Earlier this kJune, Xiang Wenbo,excutive president of Sany, published a series of articles on his Internet dairy, or blog, saying the company aims to pay 30 per cent more than the US private equity frim Carlyle Group to buy its rival Xugong Group Construction Machinery Co Ltd.
Xiang's blog became a hot topic across China. Many industrial insiders are wondering why a private company like Sany is joining the take-over battle for Xugong, China's largest construction machinery manufacturer.
Technical improvement
As Xiang has said on the blog, Sany aims to become the leader in China's construction market.
The company has set a lot of records in the industry.
In 1994 it became the first manufacturer in China to produce a high-pressure concrete conveying pump with large conveying capacity.
In 1998,at Saige Square of Shenzhen it set up a world record,300.8-metre-high truck mounted concrete pump for steel-structured buildings.
Now, sany's concrete pump is the most popular product in the market,and accounts for abount 40 per cent of domestic sales.
The company entered the engineering machinery manufacturing field in an all-round way,with products for machinery building, road building and hoist machinery. Its products fit into eight categories with more than 50 kinds of specifications.
"When we embarked on engineering machinery we found that almost all the famous brands in the market came form foreign countries," says He Zhenlin,vice president fo Sany. "In order ot compete with them we began to build our own famous brand."
At that time most Chinese engineering machinery makers were still using outdated technology. So from the beginning Sany decided to build its brand through improving technology, He says.
Based in Central China's Hunan Province,the company has established offices or engineering plants in many developed countries such as the United States, Germany and Japan,so sa to learn the most advance technology. It is planning to build an office in Hong Kong in order to keep the quality and price of crucial units and components in line with international standards.
Besides these steps, the company has made deals with foreign companies. It's working with a US company to develop road rollers. It will also work with Indian companies to develop pavers.
"Thchnology is always our focus. The investment on technical research and development has achieved double-digit growth in recent years," says He, who declined ot state figures.
"The investment is also used in technical co-operation and exchange with domestic universtities," He says. "For example,we developed the intellingent road roller jointly with Chang An University.
The take-over issue
Despite its successes, Xiang's blog has drawn the most media attention for the company.
Part of this is due to the importance of the Xugong deal.
Xugong is owned by Xuzhou Construction Machinery Group(XCMG),China's largest construction machinery company. The purchaser,the US Carlyle Group, is one of the largest private equity firms in the world.
Last October,the Carlyle Group agreed to buy 85 per cent f Xugong for US$375 million. the deal is still pending, however, and is in the hands of the central goverment.
It is the biggest-ever offer by a foreign investor for a majority stake in a leading State-owned company in China. It also sparked a hot debate, with some analysts saying it is not good for the government to sell such an important company ot foreigners.
Meanwhile,many of them don't believe Sany has the capability to take over Xugong. Some anlysts speculate Xiang's blogging was done deliberately to draw media attention and get people on their side.
"I don't think Sany can take us over now according to its capability," says Wang Yansong, vice president of XCMG.
Sany Corp,the listed subsidiary of the group,had a 216 million yuan (US$316 million),according to its annual report.
Vice President He Zhenlin admits growth slowed down last year,but says that's natural for a company that has experienced quick development for years.
"Many insiders suspect we can't afford the price that we bid," He says."I cna assure them there is no need to worry about the money." He declined to comment further on the bid.
Meanwhile, Xiang keeps writing. He says Sany's aim it to protect China's construction machinery industry.
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