China is international business's next big thing. For many western forklift makers, materials handling in the world's biggest nation is a golden opportunity: local brands like Heli and Hangzhou are king, while European and other brands are relatively unknown, and in the minority.
The facts: gross annual production (domestic and export) of about 45,000 forklifts, with 50 local manufacturers.
But, while the world races to get its products into the Chinese market, one European company has been active there for more than a decade.
Linde-Xiamen Forklift Truck Corporation was formed in the early 1990s when Linde AG bought into Xiamen Forklift Truck Co. At the time, all Asian sales were administered in Linde's hometown of Wiesbaden, Germany. Asian sales director Heinrich Winzl was deployed to oversee Linde's local presence, and is still there today.
Mr Winzl and Forkliftaction.com News chief reporter Damien Tomlinson chat about operating a successful western company in China.
Why did Linde decide to pursue entry into China all those years ago?
At the time, we were administering sales into that part of the world from Germany. China was seen as a market with huge potential for our business, so we began looking for ways to enter the market.
Why did Linde decide a joint venture was the best option?
We had a look at the options, and a joint venture was chosen for several reasons. With a partnership, we could add our quality, know-how and business ideas to an already-established player in the market. It worked out well.
Why was Xiamen Forklift chosen for the joint venture partner?
Xiamen Forklift was one of many companies we approached with proposals. They were a medium-sized company, and seemed to know what we were trying to achieve.
What is the state of the joint venture now?
We acquired Xiamen's share of the joint venture in 1999. Xiamen still operates in the market.
Is head office happy with its Asian performance?
Very much so. As a strategic world location, China is perfect for servicing customer orders from Taiwan, Australia and Singapore, and our performance locally has exceeded expectations. Germany, France and China are Linde's top growth markets.
What about sales?
Last year we sold almost 5,000 forklifts, 30% of which were for export. We have 26% of the local market among the foreign brands, which makes us the leading foreign manufacturer and supplier in China. Linde-Xiamen has been profitable for the past three years, but it was a long road.
What other foreign brands are manufacturing in China?
While Japanese brands have been sold in China for about 25 years, we are still the only foreign manufacturer building forklifts in China. Toyota is about to begin production here. Other foreign brands available in the market are Hyster, Daewoo, Nichiyu, Hyundai, Komatsu and Tailift. There are about 50 local forklift manufacturers, led by Heli and Hangzhou.
Is Linde's product line reduced for the Chinese market?
No. We have 1:1 production, which means forklifts available elsewhere are available here. Forklifts manufactured here are sent all over the world, including Australia, Malaysia, Africa, Thailand and the USA.
How does China compare to the rest of the world for business and manufacturing viability?
Labour costs are quite low, and the workforce is enthusiastic and loyal. Steel is expensive, and components cost about the same as elsewhere. The forklift industry is supported by the China Construction Machinery Association Truck Sub-association, which is a great association, and administered by the State Economic & Trade Commission.
Any predictions for the Chinese market in the years ahead?
I think it won't be long before the Chinese market is as big or bigger than the Japanese forklift market. The region is developing very quickly and, having been here for these years already, we're in a good position to benefit from the growth.
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