiveness of staff and to conduct more staff training in terms of professional skills and environmental protection.

2009 Outlook

President Zeng Guang’an was confident about the target of LiuGong in the future.

He pointed out that it was difficult to predicate the international situation in 2009. According to experts’ analysis, the economy in developed countries such as Europe, America and Japan will decrease more than 20% in 2009. Due to their small demands of Chinese goods, there is little pressure to the export of LiuGong. Some developing countries which demand great on Chinese products will also decrease in the next year but with little influences. In 2009, LiuGong will take more measures to improve the quality of products and service, develop new dealers and enlarge the development of new products to ensure that the export volume reached 6000 sets, increasing 50% than 2008.

It is anticipated that in 2009, the total sales volume of loaders in China will keep balance or decline a little compared with 2008. LiuGong stated their goal that they would try the best to break through the sales of 30000 sets even though the industry moved downward more than 20%. LiuGong will ensure the growth of company through launching new products. Seeing from relevant analysis, among all the product lines of LiuGong, only loaders were impacted a lot while other products kept growing.

LiuGong is still prospective in 2009. In recent years, LiuGong keeps stable and healthy development with smooth capital flow. Moreover, the Government adjusted the policies to help the infrastructure construction, support the export of enterprises, enhance the international competition and technological innovation, which has directly or indirectly favored LiuGong. From last year to 2008, LiuGong expanded some new operations so as to realize the target of RMB 30 billion Yuan by the year 2012. To handle with the crisis, LiuGong has to postpone some investment projects; but some important strategic operations such as Tianjin LiuGong and Indian company will be also moved on according to the plan. Meanwhile, LiuGong will fasten the development of new products, complete the product line to get through the crisis and upgrade the enterprise.

Facing the struggling international economic environment, LiuGong staff presented their confidence and calmness. The senior managers have prepared enough schemes and measures to ensure the effective operation of the company.

With the efforts of all the stall and under the support of national policy, LiuGong will overcome the challenges successfully.

About LiuGong

Founded in 1958, Guangxi Liugong Machinery Co., Ltd (LiuGong) is China’s leading construction equipment manufacturer and the first stock-listed company in domestic industry. Employing more than 6000 people and with 2006 revenues of 5.18 billion RMB, including 67.3 million USD from exports, LiuGong is the world’s second largest wheel loader manufacturer for annually outputting more than 20,000 units.