There is a danger of flooding of Chinese construction equipment into many developing countries in the near future, said Mr David Phillips, Managing Director, Off Highway Research.
Speaking at the Excon2011 seminar on ‘Industry Overview and Global Trends', Mr Phillips said the Chinese construction equipment industry currently has the production capacity that is two times the size of the global demand and this is likely to flood the developing countries.
Mr Phillips also said that there is a new world order in sales, and production of construction equipments as the market growth has been shifting from traditional markets of North America, Europe and Japan to China, India, Brazil, and Russia.
He pointed out that in 2007, the market size of North America, Japan and China was about the same but following the global financial meltdown in 2008, and its aftershocks, the demand from developed countries plummeted, while the demand in China has grown in leaps and bounds.
Mr Phillips said that the value of global sales volume in 2007 was about $100 billion. It fell to $55 billion in 2009 before increasing to $82 billion in 2011, and is likely to reach $108 billion by 2015, with China, India and Brazil contributing too much of the demand.
Today, China accounts for about 50 per cent of the global volume of equipment sale. He added that since 2005-06, the demand for construction equipment started increasing.
Currently, India has about 15,700 backhoe loaders and about 7,950 crawler excavators which are likely to reach 25,300 and 9,300 respectively by next year.
Mr Subhash Chandra Khuntia, Principal Secretary, Karnataka Public Works Department, in his address said Karnataka is planning to develop 15,000 km of State highways in the next two years.
“The State Government is pooling resources to fund the road project. It had obtained loans from the World Bank, and the Asian Development Bank, and floated Karnataka Road Development Corporation to focus on creating innovative methods of financing,” he added.
Talking about product innovation, Mr Khuntia said “In the earthmoving and construction equipment industry is the key to address the growing energy efficiency and environmental concerns around infrastructure projects in India,”
The country's product requirements are very unique, and diverse. The Indian customers are looking for more versatile and cost-effective products.
Therefore, the manufacturers have to disaggregate the market to meet the different types of customer needs.
He pointed out that the end users are becoming quality conscious.
“About 10 years ago, people in villages wanted some road access but today they are demanding us for quality roads,” he said.