Exclusive: Qingpu factory to help Jungheinrich’s China ascent

News Story
- 7 Sep 2006 ( #276 ) - SHANGHAI, China
3 min read
The Qingpu assembly plant.
The Qingpu assembly plant.
The August 18 opening of a Jungheinrich plant, in Qingpu, near Shanghai, China, marks the Hamburg-headquartered group's move into overseas forklift production. Forkliftaction.com News reporter Christine Liew spoke to Jungheinrich Lift Truck (Shanghai) Co Ltd managing director Jian Chen about the group's Chinese activities.

He said Jungheinrich Group's first "assembly factory" outside Germany, "emphasises the strategic importance of the Chinese market. The [Chinese] sales organisation and the factory will work closely" to serve Chinese customers better and faster.

The plant, in Qingpu industrial zone, about 60km from Shanghai Pudong International Airport, will initially produce forklifts for the Chinese market. In time, Qingpu will assemble Jungheinrich warehouse trucks for the Asia Pacific region. Jungheinrich also planned to localise parts production parts in the future and pass on savings to customers, Chen said.

"The success of sales makes further development of the assembly plant possible. The mutual support between these two units [sales and local production] will show a positive spiral of Jungheinrich's success in China."

Jian Chen
Jian Chen
Jungheinrich established a presence in China in 1997, through representation by a Chinese forklift dealer, Galaxy. In 2004, the group set up Jungheinrich Lift Truck (Shanghai) Co Ltd as a direct sales company. In July that year, a joint venture was formed with Chinese forklift manufacturer Ningbo Ruyi Joint Stock Co Ltd, based in Ninghai, Zhejiang province. Ningbo produces hand pallet trucks for Jungheinrich.

"[Jungheinrich] decided to work with Ningbo Ruyi because it is one of the largest hand pallet truck manufacturers in the world. Ningbo has the capacity to deal with Jungheinrich's requirements and shows a persuasive performance," Chen said.

Ningbo Ryui owner Chu Jiwang was a "person of integrity and charisma" and that also convinced Jungheinrich to work with the company.
"There are no intentions to work with further manufacturing partners in China," Chen said.

Jungheinrich currently has six Chinese branches in Beijing, Suzhou, Guangzhou, Tianjin, Hangzhou and Qingdao. It also has a partnership with Nicehorse, a dealer in Nanjing and Chendu. About 100 people work in Jungheinrich Shanghai's sales and after-sales companies.

The group will open three more branches in Shenyang, Fuzhou and Shenzhen in 2007 and, in 2008, "at least one branch" will open in Chongqing. The group considers it will have the "important China markets" covered by 2008.

Chen was effusive about Jungheinrich's Chinese market growth but would not disclose numbers.

Jian Chen at Jungheinrich Lift Truck (Shanghai) Co Ltd.
Jian Chen at Jungheinrich Lift Truck (Shanghai) Co Ltd.
"The growth of Jungheinrich warehouse trucks in China is much higher than the market's [growth]. In 2006, we expect a doubling of orders for warehouse trucks compared to 2005, in which we already achieved a very high figure," Chen said.

China's forklift market is booming and leading foreign manufacturers are interested in claiming a share. The China Industrial Truck Association (CITA) estimated the 2005 market size was 67,120 forklift units, 2004 was 60,651 units, 2003, 44,204 units and 2002, 33,221 units. Industry insiders think the market could expand to 111,200 units in 2009.

Jungheinrich is competing with Linde, Hyster and Toyota in China's high-end warehouse truck segment. Chen says Jungheinrich will count on "three strategic pillars" for its success in China. "The best after-sales in China, the successful logistics system business and the excellent talent strategy" would ensure long-term success and rapid growth.

"The main advantages of [the Qingpu plant] are shortened delivery times and quicker response to customer demands. Chinese and Asian customers expect more comparable delivery times, as we can provide them in European markets," Chen said.

Jungheinrich AG reported net group sales of EUR1.645 billion (USD2.103 billion) for 2005; 72 per cent of sales were made outside Germany. For the past five years, the foreign ratio of Jungheinrich's group net sales has been at least 69 per cent. About half its 8,998 employees work outside Germany and most of the group's sales outside Germany were in Europe. Apart from the new China plant, forklifts are produced at German-based plants in Norderstedt, Moosburg und Lüneburg.
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