While the market is still booming in China, the country's top machine makers are looking to expand outside their borders. And they're interested in more than just exports.
In countries like Brazil, India and Russia, Chinese manufacturers see an opportunity to open new manufacturing operations, grab market share and try their hand at globalizing.
The advantages for those who manufacture in China are clear. Customers in developing markets are price-conscious and Chinese manufacturers can offer machines at prices that often undercut their international rivals. Markets like India, however, have started to resist the inflow of machines from China, going so far as to impose anti-dumping tariffs against Chinese-made presses in 2009.
As a consequence, the past two years have seen an increasing number of Chinese-led joint ventures, acquisitions and manufacturing facilities around the world.
Ningbo, China-based Haitian International Holdings Ltd., for example, opened a plant in Vietnam earlier this year. Hong Kong-based Cosmos Machinery Ltd. entered a joint venture last year with press maker Jishu-Hozen Machines Pvt. Ltd. of Pune, India.
“India is a big market and growing quickly,” said Jason Chan, manager of Cosmos Machinery's marketing department. “We've just started there, but it's a great opportunity.”
Chan spoke at the Asian-Pacific International Plastics and Rubber Exhibition, held Sept. 6-9 in Shanghai.
While Cosmos is still growing more than 15 percent a year, with domestic sales taking the lion's share of its business, exports are an increasingly important part of its strategy.
“South America, Southeast Asia, India — these are all big markets that it makes sense to enter,” Chan said.
“The competition in these markets is not as tough as competition in China.”
Zhao Jian, chief marketing officer at Guangdong Yizumi Precision Machinery Co. Ltd. of Foshan, China, also had expansion on his mind at Applas.
Earlier this year, Yizumi purchased the intellectual property of bankrupt HPM Corp. of Mount Gilead, Ohio. Only 15 percent of Yizumi's sales come from exports, Zhao said, and most of its exports go to Southeast Asia. The purchase of HPM is intended to be a further step into international markets.
“This has a lot of value for us,” explained Zhao. “We can take the HPM name and make it international.”
According to Zhao, that is only the first step for the company. Yizumi is waiting for approval to list on the Shenzhen Stock Exchange. If successful, some of the money from the initial public offering will be invested in establishing a presence abroad, Zhao said.
The company is considering India, Russia and Brazil as potential locations for a new manufacturing facility. “If we don't get the approval for the IPO, we'll still make the investment,” Zhao added.
The value of having a manufacturing operation outside China, Zhao said, is the ability to understand and respond to an outside market.
“We don't want to just feed them what we already have,” he explained. “We want to go [to a region] and better understand their tastes.”
Building an international presence can boost growth and add stability, said Richard Chen, sales director of Demag Plastics Machinery (Ningbo) Co. Ltd. Though the Ningbo, China-based manufacturer is part of the international Demag Plastics Group headquartered in Schwaig, Germany, building exports has been a priority.
“Our target is to increase exports to 30 percent of our business,” said Chen. “We want to have two legs, one in domestic, one in export.”