Volvo Construction Equipment invest in China

AS part of their long-term strategy for growth in Chinese and Asian markets, Volvo Construction Equipment have agreed to make an equity investment of 70% in Shandong Lingong Construction Machinery Co. (Lingong), based in Linyi in Shandong Province, subject to regulatory approval.

Founded in 1972, Lingong are a major Chinese construction machinery manufacturer with a product line that includes wheel loaders, excavators, backhoe loaders and road rollers. The company has a comprehensive dealer network throughout China and exports machines to Australia, Malaysia, Mongolia and the Middle East. Lingong employ around 1,800 employees and in 2005 achieved sales of US$250 million.

Commenting on the investment, Tony Helsham, president and chief executive officer of Volvo CE, said cooperation with Lingong represented a significant step in Volvo’s China vision and global strategy. ‘This is a long-term strategic investment which will put Volvo CE in a very strong position in China’s construction equipment market. It allows us to strengthen our position, serving customers with different offerings beyond our current premium products.’

China is the world’s largest market for wheel loaders. The total market for 2005 was approximately 110,000 units. Lingong are the fourth largest producers of wheel loaders in the country with 16 different models and a market share of around 11% in 2005.

Volvo CE say they intend to leverage Lingong’s current management, research and development, and operations to the fullest extent. The company will continue to build upon its strong position with entry-level products, while at the same time Volvo will continue to develop and produce high-end wheel loaders in Sweden, the US and Brazil.

‘This is a win-win deal,’ said Wang Zhizhong, chairman of Lingong. ‘With Volvo’s support in products, technology and financial strength, we will be well positioned to further develop our brand in China as well as to expand overseas.’

Volvo CE have manufactured hydraulic excavators in China since 2003 and have so far invested US$24 million in their Shanghai-based operation. The company currently employs around 250 people in China.