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Limited Impact: Will Excavator Probe Speed Up Chinese Companies' Overseas Expansion?

Limited Impact: Will Excavator Probe Speed Up Chinese Companies' Overseas Expansion?

January 11, 2024

China's excavator exports face challenges again.

Recently, the British Trade Remedy Agency (TRA) issued an announcement to initiate anti-dumping and countervailing investigations on Certain Excavators originating in China at the request of British companies.


Domestic demand in the construction machinery market is sluggish this year, and overseas markets have become an important source of income. Products including Sany Heavy Industry, Xugong Machinery, Liugong, etc. are exported to the UK. How much impact will the above-mentioned double-reverse incidents have on relevant companies? What are the countermeasures?


Many relevant companies responded that export sales in the British market accounted for a relatively small proportion and the impact was limited.

The relevant person in charge of Sany Heavy Industry told reporters from the Financial Associated Press that they have paid attention to this development and will respond to it in a unified manner under the guidance of the China Electromechanical Association. It is expected that it will have a certain impact on the sales of Chinese excavators in the UK in the short term, because its main purpose is to pass this double-reverse investigation and finally impose additional tariffs.


In the long term, in the context of increasing global trade frictions, Chinese companies may accelerate the deployment of overseas production capacity.


01 The UK plans to launch a double-reverse investigation into China’s domestic excavators

On November 15, 2023, the British Trade Remedy Agency issued an announcement to initiate anti-dumping and countervailing investigations against Certain Excavators originating in China at the request of the British company JCB Heavy Products Ltd. The investigation period of this case is from July 1, 2022 to June 30, 2023, and the damage investigation period is from July 1, 2019 to June 30, 2023. The British customs code of the product involved is 8429521000.


Interested parties in the case can register on the TRA website It is a self-propelled track-laying (i.e., crawler) excavator with a superstructure that can rotate 360° and an operating weight of 11,000 kilograms (i.e., 11 tons) or more.

The content of the document is disclosed: The applicant claims that the alleged dumping has caused damage to the British industry through its impact on several aspects, including: profitability, market share, depressed prices, and growth.


The British TRA investigation was launched with the announcement of anti-dumping (case AD0047) and countervailing (case AS0046) filings. According to the British anti-dumping and countervailing regulations, the relevant enterprises involved in the case should complete the stakeholder response registration within the prescribed time announced by the investigation agency (generally 15 days from the date of the "Announcement on Registration"), otherwise they will be regarded as non-cooperating enterprises. , may receive punitive tax rates and lose the UK market.


02 Domestic enterprises responded:

The impact is expected to be limited, and overseas factory construction may be accelerated.

"In the short term, it may have a certain impact on the sales of Chinese excavators in the UK." A relevant person in charge of Sany Heavy Industry told a reporter from the Financial Associated Press that the company can only sell less than 1,000 excavators in the UK a year.


Comparing a set of data, according to Haitong Securities research report statistics, Sany Heavy Industry exported 33,500 excavating machinery in 2022, a year-on-year increase of 46.02%, accounting for 30% of China's total excavator exports, and excavating machinery export sales were 18.08 billion yuan. A year-on-year increase of 69%. According to this estimate, excavator sales in the UK market account for less than 3%.


LiuGong responded on the interactive platform: The company's excavators are mainly produced and exported domestically, and there is no low-price dumping. Moreover, the overseas revenue of British excavators only accounts for about 2%, and the overall impact is limited.

In addition, according to Interact Analysis's China non-road equipment import and export tracking database (data caliber is customs import and export data, including second-hand equipment): In the first three quarters of 2023, my country's excavator exports performed well. A total of 151,000 units were exported, a year-on-year increase of 22.8%, which accounted for 91.0% of last year’s export volume. The cumulative export value increased by 15.6% year-on-year to 46.51 billion yuan.


Among them, crawler excavators are the main driving force, with exports accounting for 97%. The top ten excavator export destination countries accounted for 60.2% of the overall export volume, with the United States being the largest, accounting for 16.5%, followed by Belgium and Russia. In terms of export value, the top ten accounted for 59.7%, with Russia leading the way, accounting for 14.4%.


From the comparison of data, relatively speaking, the British market is a "small" market. Previously, statistics from the Tianfeng Securities Machinery Team showed that Europe, ASEAN, and Asia-Pacific were the main export regions, and North America, South America, and Europe had higher growth rates.


The above-mentioned relevant person in charge believes that in the medium to long term, more and more global trade frictions may accelerate the construction and layout of overseas production capacity of Chinese companies.


First, it can better deal with trade frictions;

Second, we will select the areas where we will build factories overseas. Taking into account the overall cost-effectiveness, we will not add too many (overseas) areas;

Third, it will also be of great benefit to domestic enterprises in improving their capabilities in the global aftermarket.

Because after the entire global production capacity is operational, the adequacy rate of the entire optional accessories will also increase a lot.


The Financial Associated Press has noticed that leading construction machinery companies have all experienced development from the local to overseas. Take Caterpillar as an example. Caterpillar began its global layout in 1950, setting up its first overseas subsidiary in the United Kingdom, and gradually entering markets in Europe, Asia-Pacific and other regions to build overseas manufacturing bases. It has offices or subsidiaries in 40 countries and regions around the world and can provide support to customers in nearly 100 countries.


However, after years of development, Caterpillar's influence in the market has gradually declined, with a market share of about 16%. This reason is inseparable from the rapid growth of my country's construction machinery. In particular, many Chinese brands such as Zoomlion Heavy Industry, Xugong Machinery, and Sany Heavy Industry have gone global, and their influence has continued to expand. Excavators are not only self-sufficient, but also exported overseas in large quantities.


Statistics compiled by reporters from the China Federation of Finance and Economics show that domestic construction machinery manufacturers have been actively promoting their internationalization strategy through "overseas factory construction + acquisitions and mergers" for many years.


For example, Sany Heavy Industry: Sany India was established in 2006; Sany America was established in 2007; Sany Europe was established in 2009, including a series of industrial chains such as production bases and R&D centers; Sany Brazil was established in 2010, mainly engaged in excavating machinery, Hoisting Machinery.


XCMG Machinery: It has 5 international research centers, 15 overseas manufacturing bases and KD factories, and 30 overseas subsidiaries. It has established more than 2,000 service terminals and more than 5,000 marketing service personnel, covering 191 countries and regions.


Zoomlion: It has established subsidiaries in East Asia, Southeast Asia, Europe and other regions, invested in and built industrial parks in Italy, Germany, Brazil, India, and Belarus, plans to build new factories in Turkey and Saudi Arabia, and has established more than 50 plants around the world. Resident institution. Centered on the United Arab Emirates and Brazil, it is gradually establishing a global logistics network and spare parts supply system.


LiuGong: In 2012, LiuGong spent RMB 350 million to successfully acquire the civil engineering division of HSW Company in Poland. As a world-renowned manufacturer of heavy construction machinery and bulldozers, HSW's gear transmission technology is in a leading position in the world. Overseas manufacturing has established factories in India, Poland, Brazil, Argentina and other countries.


03 How will we deal with double-reverse violations in the future?

Data statistics show that since 2012, the number of excavators exported by my country has been equal to the import volume. In 2018, the export volume of excavators exceeded the import volume for the first time. Since then, the export sales of excavators have maintained a high-speed trend. In 2022, the national export sales of excavators will be 109,500 units, a year-on-year increase of 59.8%.


While the overseas export of domestic excavators is accelerating, the relevant British departments have launched anti-dumping and countervailing investigations on excavators originating in China, which has also sounded an "alarm bell" to domestic companies aiming to expand their overseas market share. According to industry insiders, the main purpose of this double-refugee investigation is to pass the investigation and finally impose additional tariffs.


A reporter from the Associated Press of Finance noted that, in fact, a few days ago, the China Chamber of Commerce for Import and Export of Mechanical and Electronic Products issued an "early warning". According to the Ministry of Commerce's "Regulations on Responding to Anti-dumping Cases of Export Products", the China Chamber of Commerce for Import and Export of Mechanical and Electronic Products is responsible for anti-dumping in this industry. Coordination work of responding organizations. In order to help companies understand the relevant situation and prepare for the response in advance, the "Notice on Convening an Early Warning Meeting on the UK's Plan to Launch Anti-dumping and Countervailing Investigations against Chinese Excavators" was issued.


Earlier this week, the European Commission announced it had opened an investigation into imports of mobile elevating work platforms (MEWPs) from China, following formal complaints from European suppliers that low-cost or "dumped" imports were harming the continent's industry Benefit.


Based on the latest financial reports, major domestic construction machinery companies have exported different products overseas, including excavators. In terms of overseas share, in H1 this year, Sany Heavy Industry (56.88%), Xugong Machinery (40.75%), Zoomlion (34.78%), Liugong (43.17%), and Shantui Group (51.61%).


Relevant British authorities have launched anti-dumping and countervailing investigations on Certain Excavators originating in China. How will domestic companies respond in the future? The above-mentioned relevant person in charge said, "Relevant companies will respond in a unified manner under the guidance of the China Electromechanical Association."

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