Hyundai Construction Equipment Seeks Vigorous Expansion in China, the World’s Largest Construction Equipment Market

“Increasing profitability with a focus on special and large equipment”

-      The number of Hyundai excavators produced by Hyundai Construction Equipment (HCE) in China surpassed the 200,000-unit milestone as of March 2021

-      On March 12, HCE held a product launch for their special and large equipment line-up and a business development event celebrating the milestone at 24 locations near its Jiangsu subsidiary and major dealers around the country

Hyundai Construction Equipment utilizes three vital preparations to attain the highest quality for its products and become a leading company in the industry.

Hyundai Construction Equipment, producing more than 50,000 construction equipment units and industrial vehicles annually in its production plants in Korea, China, and India, seeks worldwide expansion through a strategy best acknowledged for "delivering customized products to meet customers' demands." The company is supplying products that account for local characteristics and different customer needs in various overseas markets including the US, Europe, China, and India.

The construction of the Technology Innovation Center last November, in particular, shows Hyundai Construction Equipment’s willingness to invest in technological research and development to attain the highest technological competitiveness. At its Reliability Assessment Building and the Finished Product Performance Test Building, on a 40,000㎡ lot, HCE conducts R&D to respond to the needs of the Fourth Industrial Revolution, e.g. smart construction equipment and hydrogen fuel cells, and carries out thorough testing and quality control of their parts and finished goods from the development stage to final production.

Another driving force behind Hyundai Construction Equipment’s international business is its strong network of approximately 540 dealers in 140 countries around the world, which collectively strengthens its brand image as "Technology-centered Hyundai." HCE operates an overseas dealership management program that fosters the technical proficiency of its dealers, allowing them to better their market-influencing capabilities. The program seeks to establish an advanced education course to develop trainers who will then provide technical training to the dealers alongside HCE’s global online education system to provide training and education tailored to local dealers in different countries.

In addition, Hyundai Construction Equipment enables customers to continuously enjoy the benefits of using their highest-quality products over the long-run through "customer-satisfaction management." To facilitate the safe use of their equipment, HCE developed an online warranty service called HI CARE, which allows customers to remotely receive diagnostic and prediction-based maintenance. They are also making additional efforts to reduce customer claims by investigating and reflecting on their feedback before organizing separate task forces as needed.

Selling "special and large equipment" in China, the world’s largest construction equipment market.

According to the market research company Statistica, China accounts for about 26% of the global construction equipment sales in 2018 (about 300,000 units), placing it as the largest market share in a single nation, and is predicted to remain in first place, or at least second place, in single-country market share in the next few years. As the Chinese market accounts for the largest share of Hyundai Construction Equipment’s global sales, it is the most important strategic location in accomplishing HCE’s mission of reaching sales of KRW7 trillion and being included in the top five companies worldwide by the year 2023.

Hyundai Construction Equipment is concentrating on maximizing sales through the development of special and large equipment to meet the construction demands in various regions in China and aggressively pursuing on-site marketing and sales to actively promote their products to local customers.

In 2016 the company, to satisfy the heightened demands of Chinese customers, successfully took a leap forward in technological and competitive capabilities by releasing the VS-series excavators, which came equipped with enhanced work performance and fuel efficiency, while simultaneously meeting the stricter exhaust gas regulations enforced by the Chinese government. Last September HCE also found a new special equipment business headquarters in China to develop the pile hammer excavator and the amphibious excavator, providing greatly improved performance and a high level of usability during construction and urban development, plus the capability to work in lakes, rivers, and wetlands for efficient landscaping and waterway and wetland conservation work, respectively. These efforts resulted in satisfying increasing local infrastructure investment needs and improved profitability for the company.

Hyundai Construction Equipment sold eleven pile hammer excavators at the equipment exhibition held last November, and twenty 21-ton and 22-ton amphibious excavators at the exhibition in October.

Held a large-scale new product launch and test run event in China to celebrate the production of 200,000 Hyundai excavators milestone.

Hyundai Construction Equipment’s production of Hyundai excavators exceeded 200,000 units in the Chinese market as of March 2021. On March 12^th, the company successfully held a large-scale event "celebrating the production of 200,000 excavators and introducing new special equipment line-ups" to promote new special and large equipment products to key customers.

At this event, the Changzhou plant of the Jiangsu subsidiary and the 11 major dealers in China managed 24 events across China which were cross-linked and broadcast online simultaneously. At the new product launch event held by the Jiangsu subsidiary, the company unveiled the production facilities of the Changzhou plant, conducted an on-site test run of four new excavator models including the R205VS, and introduced the special features and strengths of thirteen special and large equipment products. This product launch event was broadcast live through a self-developed app platform, and a total of 14,000 people participated in the event both on and offline.

During the business development meeting held afterwards, the four new excavator models were explained in detail, and dealers actively conducted promotional activities, resulting in more than 2,200 pre-orders of the units and starting the March-April peak season with a foundation for a large revenue gain. Also, various prize-drawing events were held for those who reserved the new products, attracting the attention of many customers.

Customers could directly observe the improved performance, working speed, capacity, precise control, and enhanced design structure of the new mid-to-large size Hyundai Construction Equipment excavator models through the test runs. The R245VS model’s high-output engine demonstrated improved loading efficiency, and its reinforced bucket made it possible to move materials more easily. It also boasts a robust design structure and excellent durability, which has been proven through extended verification.

The new special equipment models introduced at this event include, among others, the 18m pile hammer suitable for large-scale infrastructure construction in cities and rural areas, amphibious excavators for wetlands work, and nippers. At the Jiangsu subsidiary and dealers event, improved performance specs and features of the special equipment products were shown and explained on large screens so that customers could better understand the advantages of working with special equipment.

China is expected to grow rapidly with an increase in infrastructure investment through urbanization, e.g., construction, real estate, and roads.

Economic stimulus plans following COVID-19 raised the demand for infrastructure investments through urbanization such as construction projects, real estate, and roads. Chinese customers confronted with various conditions of usage that include general construction, the development and conservation of wetlands, mine development, etc., are willing to replace their outdated excavators with those of superior quality. It is necessary to supply these customers with construction machinery and equipment optimized for each of the diverse working conditions, as well as providing improvement in the performance, cost efficiency, eco-friendliness, durability, and level of safety.

Since it entered the Chinese market in 1995, Hyundai Construction Equipment has grown rapidly by more than 60% each year for eight consecutive years. The main factors credited for this growth are the development and sale of entry-level and highland models suitable for the local market and HCE’s brand competitiveness, which derives from its creation of exceptional values.

Hyundai Construction Equipment’s three key preparation points for the Chinese market – Quality, Local Sales Networks, and Customer Satisfaction.

Hyundai Construction Equipment operates local production facilities and their processes according to a quality management system that integrates international standards. They strive to maintain the exceptionally high quality of its various models by implementing a thorough quality control system that employs a periodic productivity evaluation and failure cost management.

Last September the company constructed a performance test building and noise test site spanning 6,600㎡ at its Jiangsu subsidiary. The test site is equipped with all-weather testing facilities, and their final products are thoroughly verified for quality, leading to the shortening of the product development timetable.

Furthermore, by cooperating with highly competitive local equipment manufacturers, HCE attains quality competitiveness that serves as a foundation to increase its shares in the global market with its rising demands. The recent OEM arrangement with the Chinese forklift manufacturer, UN, led to sales of its 10 OEM-produced entry-level models in China, Europe, and various emerging markets. Additional collaboration with UN, which includes the construction of exclusive assembly lines for entry-level forklift models as well as quality assurance and development facilities in UN’s manufacturing plant, will further boost long-term product competitiveness for Hyundai Construction Equipment. HCE also signed a contract with China’s prominent state-owned company, Sinomach Changlin, of the China National Machinery Industry Corporation, for the sale of motor graders until 2024, thereby increasing its product groups from six to seven. The export of the new motor graders to emerging markets has contributed to the rise in HCE’s sales revenue.

Similarly, local customers have expressed high satisfaction with HCE’s quick-response customer support services. The establishment of education centers in multiple locations, including Changchun and Sichuan among others, promotes advanced technical education for its professional support employees and provides technical support for its customers within a 24-hour timeframe. Additionally, by quickly providing repair parts through service parts centers, HCE upholds a competitive edge in their product’s life-cycle and durability.

An official from the company stated, “In the Chinese market, the three elements promoted by Hyundai Construction Equipment, ‘quality,’ 'solid local sales networks,’ and ‘the management of customer-satisfaction management’ synergized and met with good results. We’ll increase our market share by developing and supplying strategic models and cutting-edge technologies that answer to the exact needs of the local customer.”