Posted 03/10/17
It wasn’t that long ago that the general perception of Japanese products was that they were cheap and really not that good. History has a habit of repeating itself so cast your mind back to more recent times when Korean products hit the shelves and forecourts of Europe. In the 1990’s you could purchase a Goldstar television set for a fraction of the price of a Sony or a Panasonic. They essentially done the same job and so we bought them based on the principle that ‘I am getting the same thing for much less money’. Nowadays you need a small mortgage to buy a Goldstar TV (rebranded as LG “Lucky Goldstar” in 2002). The same evolutionary trends can be seen in the car industry were Hyundai and Kia where once, not that long ago, bargain basement products that you wouldn’t touch with a barge pole but now they are the fourth largest car manufacturer in the world (larger than Ford who is fifth) so an awful lot of us are buying them.
History has therefore shown that as consumers we are always looking for a cheaper alternative and that the cheaper alternatives evolve with time. The trend continues and now the world has shifted to cheaper products coming from China. This time it’s different however and cycle of manufacturing in China will be much, much longer. China is a huge country with a near endless supply of resource (Chinese companies have purchased a very large number of the worlds commodity producers) and it has benefitted massively with the rapid growth of globalisation over the past 20 years. Also, as a country, China has always been a major manufacturing entity but it was when state owned industries were replaced by private enterprises and the financial system restrictions were eased that its growth went into overdrive.
China, in a very short period of time, has now established itself as a mature hi-tech manufacturing entity and is no longer “the workshop of the world”. There are many innovative Chinese companies leading the way within their industries and when you consider that Comac (Commercial Aircraft Corporation of China) was formed in 2008 and a few months ago test flew their new C919 passenger jet and that they have 580 orders for it you will appreciate that the country possesses and can produce the world’s most advanced technology and they can sell it. Another example is CRRC Corporation who are the largest train manufacturer in the world and who have just released their second-generation bullet train which will be the fastest in the world at 267 kms/hr. This was also achieved in less than 10 years and again demonstrates the very fast-moving pace at which Chinese technology is moving, literally. The speed of progress was however, in some part, due to the fact that the world’s major bullet train manufacturers, Siemens, Bombardier & Alstom had to sell some of their know how to gain access to the very large Chinese market. In a rapidly growing economy the transfer of knowledge is normal as indigenous companies attract employees from multi-national companies ultimately bringing the technical know-how with them.
I personally experienced a more blatant demonstration of knowledge transfer during a material handling trade show some years ago when we represented Doosan. Staying in our hotel at the time were, what turned out to be, a crack team of Korean engineers. They were armed with an array of photographic equipment and they moved round the trade show in packs opening bonnets and taking pictures as fast as they could before they were rumbled and on one occasion it turned nasty where a “delegation” of rather large Still representatives came onto the Doosan stand “looking for them”.
In the grand scheme of things and when compared to highly sophisticated aircraft and bullet trains, forklifts are quite rudimentary technology. It is an industry however that is following the general trend of other manufacturing industries within China. To compete, many of the well-known brands have shifted their manufacturing facilities to China. Not many people realise it but all Mitsubishi, Caterpillar, Nissan & TCM engine forklifts are now exclusively built in a super factory near Dalian, north east China (close to the North Korean border). These trucks are exported round the world as “Japanese Forklifts” with all the very nice sentiment this this term implies but they are, in reality, no such thing. Anyone who is associated with the Material Handling industry will be familiar with those old bastions of German manufacturing, Linde & Still but the holding company for both (the Kion Group) is 43.3% owned by Weichai Power who are described on Kion’s corporate website as a “strategic anchor shareholder of KION GROUP AG”. Weichai Power are a Chinese state-owned company who specialise in the manufacture of engines. There are many other examples of how China plays a major part in all the major manufacturers production networks such as:
Toyota – purchased Tailift recently including its manufacturing facility in Taiwan and in China
Manitou – manufactured by Hangcha in China
Jungheinrich – a number of products in their range are manufactured in China for the European market.
Kion Group – a number of products in their range are manufactured in China for the European market.
Clark – a number of products in their range are manufactured in China for the European market.
Doosan - a number of products in their range are manufactured in China for the European market.
EP are a good example of today’s progressive Chinese technology. Look at their range you will discover some truly unique innovations ( https://clearlift.ie/product-range/ )The company is led by a true entrepreneur and innovator, John He, who is seen by many as the Elon Musk of the forklift world. EP, under John’s leadership is changing the way material handling problems are solved and that results in simple cost-effective solutions. When sophisticated technology is called for it is applied in EP products but very importantly it is left out when it is not needed. With EP there is a definite break from the idea that Chinese forklift manufacturers just build things and an interesting dynamic has evolved where EP now need to hide their latest R&D prototypes at trade shows (access to them is highly restricted) for fear of other manufacturers stealing their ideas (they keep a very close eye out for the Koreans!)
China now dominates the forklift manufacturing world and the reason for this is simple. The country can build stuff that does exactly what the alternatives do but at a much lower price. Just like when the Japanese and Korean products hit the European market we are enjoying an era of getting the same thing for much less with Chinese products and so why would you pay more. The period of thinking “I wouldn’t buy that Chinese rubbish” is well and truly over.