Chinese machinery firm to build Thai site

Sany Heavy Industry Co Ltd, a Chinese construction machinery manufacturer, will invest up to US$100 million to build a new production base in Thailand with annual turnover of about $100 million.

Mr Zhang (left) and Mr Feng say Thailandís demand for excavators is strong, with the products used in many major projects such as the Airport Rail Link, mass transit extensions and a luxury residential project.

The company said it was making the investment because of its "strong confidence" in the country, despite its political challenges.

"We see a good opportunity to have a new production base in Thailand as it is the centre of Southeast Asia and its culture is similar to ours," said deputy general manager Zhongke Zhang.

The investment outlay will be between $40 million and $100 million, covering the acquisition of land plots sized from 60,000 to 100,000 square metres in an industrial estate and the construction of a manufacturing plant.

The company, now in talks with a few industrial estates, is studying regulations in each Board of Investment zone.

It will decide on the location within the next few months from among a handful of sites such as Bang Na-Trat Road, 304 Industrial Estate in Prachin Buri, Laem Chabang and Bo Win.

Construction will begin by the end of the year and production will start with the assembly of excavators, the main parts of which will be imported from China, said Mr Zhang.

"The benefit from our investment in Thailand will be an opportunity to distribute our products to Southeast Asian countries like Burma, Laos, Vietnam and Cambodia," he said.

At the same time, about 90% of the parts imported from China to be assembled in Thailand are tax-free under the China-Thailand Free Trade Agreement.

Moreover, logistics costs in Thailand are lower when compared with the 10% of the product price for goods manufactured in China, he said.

"We also want to change the attitude toward Chinese products from being low-priced with inconsistent quality to good-quality by introducing our products," he said.

Mr Zhang said local demand for excavators in Thailand was strong, with 2,000 units a sold locally each year. Of the total, the company hopes to grab a market share of 200 units worth $100,000 each in the first year of assembly in 2012.

He added that Thailand's capacity would contribute 2-5% to the company's total revenue which is projected to exceed 200 billion baht by the end of the year, up from 153 billion last year.

Sany also aims to generate 500 billion baht and one trillion baht in revenue in 2012 and 2014 respectively.

Last year, the company set up a subsidiary in Thailand with registered capital of 2 million baht.

Xie Feng, general manager of Sany Heavy Industry (Thailand) Co Ltd, said the company's products were used in many major projects such as the Airport Rail Link, mass transit extensions and a luxury residential project, Mahanakhon.

Its main partner is Sino-Thai Engineering and Construction Plc.
"The Thai production base will be a model for expansion into at least 30 plants worldwide in the next three to five years and 60 to 70 in 10 years," he said.

Founded in 1989 in Changsha in southeastern China and listed on the Shanghai and Hong Kong exchanges, the company has a manufacturing base and research and development in the US and India with investments of $60 million each.

Last year, it spent 100 million to build a manufacturing base and R&D unit in Germany and plans to invest $200 million in Sao Paulo to expand into the Latin American market. Currently, it has more than 30 subsidiaries overseas, exporting to 150 countries worldwide.

Its products include construction, road and pile-driving machinery, crawler cranes, non-excavation machinery for construction, equipment for the coal industry and harbour equipment.