Avengers: End Game HQ belongs to SANY!
The case of SANY — the giant Chinese construction equipment manufacturer expanding in the US market
You know that amazing headquarters that the Avengers team uses in End Game to save the world? It’s actually the US headquarters of Chinese heavy equipment manufacturer Sany Heavy Industry Co. It is located in Georgia, where much of Avengers: End Game was filmed.
Who is Sany Global?
Sany Heavy Industry Co., Ltd. (SSE: 600031) (known as SANY) is a Chinese multinational heavy equipment manufacturing company headquartered in Changsha, Hunan Province. It is the sixth-largest heavy equipment manufacturer in the world, and the first in its industry in China to enter the Financial Times Global 500 and the Forbes Global 2,000 rankings. Its founder and main shareholder is Liang Wengen. According to its website, SANY has built 25 manufacturing bases, six sales regions, and over 100 offices with more than 400 agents and 8,000 suppliers worldwide. In China, SANY has established six industry parks in Beijing, Changsha, Shanghai, Shenyang, Kunshan and Urumchi. Products are exported to 150 countries and regions around the world and SANY has manufacturing bases in the US, Germany, India and Brazil.
SANY traces its roots to a company called Lianyuan Welding Material Ltd, founded in 1986 by Liang Wengen, Tang Xiuguo, Mao Zhongwu and Yuan Jinhua. They left their previous jobs and established the company with a capital of sixty thousand yuans (under $10,000 USD) in the town of Maotang.
Though SANY is a relatively unknown brand in the US, it’s a household name in China, at least in construction. With revenues of $7.6 billion, it is the largest construction equipment company in China and also a Chinese business success story.
According to a 2013 article in Fortune by Nin-Hai Tseng, SANY has come to dominate the Chinese market for concrete machinery, excavators, and truck cranes in just over two decades. SANY has grown alongside China’s rapidly growing economy.
MILESTONES (from SANY’s website):
- 1986: Liang Wengen, Tang Xiuguo, Mao Zhongwu and Yuan Jinhua found Hunan Lianyuan Welding Material Factory in Lianyuan, China.
- 1991: Hunan Lianyuan Welding Material Factory is officially renamed to Hunan Sany Group Co., Ltd. and its headquarters officially moved to Changsha.
- 1994: Hunan Sany Group Co., Ltd. is divided into Hunan Sany Heavy Industry Group Co., Ltd. and Hunan Sany Materials Industry Co., Ltd. SANY independently developed China’s very first high-pressure truck-mounted concrete pump with a large displacement.
- 1995: Hunan Sany Heavy Industry Co., Ltd. changes its name to Sany Heavy Industry Co., Ltd.
- 2000: Sany Heavy Industry Co., Ltd. changes its name to Sany Heavy Industry Inc.
- 2003: SANY Heavy Industry is successfully listed on the Shanghai Stock Exchange. Sany Heavy Machinery Co., Ltd. is founded, focusing on excavators and oil drilling machinery
- 2004: Sany Holding Ltd. changes its name to Sany Group Co., Ltd.
- 2005: SANY Heavy Industry implements its split share structure pilot, influencing China’s equity division reform.
- 2008: SANY Heavy Industry begins the process of lifting a share ban and makes strides towards full circulation of its shares on the Chinese stock market. A fully hydraulic rotary drilling rig of the largest tonnage in Asia rolled out in SANY. SANY develops a whole-rock road header with the highest power in Asia.
- 2009: SANY develops a 200-ton hydraulic excavator, the largest tonnage in China. A 2MW wind turbine rolled out. SANY becomes a wind turbine manufacturer with proprietary IPR and a manufacturing capacity covering the entire value chain.
- 2010: SANY develops a 1,000-ton truck crane, marking the highest tonnage in China.
- 2011: SANY Heavy Industry enters the FT Global 500 ranking of the world’s largest companies. SANY develops a 3,600-ton crawler crane, known as the No. 1 crawler crane in the world. SANY rolls out a truck-mounted concrete pump with an 86-meter boom, the longest in the world, breaking its own previous record.
- 2012: SANY acquires leading German concrete machinery manufacturer Putzmeister. SANY announces a joint-venture with Austria-based heavy machinery manufacturer PALFINGER AG. SANY Heavy Industry is ranked in the top 10 of the Chinese Federation of Enterprises’ Top 500 Chinese Enterprises.
- 2013: SANY Heavy Industry’s overseas sales reach US $1.61 billion. SANY’s overseas operation mode is used as a case in international business by Harvard Business School.
- 2014: Sany Heavy Industry Co., Ltd and Austria-based PALFINGER AG establish two joint ventures in which both parties hold 50% shares. SANY develops a concrete pump with record-breaking 620-meter (2,034 feet) vertical pumping height.
- 2015: SANY begins its transformation of the Industrial Internet and has already completed its preliminary goal. SANY was rewarded with “Outstanding Achievement Honor in Globalization” among Chinese enterprises.
What is important to know about SANY?
SANY’s newest excavator factory in China, which is also the world’s largest excavator factory, can produce an excavator every five minutes.
In addition to excavators produced in Lingang for sale in China, SANY produces base excavator kits that are shipped to SANY America’s assembly facility in Peachtree City, Ga. The kits are assembled there, adding the options and features preferred by North American customers.
Core philosophy of the company: SANY’s philosophy is about paying attention to customer needs, according to a rare 2011 interview from Liang Wengen cited in this Forbes article. He also said that SANY’s management concept is ‘win-win.’ In the interview, he said value is created for the customer, and that allows suppliers, agents and staff that work with SANY to obtain success.
Wengen is one of mainland China’s richest people. The 57-year-old remains politically well connected — he joined the Communist Party of China in 2004 and has become one of the party’s most influential members. The connections have paid off for the company. According to the aforementioned Forbes article, SANY benefited as the government poured hundreds of billions of dollars into the economy by launching enormous infrastructure projects, which in turn fueled demand for trucks and trailers.
While Caterpillar remains the global giant in the construction equipment market, with $66 billion in revenue, SANY is in the lead in China, which is the world’s largest construction market. In fact, ten years ago SANY overtook Caterpillar in market share in excavators.
One of the reasons the company was able to grow so quickly, for example, is because it followed other Chinese manufacturers (and possibly the US housing industry) in offering generous financing terms on loans for its machines. Buyers could make small down payments and hold off longer than usual before making their first payment.
The company, which started as a sales and service organization in 2006 in the US, actually started semi-knocked down, mean it was assembling partially prefabricated vehicles, according to SANY America CEO Doug Friesen in this China Daily article.
What does SANY manufacture?
They produce products of 26 categories and more than 200 specifications
Here are the four major groups: SANY LONG Insurance, SANY Auto Finance, SANY Housing Industry, SANY Solar Power
- Truck-mounted Concrete Pump
- Trailer Pump
- Line Pump
- Placing Boom
- Batching Plant
- Truck Mixer
- Mortar Pump
- Dump Truck
- Mini Excavator
- Small Excavator
- Medium Excavator
- Large Excavator
- Wheeled Excavator
- Mobile Crane
- Crawler Crane
- Tower Crane
- Truck Mounted Crane
- Rotary Drilling Rig
- Motor Grader
- Asphalt Batching Plant
- Cold Planer
- Reach Stacker
- Forklift Truck
- Empty Container Handler
- Ship-To-Shore Container Crane
- Rail-Mounted Container Gantry Crane
- Rubber Tyre Container Gantry Crane
- Portal Slewing Crane
- Port Tyre Crane
- Material Handler
- High Speed Doubly-Fed Wtg
- Off-highway Mining Truck
- Coal Mining Equipment
- Scraper Conveyor
- Mining Supports
- Electric Shovel
PETROLEUM DRILLING MACHINERY
- Oilfield Drilling Environmental Treatment
- Complete Plant for Wellhead Automation System
- Cementing & Fracturing Equipment
- Integrated Drilling & Repairing Machine
Who is behind it?
SANY’s main founder and biggest shareholder, Liang Wengen, is one of mainland China’s richest people, with a net worth of more than $7 billion. As mentioned, he is politically connected and Liang’s rise within the Communist Party is notable in a country where private entrepreneurs were historically denied membership, according to Tseng’s Fortune article.
In the article, the author adds that Liang wasn’t always rich and powerful. He was born poor in central China, graduated from China’s Central South University with an engineering degree and worked at a state-owned factory before found SANY. The name is derived from the Chinese name, Sanyi, which means “three ones.” That refers to the three goals of the company: 1.) to build a first-class enterprise; 2.) to foster first-class goals; and 3.) to make a first-class contributions to society. Before venturing to construction equipment, SANY produced welding materials. In 1995, it expanded by first manufacturing concrete pumps that pour and transfer liquid concrete.
Which countries are they the most active in?
As of 2012, SANY made more than 80% of its revenue in China. In recent years, it has expanded with sales and marketing operations in Europe, Latin America, and India, as well as the US.
What are their future targets?
Even though SANY’s overseas revenues have risen in recent years, it is still most successful in China. But the brand has its eyes set on the US. The company recently hired an executive from Manitowoc, John Lanning, and has made aggressive moves to reach its goals in the states.
The transformation is part of “strategic globalization efforts” made by SANY, according to Friesen.
Sixteen SANY excavator models will eventually be brought to the United States, potentially serving the markets of Europe, North and South America, Friesen added.
What is their most targeted equipment?
Sales of excavators rose 40.8 percent year-over-year to 19.2 billion yuan in 2018, helping it retain the spot of top seller on the domestic market for the 8th consecutive year.
Sales of concrete machinery and cranes jumped 34.6 percent and 78.3 percent to 17 billion yuan and 9.3 billion yuan.
As reported by China Daily, the company said it will invest billions of yuan in the construction of five heavy truck production bases by 2019, and will road test autonomous trucks this year, executives said. The company’s massive expansion plan, which could see its annual output rise almost twentyfold, is helped by the continued demand domestically. After more than a year of research and design, SANY’s trucks began the first online presale in late March and were heavily marketed, said Zhou Junfeng, research and development engineer and project manager of the company’s heavy truck arm.
SANY is planning to develop this type of heavy truck in autonomous ones, and is partnering with the country’s telecom carrier China Mobile in this area, according to Zhou, quoted in China Daily. “In December this year, we are going to road test the sample vehicle, which will have Level 4 self-driving technology and apply 5G telecommunication technology,” he said.
What is their next target sector?
According to this China.com article, “sales of digging machines are an indicator of the vitality of an economy as demand is usually backed by growth in mining and infrastructure development. A total of 86,622 excavators were sold in the January-April 2019 period, up 57.9 percent from a year earlier.”
Do they have country specific equipment?
- Excavator – SY500H-Tier 4F in (US)
- Sixteen SANY excavator models will eventually be brought to the United States, potentially serving the markets of Europe, North and South America, according to Friesen, SANY America’s CEO
What are SANY’s weaknesses?
SANY faces significant challenges, according to Tseng’s Fortune article. China’s rapid growth has slowed, which means every brand — including Caterpillar and Hitachi too — looks at cutting production. The slowing growth may reveal weaknesses in SANY’s strategy, according to the article.
As noted, SANY followed other Chinese manufacturers (and possibly the US housing industry) in offering very attractive financing terms on loans for machines. Buyers would make small down payments and would be able to hold off longer than usual before making their first payment. But Julian Bu, an analyst with Jeffries & Co. in Hong Kong quoted in the piece notes that this is risky: “If slower growth in China continues and it becomes harder for SANY’s big customers to pay down their debts, SANY could face a wave of customer defaults.”
What are their strengths?
One of the strengths is the influence and wealth of SANY’s main founder and biggest shareholder, Liang Wengen. He is one of the most influential members of the Communist Party in China.
Another strength is in its manufacturing facilities. Quoted in this piece in Construction Equipment Guide, chairman of SANY America Tim Frank noted: “Our Lingang facility is the most advanced, highest-capacity excavator factory in the world, and Sany produces more excavators globally than most other equipment brands.” Frank added, “North American customers might rightly ask, ‘What’s in it for me?’ It’s simple: robust and reliable structures, cut and welded by precise, fully robotic systems, assembled by a dedicated team.”
SANY posted a 192.3 percent jump in net profit in 2018 on rises in sales and profit margins, according to this article in China.org. Net profit attributable to shareholders totaled 6.12 billion yuan ($912 million), Sany said in its annual report filed to the Shanghai Stock Exchange. During the year, SANY raked in a revenue of 55.8 billion yuan, up 45.6 percent year-on-year.
Sales from the overseas market rose 17.3 percent to 13.6 billion yuan, SANY said.
The company also maintains an online sales channel. “Our trucks are only available online, which reduces extra costs for customers,” said Zhou Junfeng, R&D engineer and project manager in the company’s heavy truck arm, as quoted in this China Daily article. The article notes that SANY’s heavy truck is priced at 270,000 yuan ($42,710), while similar products from other Chinese companies sell at about 360,000-370,000 yuan.
The company has also been expanding its presence in the industrial internet segment over the past few years, according to this news release. SANY is planning to develop this type of heavy truck into autonomous ones, and is partnering with the country’s telecom carrier, China Mobile to do so. Zhou, the aforementioned R&D and project manager of heavy trucks, said in China Daily: “We are going to road test a sample vehicle, which will have Level 4 self-driving technology and apply 5G telecommunication technology,” he said.
SANY has a culture that emphasizes hard work. In this 2011 Forbes article, CEO Xiang Wenbo said: “SANY, including the chairman, and our team are among the most willing to struggle in China.” He said that meetings start at 7:30 a.m., and staff work more than ten hours a day. “In the world, especially in Europe and the US, basically, you can’t find this,” Xiang adds. “Perhaps this isn’t very smart. But there’s an expression in China: ‘Hard work overcomes slowness.'”
Opportunities for SANY:
Growth in excavator sales: According to China Daily, sales for China’s major excavator producers expanded faster in April, 2019. The country’s 25 leading excavator makers sold 26,561 digging machines in April, up 84.5 percent year-on-year, compared with a 78.9-percent increase in March, according to data from the China Construction Machinery Association
Mining and infrastructure development: China Daily also reports sales of digging machines are up, which can be an indicator of the vitality of an economy. A total of 86,622 excavators were sold in between January and April, up 57.9 percent from a year earlier.
Steady growth in manufacturing: The manufacturing purchasing managers’ index, a gauge of manufacturing sector activity, came in at 51.4 in April, down from 51.5 in March but higher than an average of 51 in the first quarter and still in the expansionary zone, according to the National Bureau of Statistics.
Demand in domestic market: Solid demand from the domestic market created an opportunity for SANY to invest billions of yuan in the construction of five heavy truck production bases by 2019. The company’s massive expansion plan — they want to increase output by 20 times — relies, among other things, on this opportunity.
Domestic demand and the replacement of older truck models: In 2018, the sector is forecasted to remain strong, partly due to the upturn in the global economy, solid domestic demand and the replacement of older truck models, said Gao Deng, an analyst at Changjiang Securities, in a research note.
Powering ahead industrial internet development efforts: The industrial internet is a network of combined, advanced machines that contain internet-connected sensors and use big-data analytics. According to China Daily, SANY is looking to boost productivity, efficiency and reliability of industrial production with the investment in this.
China is stepping up efforts to develop the industrial internet, with the recent approval of two important action plans for the industrial internet, an official from the Ministry of Industry and Information Technology recently said. The sector is still young, but a group of Chinese companies, including SANY, have increased presence in the industrial internet segment recently.
Could SANY be a threat to US manufacturers?
That End Game headquarters in Peachtree City, Georgia, it is a powerful statement. Here’s how Tseng describes it in his Fortune article: “a $60 million modernist cube” that “went up and opened with great fanfare in August 2011. It’s from this glassy structure that SANY has been executing its push into the North American market.”
Their products are in high demand. According to SANY in China Daily, trucks began the first online presale in late March and were heavily marketed and within just 53 seconds on that day, the first batch of 500 heavy trucks wer pre-sold, with the total sales exceeding 135 million yuan. A monthl later, they had received a total of more than 11,000 online orders.
SANY America will start building excavators in the US “completely from scratch” in June in the United States, according to this article on China.org. “It’s just like just brand-new start,” said Friesen, CEO of SANY America. “In the beginning, what we do is bring everything in (from China), and then we build up a market through distribution channels of distribution. This came strategically as a result of SANY having a very serious effort to globalize,” he said. “And in this globalization effort, there is a recognition that wherever you sell, you should manufacture.” He added that: “We’re shooting for 6,000 units (of excavators) here in the United States, and currently we’re in about 1,000. That’ll be all product lines.”
Nin-Hai Tseng, Sany’s Bold U.S. Move, FORTUNE, June 17, 2013, http://fortune.com/2013/06/17/sanys-bold-u-s-move/
Jing Shuiyu , Sany Group moves into heavy truck production, China Daily, 2018-04-27, http://www.chinadaily.com.cn/a/201804/27/WS5ae2762aa3105cdcf651acca.html
Russell Flannery, Forbes, Sany Sensations, Sep 13, 2011, https://www.forbes.com/global/2011/0926/china-billionaires-11-sensations-chairman-wengen-flagship-construction-flannery.html#442a201a4a4f