2006 was a fantastic year for the South African construction sector. Contractors were getting ready to start building the large stadia for Soccer World Cup, major highways were undergoing major upgrades, construction on the Gautrain had started in earnest and Eskom’s Medupi was looming large.
This is when we experienced the introduction of brands such as XCMG, Sany, LiuGong and Shantui into the market.
Associated closely to these brands were names, such as Super Group and McCarthy. They were on a mission to introduce Chinese technology to the South African construction sector. These dealers and their principals were aggressive, rivalling European, Japanese, Korean and American brands that dominated the earthmoving equipment market for many years. The biggest differentiator that they had at their disposal was their very competitive price. At the time, their products were stripped of all the extra bells and whistles that drive up the prices of these technologies.
The worldwide economic collapse at the end of 2008 placed a dampener on the bullish outlook of contractors, as government started applying brakes on infrastructure spending. The worrying state of construction in 2009 and onwards saw most of these Chinese OEMs take a different approach to drive unit sales in the country. Most of them established subsidiaries in South Africa who would manage newly appointed dealers that had a long history in the country’s construction sector. Some of them were contractors, while others had a solid track-record in the “yellow” metal industry.
This so-called second wave of entry into the construction equipment market was thought to be the last. Users of their equipment were now reassured that the OEMs were here to stay. Their investments could be seen along the highways in and around the OR Tambo International airport. Technicians and support were at hand to keep those machines running.
Last year, saw more changes with at least one OEM firing its long time dealer and appointing another one and another pulled out of the country completely.
We now witness another “wave” with a well-known OEM relinquishing its previous dealership and partnering a well-known local dealer. Based on the number of views on Equipment Africa, this announcement is very big news in the industry.
I am sure that this is exactly what this privately-owned Chinese equipment OEM needs to raise its profile in the market, and we look forward to watching developments unfold. In most instances, it is an adequate local distributor that has been missing from the equation.
It already has the local infrastructure in place at OEM level in the country sending a very strong message to the market. This is now being backed by a powerhouse dealer that understands the intricacies of the South African construction market.
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