XCMG

Xuzhou Construction Machinery Group

    Overview: Cranes lifted XCMG to the Top

    Xuzhou Construction Machinery Group (XCMG) is a multinational heavy equipment manufacturing company headquartered in Xuzhou. It was established in 1989 and is mainly offering cranes, diggers and bulldozers. After Sany and Zoomlion, which are its biggest competitors, XCMG ranks number three in the Chinese machinery industry and is one of the tenth biggest construction machinery companies worldwide.

    XCMG is among the three biggest machinery companies in China
    The company's main subsidiary is the XCMG Construction Machinery Co., Ltd. which is listed on the Shenzhen Stock Exchange. In 2010, the company expanded its field of operation by establishing another subsidiary, the XCMG Railway Equipment Co., Ltd, which is mainly focusing on the railway equipment market.

    In 2012, the company completed the construction of new facilities in Xuzhou for the manufacturing of all-terrain cranes wheeled loaders and concrete machinery. The facilities costed USD 1.9 bn and are able to manufacture 5,000 cranes, 40,000 wheeled loaders and 20,000 units of concrete machinery.

    XCMG's strategic goal is to rank among the top three construction machinery companies in the world by the end of 2015.


    Internationalization Strategy: Internationalization as the Core of Development

    Internationalization is a very important part of XCMG's business. Overseas markets are not only important for sales issues but also to strengthen its global presence through acquisitions. XCMG has already sold products to more than 150 countries and regions around the world, operates several manufacturing bases and components centers and has more than 500 contracted service providers. In 2012, the export of XCMG exceeded USD 1.36 bn, thus the company was one of the biggest exporter in the machinery industry for 24 consecutive years.

    Next to the establishment of overseas facilities, XCMG also cooperates with several famous machinery manufacturers, including Caterpillar and Liebherr, both estabilshed in 1995. In cooperation with Caterpillar an excavator plant was built and the one with Liebherr allowed XCMG to produce three models of all-terrain cranes.

    In 2005, XCMG was nearly acquired by the US based private equity company Carlyle Group, but the Chinese government blocked this plan.

    As Sany, XCMG shifted its focus towards the German market in the last year. After the acquisition of a 52 percent share of the machinery manufacturer Schwing, XCGM also started to construct a R&D center in Krefeld.


    R&D and Intellectual Property: Constant Investments in R&D

    With its R&D centers XCMG strives to generate new innovations. The company employs more than 4,000 R&D specialists and investmented more than USD 160 mn in R&D in the last year. The two most important R&D facilities are the XCMG Research Institute and the XCMG Technology Center. To further expand its R&D capabilities the company plans to establish two new R&D facilities, one in Germany (2013) and the other one in the US (2014).

    XCMG employs 4,000 employees in its R&D division
    The following graphs depict the patent and utility model applications of XCMG. The main difference between a patent and an utility model is the durability and the strength of protection. Patents are protected for twenty years, while utility models are only protected for ten years. Thus, an utility model can be described as a weaker form of patent.

    The first applications were filed in 2003. In the following years, the number of applications stayed on a nearly consistent level and only little variations are detectable. The first big step was taken in 2008, when XCMG registered nearly 50 applications. From this year onwards, the number of patent and utility model applications increased rapidly. Two years later, the maximum to date was reached with more than 200 filed patent and utility model applications. Especially in the last years, one can detect an increasing effort in R&D.

    The next chart illustrates the geographical distribution of XCMG's patent and utility model applications. It lacks diversification, as the company only filed applications in its home market. This is not surprising, as the period of time observed, shows no foreign R&D center. In the future, it is very likely that this chart will look different. With the establishment of the German and the US R&D center it can be assumed that there will be registered patent and utility model applications in these two countries in the future.

    The next two charts show the distribution of XCMG's applications across the different technology areas. Most of the patent and utility model applications were filed in the areas civil engineering, building, mining and mechanical elements. These two areas are very typical for companies in the machinery industry. Another peculiarity is XCMG's favoritism of the easier to get but less protected utility models.


    References:

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