Understanding Chinese – Dispelling the myths around equipment made in China
By Maron Green JAPA Machinery
I read December 2016’s editorial in this magazine, “Waiting for China,” and I could not help but reflect on how my business’ experiences with Chinese-exported products has been similar but also very different from those described by Patrick Flannery.
By Maron Green JAPA Machinery
I work for JAPA Machinery Group, the western Canadian dealer for Xuzhou Construction Machinery Group (XCMG) equipment, China’s largest heavy equipment manufacturer. Flannery’s article spoke to the perceived stigma about the poor quality of Chinese manufactured equipment. He wrote, “I hope that Chinese manufacturers learn to do a better job producing, supporting and promoting their best products in our market.” As the dealer for XCMG and an importer of Chinese manufactured equipment, I wanted to touch on my experiences and what I have seen from China on those fronts.
Chinese manufacturers have notoriously all been painted with the same brush: low price and low quality. However, in the last six years that KHL has published its annual Yellow Table Report of international construction equipment manufacturers, at least four Chinese equipment brands have been represented in their top fifty manufacturers. Two thousand sixteen was the first year in that time frame in which there were not two Chinese brands in the top ten, as Sany slipped to 11th spot leaving only XCMG. These are no fly-by-night manufacturers; these are reputable companies who are highly invested in succeeding in the North American market.
In our own experience, XCMG’s commitment to the North American market is in their words, “top priority.” Although they support a full line of construction equipment around the world, they are nearly unheard of in North America. Large companies like Apple and Lululemon have been battling the perceived North American stigma of Chinese manufactured products by including “Designed in USA” before listing that their products are made in China. With XCMG, for example, it’s no different. They have started to introduce themselves slowly and deliberately by redesigning and introducing their equipment piece by piece into the North American market. These products are specifically designed and built for North America. The major components are either manufactured in North America or are brands familiar to and commonly accepted by North Americans. The equipment is assembled in China.
In 2015, JAPA Machinery Group sent a team to China for our first factory tours with XCMG. In short, what we witnessed in the manufacturing facilities in China was state-of-the-art. We were blown away by the size, the cleanliness and the technologies featured in these factories. The modern facilities are equipped with robotic welding and machining stations, manned by experienced and proficient people. Everything ran like a well-oiled machine. Employees were well-paid, housed and fed on site daily by professional chefs. Safety was of great concern and personal protective equipment is worn by every factory worker, the same as you would see in any shop or factory in North America.
All products, whether they are built by manufacturers in China, Japan, Germany or in the United States, must meet North American regulations before they can be brought into the market. For XCMG, their North American lead design team creates and builds the products we import to meet and exceed all the stringent regulations of the North American market. Through all my dealings with Chinese manufacturers, research and development has proven to be a primary focus of theirs. Supplying product improvement suggestions is a requirement of our dealership agreement. Across the globe, XCMG employs over 6,000 research and development technicians and holds over 2,200 patents for the equipment they are producing. Even as a Chinese based company, they are doing their research around the globe with designated research and development facilities in Germany, India, Brazil, Japan, the United Sates, as well as China.
The best Chinese manufacturers are trying to learn more about the equipment needs and environment for each individual global market. This commitment does not stop at research and development. As their equipment is introduced into new markets, technicians and engineers travel with the equipment to monitor it while it is put through its paces as a demo machine on a real construction site. If there is a problem or something needs to be changed, it is relayed to the factory and put into the design. XCMG, for example, has made the commitment to North America by setting up its American head office in Las Vegas out of which they will support and service their dealers in Canada, the U.S. and Mexico.
As a dealer of Chinese exported heavy equipment, my message is: don’t associate low price with poor quality. A question we often are asked is, why are Chinese products priced so competitively? Chinese manufacturers are recognizing the need for aggressive pricing in order to gain market share and acceptance. Being tasked with introducing a relatively unknown equipment manufacturer into the Western Canadian or North American construction market is no small matter. While we at JAPA Machinery Group have been thoroughly impressed with the quality of the equipment, we worked closely with XCMG to establish a competitive price point.
As the old adage goes, if you can sell the first one, it’s your service that will sell the next one. Historically Chinese manufacturers have used brokers to
bring equipment into the North American market. From my own experiences,brokers often have no perception of offering after-sale support or service. As Flannery pointed out in his article, U.S. and Canadian-based distributors elected to use cut-rate Chinese producers to absorb a larger markup. Fortunately, these days, Chinese manufacturers are working to set up proper dealers in North America. Being a dealer means the same to the Chinese as it does to the Americans. The requirements for dealers such as JAPA Machinery Group are to supply parts and service to support the sale of equipment in their territory. As XCMG’s dealer, we offer a complete warranty FOB the machine that matches or beats the warranties of every major manufacturer’s dealer in our western Canadian market. Most Chinese manufacturers are adamant in their expectations that their dealers are as qualified to support their equipment as anyone else. Dealer support is very important.
Flannery stated in his article that the “lingering concern in dealing direct with Chinese exporters is the level of support you can expect to receive,” with the language barrier and delivery time for parts being some of buyers’ biggest apprehensions. These were also some of my biggest concerns when dealing with Chinese manufacturers. No, no one in my office speaks Mandarin. Yes, the 14- to 15-hour time difference from eastern China to Alberta is not ideal. That being said, the continued commitment we have seen from our Chinese exporter means that we have an English-speaking, Chinese sales representative on location with us, most days of the year. This person is the primary relay to the factory and works through the evenings addressing our questions, updating the factories and ordering parts. As part of our dealership agreement, we have a spare parts inventory on site. However, ordering parts from China is surprisingly easy, considering it is half way across the world. This March, XCMG will be launching a service information system program in English to further streamline parts ordering and factory communication. As it stands, a typical parts order takes three to five business days to arrive, either via courier or one of the bi-weekly direct cargo flights between Edmonton and Shanghai. Depending on the size of the order, we also receive containers by ship into Vancouver. Shipping by sea takes about 30 days. Smaller pieces of equipment also arrive by container to Vancouver’s port, while our bigger pieces of equipment arrive at the port of Tacoma, Wash., for roll-on-roll-off delivery. We wait to see if and how any policies that will be implemented by the new U.S. government will affect how Chinese machines will be imported from Tacoma into Canada.
The biggest hurdle of any of this is getting the name out, building brand recognition and overcoming the stigma about the inferior quality of Chinese exported products. In response, I say that everyone should look around their office and try and count the number of products they use daily that are made in China. Chinese equipment manufacturers are working increasingly with their dealers to build brand recognition in North America. I was blown away by what I saw from these manufacturers at 2016’s Bauma China, and I’m looking forward to seeing how these manufacturers will present themselves at ConExpo this March. By the time you read this, ConExpo will have passed. I hope you got a chance to stop by the JAPA Machinery booth and learn a bit about what Chinese machinery exporters are doing in North America today.