China's excavators, rollers dig long-haul success abroad via e-commerce

A little-known road called Kaixuan in Jining, east China's Shandong Province, has become an undeniable presence on the world's leading cross-border B2B e-commerce platform, Alibaba. It not only witnesses the transformation of Jining from a traditional coal resource hub to a manufacturing powerhouse but also how cross-border e-commerce has changed the fate of factories along this road.

Stretching approximately 2.5 km from southwest to northeast, the road, whose name means triumph in Chinese, can be walked in about half an hour. However, a dozen machinery manufacturing companies gathered on both sides of the road, actively seeking to go global through Alibaba.

For Han Guangfei, general manager of Jining SAAO Machinery Company Ltd., a "resident" of Kaixuan Road that specializes in small and medium-sized road construction machinery, the recently concluded annual "Double 11" online shopping spree was more of a reminder that his business is not limited to just one day. While others are busy stocking up on discounted daily necessities, he is focused on quality control and preparing the inventory of road rollers, setting his sights on overseas markets.

"Either go global or be left behind," said Han. "Most of the machinery factories you can see along the Kaixuan Road are doing business on Alibaba."

SAAO mainly produces various types of road rollers and graders. It earned its reputation in the industry by sponsoring all the lighting machinery equipment in the 2023 Chinese sci-fi blockbuster "The Wandering Earth II."

Han believes traditional manufacturing equipment must explore overseas markets to achieve sustainable development.

In 2018, SAAO's foreign trade orders accounted for only 20 percent of its business. Han's decision to go global online has become a game changer for the company, while SAAO's store on Alibaba.com, the cross-border B2B platform owned by China's e-commerce giant Alibaba, was in full operation in 2019.

"Since then, the foreign orders have flocked in, but we have seen a surge in overseas orders through Alibaba since 2021 when foreign countries strove to recover from the COVID-19 pandemic with an infrastructure-building wave," said Han.

"In the first half of this year, our order transaction volume on Alibaba increased by 50 percent year on year, while foreign trade amounts to 60 percent of its overall business, and the figure is expected to rise to 70 percent by the end of this year," he added.

SAAO's overseas expansion is reflected in the official economic data released by the Chinese authorities. According to the China Construction Machinery Industry Association, in the first half of 2024, China's construction machinery import and export trade exceeded 27.13 billion U.S. dollars, up 3.13 percent year on year. Among them, exports amounted to nearly 25.84 billion U.S. dollars, up 3.38 percent year on year.

Alibaba also sees more machinery manufacturers like SAAO rapidly expanding their presence in the overseas market. Its data shows that among the top 10 industries with the highest growth of online transactions on Alibaba.com in the first half of 2024, half are related to machinery equipment and construction materials, with star products in the construction machinery industry, such as excavators, loaders, and drilling rigs, having seen transaction growth rates exceeding 50 percent.

Many enterprises from Jining, one of China's six major construction machinery industry bases with over 900 such enterprises, are also flocking to Alibaba. Since April this year, the number of new merchants from Jining joining Alibaba has increased by 76.2 percent year on year.

"Jining has already been a brand itself on Alibaba. Foreign buyers searching for road-building machinery know well what they can get from the enterprises tagged with Jining," said Guo Zhengkui, the regional head of Alibaba.com in Jining.

Guo said that the rapid growth of online machinery exports began in 2023 when markets such as Southeast Asia and the Middle East embarked on a wave of infrastructure construction. This created a huge demand for China's construction machinery, which has a competitive advantage in terms of quality and cost-effectiveness.

"Chinese companies going global is not easy. First of all, you have to face the most cutthroat competition domestically, which is why once you survive that round and become a winner here, you are pretty much the most competitive product internationally," he said.

Guo noted that the strong performance of Jining's mainstream product -- small excavators -- has been transformative to Chinese construction machinery enterprises for its multifaceted role in farming.

Previously, Chinese machinery was traditionally used for infrastructure building in the European and American markets. But now, the convenience of online procurement has prompted many foreign farms and gardens to purchase small excavators through Alibaba, said Guo, bringing breakthroughs to Chinese machinery enterprises with a richer product line.

Guo's view is shared by Liu Mingtao, general manager of Hengwang Group, a major excavator and bulldozer producer based in Jining.

"The overseas demand is overwhelming now. If new customers come to place orders, they may not necessarily be able to get them," said Liu.

In 2013, Hengwang officially opened its store on Alibaba.com and the annual sales growth on the platform has already exceeded 80 percent this year. So far, it accounts for about 70 percent of the company's overall foreign trade turnover.

"Twelve years ago, 99.9 percent of my business mates didn't know what I was doing; five years ago, 10 percent of them started coming to me for advice; now, 90 percent want to know how to do cross-border e-commerce," said Liu.

"This year, we see fresh blood has joined us, and many of them are second-generation entrepreneurs in the industry," he said.

EXPANSION OF OVERSEAS WAREHOUSE

Besides growing overseas demand, another driving force behind the booming machinery business is the large number of overseas warehouses sprouting across the globe, which makes Chinese cross-border e-commerce much easier.

According to official data, China has over 1,000 cross-border e-commerce industrial parks and over 2,500 overseas warehouses covering over 30 million square meters.

However, they are not merely warehouses for goods storage. By integrating storage, logistics, and after-sales support with digital and intelligent technologies, they are helping the country's over 120,000 cross-border e-commerce entities bring their products to all corners of the world.

This warehousing and logistics method has greatly improved logistics efficiency and customer experience. It also helps businesses respond actively to order peaks and reduce logistics costs.

To promote cross-border e-commerce, the Chinese government released a guideline in June on advancing the construction of overseas warehouses. The guideline specified measures in financial support, infrastructure construction, and services.

Cross-border e-commerce, in collaboration with new foreign trade infrastructure like overseas warehouses, helps build new advantages in international economic cooperation and has become a dynamic force in China's foreign trade development, it noted.

Hengwang has built 13 warehouses in major export destinations such as the United States, Saudi Arabia, Indonesia and the Philippines.

Liu said that such warehouses not only store complete machines but also spare parts for timely after-sales service and technical support. "Overseas warehouses do not always operate at full capacity but adjust inventory dynamically according to customer demand."

SAAO has also taken action. Han plans to deploy overseas warehouses in Central Asian countries after setting up warehouses in Indonesia and the United Arab Emirates, as his business is expanding from Europe and America to the region.

EXPLORATION NEVER STOPS

Liu calls himself a "road warrior" after spending more than 200 days abroad last year, shuttling between Europe, America, the Middle East, and Southeast Asia. He discovered more business opportunities as Hengwang transformed from a small and medium-sized machinery equipment producer to a large equipment maker.

"Being early is crucial. We are developing new products, such as 125-tonne large excavators that can compete with famous brand Caterpillar of the United States and Japan's Komatsu," Liu said.

SAAO also invested more in the overseas market. It purchased more machines including a second laser cutting machine worth 1.5 million yuan and supplemented its workforce in various links of the entire foreign trade business chain, from technicians, assemblers, salespeople, and procurement personnel.

In addition, SAAO has developed green machinery that uses new energy and does not have engine noise pollution.

"Currently, the demand for environmentally friendly machinery is increasing year by year, and its shipment volume has accounted for nearly 10 percent of our overall volume," said Han.

"Only those who never stop exploring and innovating can thrive on the Road of Triumph," he said.