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China's Largest Equipment Manufacturer Said Taking Stake in Schwing

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Industry analysts say that Chinese manufacturer XCMG has purchased a stake in Schwing, which exhibited at this year's World of Concrete.
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Chinese manufacturer XCMG has taken out a stake in Germany-based Schwing, industry analysts have told ENR.

Details of the deal are sketchy though it is the subject of much talk here at the annual World of Concrete show, held Jan. 24-27 in Las Vegas. Schwing, a large exhibitor at the show, declined to comment.

"We prefer to communicate directly with our customers, not through the media," said Tom O'Malley, vice president of sales and marketing at Schwing America. XCMG, China's largest equipment manufacturer and the seventh-largest worldwide, could not be reached for comment.

Schwing may have become an investment target in part due to recent financial troubles, experts say. In 2010, Schwing America emerged from Chapter 11 bankruptcy in a period of deep cutbacks in concrete construction spending.

"The U.S. basically went to zero units in 2009, and it hasn't really bounced back," said one pump vendor at World of Concrete, who asked not to be named. "We're really not forecasting a steady increase until 2013."

The move could help XCMG compete with more established players globally. In 2008, Chinese producer Zoomlion took out a 60% stake in Italian pump maker CIFA in a deal worth $422 million.

"The concrete pumping business is really a huge business in China," said Frank Manfredi, whose Mundelein, Ill.-based firm, Manfredi & Associates, provides market research for heavy equipment. "They have a need for pumping massive volumes of concrete very high in the air. The Chinese have done a very good job of developing products that do that."

However, as Chinese manufacturers such as Sany, Zoomlion and XCMG have sought to expand exports, they have run up against a poor-quality perception even though many of the parts—engines, hydraulic pumps and controls—on Chinese machines are sourced globally. Investing in an established player is one way to overcome such stigma, experts say.

"I drive a Pontiac and my wife drives a Honda. My Pontiac was made in Australia, and my wife's Honda was made in Ohio," says David Wright, general manager for Sany America's concrete pumping division. "The market is global."

Other vendors responded favorably to the deal.

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