Machine Tools China’s Shenyang Machine Tool Group sets its sights on the world

Author / Editor: Eric Culp / Jürgen Schreier

The CEO of the world’s third-largest machine tool builder says his company will continue its expansion outside China by setting up additional operations in Germany as part of a plan to raise exports to 30% of sales over the next five years from their current level of 8%.

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Shenyang Machine Tool Group CEO Xiyou Guan says his company plans to expand further into Germany. (Photo: Fouhy)
Shenyang Machine Tool Group CEO Xiyou Guan says his company plans to expand further into Germany. (Photo: Fouhy)

In an exclusive interview with Ken Fouhy, ETMM Group Publisher, Shenyang Machine Tool Group CEO Xiyou Guan said: “Our future positioning is to make our company the global market leader.”

To grow outside China, the company has been boosting its presence in Germany. It already owns Aschersleben-based Schiess, which will be reintroducing its Asca-brand in the form of a portal milling machine, one each of vertical and horizontal turning machines, and a drilling machine.

The basic units are to be built in China, and the high-precision parts will be shipped in from Germany. “For internationalization, we are looking for partners to be responsible for the global sales and services of our products,” Guan said. “As a first step, we will establish a technical centre in Berlin. This will mainly be responsible for the design of new products. In addition, we will set up a marketing centre in Frankfurt.”

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The plan to increase sales outside the People’s Republic over the next five years offers evidence of the company’s ambition. “In the next decade, internationalization is the biggest challenge,” Guan said. “Today, more than 95% of our business is domestic.” Last year, output at China’s biggest machine tool maker totalled 96,000 units, 31,000 units of which were CNC machine tools. This year, the company plans to produce 100,000 units, including 35,000 CNC machine tools. Guan predicted sales this year will grow to 20 billion RMB from 18 billion RMB in 2011.

The company has also been making technical headway in CNC. “The development of the 5-axis system will be completed within one year. But large-scale deployment will still take some time. Just like our 3-axis Fei Yang CNC system, which has taken five years to complete and introduce. It started in 2006, and now there are more than 1,000 units equipped with our system.”

For Guan, Germany offers both personal and industrial charms. “When I was studying at the university, I was introduced to the German language and German engineering. Germany has been always in a leading position in manufacturing technology, as well as being a very open society. In my opinion, Germany will continue to be the global leader in the manufacturing industry. So, I have a dream to combine German machine tool technology with the Chinese manufacturing strength, which can give birth to a great business opportunity and create tremendous wealth. It is just like the iPhone, with its design conception coming from California, manufactured in China and sold across the world.”

Link up to bulk up

While the company has purchased foreign-owned operations outright, the focus will remain on partnerships, Guan said. “In cooperation with DMG and Mori Seiki, we will play a role as a manufacturer. If the cooperation… becomes even closer, there will be no need for our company to pursue international markets, because the product platform will be common and we would have a common target, which is to change the pattern of the world machine tools.”

The machine tool sector offers ample room for improvement, and growth, he said. “Compared with industries such as automobile, aircraft and electronics, the machine tool industry is quite backward in both its business models and its approach to globalization. There are a lot of small enterprises in this industry with no really big companies. So cooperation between us will have very good prospects in the future. “