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Zoomlion-ElectroMech JV comes into effect

August 22, 2012

Inking their first directly-invested overseas plant Zoomlion, formed a 70:30 Joint Venture with ElectroMech, India’s largest industrial crane manufacturer. The two machinery construction companies will specialize in tower crane production. Tower cranes (see pic) are used on construction sites to lift heavy cement blocks and other materials from one area of the construction site to another. Zoomlion which announced the alliance last November hopes the JV will realize US$50 million in annual sales over the next five years.

According to Xinhua, last year, India’s tower crane industry saw total revenue of US$93 million. Tower cranes have a huge potential in India as they find applications at various real estate and construction project sites all across the country. The market for tower cranes is now on the verge of witnessing explosive growth and is expected to grow at 20-25 percent annually.

As global markets thaw, and China’s construction industry plateaus with an over supply of construction, Chinese companies are keen to expand into India whose infrastructure industry is burgeoning. India has planned to invest US$1 trillion on infrastructure construction in the next five years.

Zoomlion’s latest partnership with ElectroMech further expands its geographic and segment reach with a crane builder that designs, sells, manufactures, and installs custom and standardized overhead and cargo cranes. ElectroMech’s standardized cranes are distributed in India in association with German overhead crane manufacturer Abus. ElectroMech is headquartered in Pune, where it has its manufacturing facilities, and has offices in India and the Middle East. Its subsidiary, Cranedge, offers its clients post sales services.

Listed on both the Hongkong and Shenzen markets, Zoomlion is the fastest growing global construction machinery company. One of the worlds largest, Zoomlion has been present in India over the past several years, the company makes diverse construction equipment including towers and mobile cranes. While the company has seen its Indian revenues rising and has won many projects for construction equipment, this JV is sure to catapult its profits.

After signing the agreement with ElectroMech in Changsha, central China’s Hunan Province, He Wenjin, vice president of Changsha Zoomlion Heavy Industry Science and Technology Development Co., Ltd. said Zoomlion has a long-term strategy in the Indian market and plans to invest 100 million U.S. dollars to bolster its business development in India in the next few years.

Other Chinese companies such as Huawei and ZTE have also taken their time to realise profits from the Indian market. Establishing a base in India isn’t a cakewalk for Chinese companies, however once they build trust and operate according to Indian norms, winning over deals isn’t a problem – primarily because India desperately needs infrastructure companies and China offers it at a 40 percent discount. Consequently, Indian companies haven’t been able to break through the bamboo curtain and reap similar benefits from the Chinese market, leading to a huge trade deficit in China’s favour.

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