Others News
- Volvo plans further acquisitions
Date: 6-Jul-2007 Sources: (Shenzhen Daily)
VOLVO AB, the world's third-largest construction-equipment maker, aims to make further acquisitions in China, as road-building and real-estate projects boost sales of wheel loaders, excavators and trucks.
'Acquisitions are natural and the most effective way to expand,'' Lansi Jiang, vice president of Volvo (China) Investment Co., said Thursday. Volvo bought a 70 percent stake in Shandong Lingong Construction Machinery Co. for 327.5 million yuan (US$43 million) in January.
The Swedish company will also add new heavy trucks through its venture with China National Heavy Duty Truck Corp., as the country's 560 billion yuan road-building plans boost commercial-vehicle sales. The company aims to raise its proportion of sales generated in Asia to 25 percent from 18 percent within five years, Jiang said.
'China's increasing fixed asset investments and improving working conditions in the construction industry will create many opportunities for overseas companies,'' said Chen Yaobang, an analyst at Huatai Securities Co. in Nanjing. 'Overseas makers need to move production to China to be competitive.''
Caterpillar Inc., the world's largest construction-equipment maker, and smaller rival Komatsu Ltd. are also targeting China, as rising wages and government policies encourage greater use of machinery in construction work.
The country's spending on construction and equipment grew 24 percent to 1.96 trillion yuan in the first five months from a year earlier, according to the government's statistics agency.
Volvo, the world's second-largest truckmaker, also plans to add hybrid vehicles in China as early as 2009, Jiang said. The company may also form a venture to make large commercial vehicles with Dongfeng Motor Group Co., it said in January.
The acquisition of Lingong boosted Volvo's dealership network in China more than 1,000 percent to 187 and raised its wheel-loader production capacity. Lingong each year produces 16,000 wheel loaders, machines used to carry while excavators dig.
Sales of wheel loaders in China totaled about 120,000 last year, more than twice the amount sold in the rest of the world.
Volvo also bought Ingersoll Rand Co.'s road-development unit for US$1.3 billion in cash in April to add heavy road-building equipment. The unit operates a plant in Wuxi City, eastern China, among others worldwide.
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