Doosan Dedicates 2nd Plant in China

New plant to turn out small excavators to compete with indigenous makers on price

Doosan Infracore Co., an affiliate of Doosan Group, dedicated its second excavator plant in Suzhou, Jiangsu Province, China, in line with its strategy to take a bigger share of China's construction equipment market, which dominates 40 percent of the world market for construction equipment, in a ceremony on Oct. 26.
Chairman Park Yong-hyun attended the ceremony in recognition of the growing importance of China's construction equipment market for the group. The group set up a wholly-owned local subsidiary, Doosan Machinery Suzhou Plant Inc., in Suzhou to produce 9,800 earth diggers annually, each less than 8 tons in weight. Its first excavator plant in Yantai, Shandong Province, produces heavier construction equipment, which will help boost Doosan's market share in the construction equipment market in China. The Yantai plant produces 22,500 excavators annually, bringing the total to 32,300 excavators in various sizes produced by the company in China.
Chairman Park said in his speech at the ceremony that China's construction equipment market has been expanding 30 percent annually and Doosan Infracore will make efforts to expand its market share with light excavators produced at the Suzhou plant and heavier ones made at the Yantai plant.
Doosan's excavator market share in China came to 9.9 percent during the first nine months of this year, ranking fourth after Ssani of China and Komatsu of Japan, Park said, adding that the company has been named for seven consecutive year as the top company in the area of customer satisfaction since it first began selling construction equipment in China. In February, the company achieved the sale of its 100,000th excavator and it will make the Suzhou plant its base for growth to become a top producer of integrated construction equipment in China.
Doosan Infracore plans to expand its Suzhou plant's annual capacity to 13,600 by 2015 through a two-stage construction plan, with the plant taking up 240,000 square meters in space. The company's two Chinese subsidiaries invested 72.6 billion won last November to kick off the construction of the Suzhou plant.
Director Nam Don-keun, in charge of Doosan Infracore's operations in China, said the Suzhou plant's smaller excavators are aimed at coping with the 34 percent annual rising demand for such products, especially targeted at southern regions in China, and also to cut production as well as logistics costs for enhancing its competitive edge. The smaller earth diggers account for 33 percent of total excavators sold in China last year, he said.
A Daewoo Securities analyst said the second plant in Suzhou is likely to cut production costs for Doosan Infracore by boosting its productivity. The introduction of new types of excavators would also expand the company's market share in the future, pointing to a reduction in inventory levels due to hefty sales of the equipment.
The company has a compelling reason to localize the production of its construction equipment, as local producers have been challenging foreign makers ever more strongly with competitive production costs and logistics expenses. Some of them, such as Ssani, have already outsold their foreign competitors including Komatsu of Japan, boosting its market share from 2.8 percent to 11 percent in the first nine months of this year, helping to boost the market share of indigenous excavators to 31.4 percent in the same period.
Doosan has no choice but to increase the localization of its excavator production in China in order to compete with indigenous competitors, as personnel and logistics costs are lower there, a company executive said. nw

Dignitaries including local Chinese officials and Doosan Group officials led by Chairman Park Yong-hyun, 3rd R, cut the tape at the dedication ceremony for Doosan Infracore's second excavator plant in Suzhou, China, on Oct. 26.
Photo on courtesy of Doosan Infracore