Five things we learned from Bauma China and IRC

China’s depressed rental market has regional implications

The dramatic growth of AWP rental fleets in China – 700,000 machines and counting – has left the market exposed, with the slowdown of the Chinese economy leading to lower rental prices and oversupply.

That in turn has led many Chinese rental companies consider moving outside of China, with Shanghai-based CDHorizon being the most prominent example.

Rental Briefing understands that CDHorizon now has more than 1100 machines in the UAE, and it is also opening in Saudi Arabia. Closer to home, it already has rental operations in Malaysia, Indonesia, Vietnam and Thailand.

Li Ying, general manager of Liugong Access, speaking at the 2024 International Rental Conference (IRC) in Shanghai. (Photo: Rental Briefing/IRN)

Rental prices in China have declined by more than 20% compared to 2023, said Li Ying, general manager of Liugong Access, speaking at the 11th International Rental Conference (IRC); “The sharp drop in rental prices has caused widespread defaults and financial stress. It’s nearly impossible for companies to recover costs or achieve profitability under these conditions.”

The downturn has forced many rental company owners to reassess their strategies. “Just two years ago, many of these [new rental] leaders were optimistic and confident,” he said. “Now, with the market shrinking, they are questioning their paths and facing significant self-doubt.”

Also at IRC, Jimmy Wang, founder and CEO of rental firm China Construction Bright Future (CCBF), said a shift to overseas rental markets was one consequence of the domestic squeeze; “The search for margins is driving the overseas diversification.”

He said the Middle East was the first priority target market, followed by South East Asia, and finally countries associated with China’s Belt and Road project, which includes nations such as Pakistan, Kazakhstan, Sri Lanka and Laos.

Giving the OEM perspective was Dawei He, international sales and marketing director at Sinoboom. He said Chinese manufacturers had to shift from volume-based to a “value-based” strategy; “Not copy-cat products to grab market share at the expense of margins.”

At the same time, aftermarket services need to improve; “I strongly recommend all Chinese manufacturers – including Sinoboom – to pay more attention to the aftermarket. If you do, you are more likely to succeed.”

What was interesting about his comments is that they included a recognition about the role of Chinese OEMs in the oversupply of machines in the market; “If more production capacity is released [in China], it will jeopardise the whole market.

“We need to get rid of our dependence on scale. We need to rely more on developing new use cases, new technology. It will create a healthier ecosystem.”

Telehandlers is the next target for Chinese OEMs

According to one Western manufacturer, there were 19 Chinese OEMs producing telehandlers at Bauma China. That included big name suppliers such as Sinoboom and LGMG, but also numerous other suppliers.

Western manufacturers, particularly Manitou, have been banging the drum for telehandlers in China for several years – Manitou is celebrating 20 years in China this year - but the take-up has been slow, with Chinese companies choosing to stick with traditional equipment such as truck cranes.

One major Chinese rental company told Rental Briefing in Shanghai that it had been trialing telehandlers at its branches, but the results had not been encouraging.

Zoomlion launched this 4525R roto telehandler at Bauma China. (Photo: IRN/Rental Briefing)

That means the Chinese OEMs are targeting export markets, particularly Europe and Australia, but also Russian buyers.

That is clear also in the types of machines they are building, with Roto and conventional models shown by Zoomlion and an electric machine from LGMG. Sinoboom has recruited experienced telehander experts, including former JCB staffer Ian Pratt, to help in their efforts.

Lesser-known Chinese brands such as Everun and Henan Jianghe Special Vehicle Technologies also showed handlers, the latter focusing exclusively on telehandlers on its stand rather than any of its booms or scissors.

The investment in time and effort that European OEMs have made to promote telehandlers in China may well pay off in the long term, but it won’t be easy, particularly now that Chinese suppliers have entered the fray.

Chinese OEMs may have their eye on export markets, but they will no-doubt be ready when domestic demand increases.

As Ares Song, head of exports for LGMG’s MEWP international marketing division told Rental Briefing, “We believe it will be a product of the future. We want to be one of the pioneers in China.”

Tariff uncertainties dominated trade show talk

President-elect Trump’s comments on tariffs for Chinese products, including those on products made in Mexico, were made on the opening day of the show and inevitably dominated discussions in Shanghai.

Many Chinese OEMs – including XCMG, Sinoboom and LGMG – have production facilities in Mexico, and in some cases are in the middle of building them, so thought of high tariffs on Mexican made products was alarming. And of course Chinese OEMs also have tariffs for the EU as a concern them.

In the case of LGMG, it opened its Monterey facility late last year and is still ramping up production. It is making rough terrain and slab scissors and booms from 30 to 80 ft in Mexico, and also has plans for a US-design 10,000 pound telehandler for export to the US.

On the tariffs, Ares Song acknowledged that they were not a good thing for it and all other OEMs in a similar situation; “We have different ways to overcome the challenge.

Ares Song, head of exports for LGMG’s MEWP international marketing division, pictured at Bauma China. (Photo: IRN/Rental Briefing)

“Our new products – the ‘generation 2’ machines – will improve our competitiveness…The costs of manufacturing in Monterrey is higher than China. We are looking at which products are most competitive to build from China or Monterey.

“We will use both China and Monterey to supply Europe: we can use both factories to supply Europe.” The decision on what to produce and where will depend also on the second round of tariffs expected from Europe in December, with countervailing tariffs (to address state subsidies) likely to be added to the recent anti-dumping measures.

In more general equipment, Liu Hanson, general manager at XCMG’s import and export business, told Rental Briefing that potential US tariffs would not stop its internationalization strategy; “we strongly believe internationalization is localization.”

He said North America did not represent a significant proportion of XCMG’s business, and that it continued to invest in its facilities worldwide with manufacturing plants in Indonesia and the Middle East next on the company’s agenda.

While measured and diplomatic, Liu did say that he thought protectionism wasn’t a great idea, and that the result would be higher prices for buyers and the risk of less competition on technology.

The fact that the UK announced anti-dumping tariffs on Chinese-made excavators during the show only served to further raise the temperature of debates.

Not all tariff attention was directed at US policy. A major hydraulic breaker manufacturer in China, Daekko, told Rental Briefing about its plans to create an assembly hub in Dubai, UAE in response to tariffs applied to Chinese goods by Japan and other Asian countries.

Chinese OEMs who have invested in US manufacturing or invested in US companies – Sany and Dingli among them – will be congratulating themselves.

Chinese OEMs forging ahead on electrification and fuel cells

China’s construction and mining equipment users are already using more electric machines than anywhere else in the world, mainly mid- and large-sized wheeled loaders.

But a stroll around the outside area of Bauma China presented the visitor with a sea of battery and fuel cell powered machines.

It seems the impact Chinese manufacturers are having on the global EV automotive market will be mirrored by their construction OEMs: there were literally hundreds of new power machines on show.

Zoomlion, for example, showed a prototype large concrete pump with a 200kW hydrogen fuel cell power source combined with a battery pack. The truck chassis contained the batteries and six 1300 litre capacity carbon fibre tanks to store the hydrogen.

A spokeswoman told Rental Briefing that it was developing products to use both battery and hydrogen fuel cell technology, for applications in different environments.

Small excavators and wheeled loaders powered by battery abounded at the show, but what was interesting was the number of electric machines designed purely for export markets. For example, LGMG showed its first battery powered telehandler, while the big Chinese aerial platform suppliers were all expanding their ranges of battery powered booms and scissor lifts.

A Zoomlion concrete pump powered by battery pack plus a 200kW hydrogen fuel cell, pictured on the opening day of Bauma China 2024. (Photo: IRN/Rental Briefing)

Some of the products on show were interesting takes on electrification. Sany, for example, showed a 55t excavator with a charging cable reel – offering up to 300m distant charging - fitted to its counterweight. This was shown connected to a vehicle mounted battery energy storage system (BESS).

Indeed, the presence of BESS systems was a feature of the show, including one 800kWh unit mounted on a four wheel drive truck. That was shown by CPI Ronghe and Fujian Jingong.

There is also a growing market for the rental of such units. Nanjing-based LegenDale – created by Fan Zhen, who used to work for a big JCB dealer in China - is building mobile BESS units and has launched a separate business, McSolid, to rent the units to contractors and developers for use in the initial stages of projects where there may not be a grid connection.

Electrification has been most notable in the aerial platform sector, with even large booms now electric, such as 38 m and 42 m telescopic machines from LGMG and Sinoboom, respectively.

The pace of this trend has even surprised some Chinese rental companies. Li Ying, general manager of Liugong Access, in his speech at the IRC conference, said; “One notable example [of rental challenges] is their failure to anticipate the rapid electrification trend in China.

“Some companies were still purchasing new diesel vehicles as late as 2021 or 2022, completely missing the shift to electrification.”

Opening day at Bauma China 2024. (Photo: IRN/Rental Briefing)

Bauma China makes “incredible comeback”

Exhibition organisers are masters at putting a positive gloss on however many people visited their event, but it was impossible to argue with Messe München CEO Stefan Rummel’s assessment that Bauma China had made an “incredible comeback and impressively confirmed its leading position in the Asia Pacific region.”

More than 280,000 visitors were at Bauma China, which was a considerable advance on the 200,000 it had forecast and on the 80,000 who had visited the pandemic-impacted 2020 event.

That the show attracted those numbers at a time when the Chinese market is at a low point in terms of sales only reinforced Rummel’s view.

The key figure, however, was the 20% of visitors who came from outside of China. That was clear from Rental Briefing’s attendance, with the aisles full of Russians, Indians, Australians and other Asian visitors.

The top ten visitor countries were: Russia, India, Malaysia, South Korea, Thailand, Indonesia, Singapore, Kazakhstan, Brazil and Japan.

The show has become a showcase not only for domestic buyers of construction equipment, but a must-visit event for international buyers, particularly those in Asia and those interested in how new power technologies are developing.

China’s construction OEMs have made strides. Should western firms worry? China used to be a lucrative market for western construction equipment manufacturers. But the world is changing.