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North American Special - Trenchless International

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SPECIAL FEATURE<br />

April 2009 - <strong>Trenchless</strong> <strong>International</strong><br />

Made in China<br />

by Kate Pemberton<br />

The global HDD market is a dynamic and expanding area. A new innovative market emerging from<br />

the east is set to challenge the dominance of the traditional manufacturers.<br />

The prolonged and extensive<br />

period of construction growth in China<br />

has enabled the country’s huge cities to<br />

modernise utilities such as water, wastewater,<br />

and telecommunications. Above<br />

ground construction has been achieved<br />

so rapidly that in many of China’s populous<br />

cities no-dig construction is the only<br />

practical method to install and repair the<br />

necessary supporting infrastructure.<br />

The use of HDD has been a factor in<br />

the development of a growing export<br />

market. Despite the slow down in China’s<br />

growth rates, the trenchless industry continues<br />

to gain momentum domestically.<br />

Chinese companies are finding success<br />

exporting machinery such as HDD rigs to<br />

the rest of the world.<br />

The HDD market<br />

In the past Chinese ‘knock-offs’ have<br />

been dismissed as unreliable, based on<br />

quality concerns. However, international<br />

partnerships, increased technological<br />

capability and lower costs are combining<br />

to create a market for the Chinese<br />

product.<br />

HDD Broker General Manager Bob<br />

Martin spoke to <strong>Trenchless</strong> <strong>International</strong><br />

regarding the international HDD market.<br />

Mr Martin said that historically the<br />

<strong>North</strong> <strong>American</strong> market has been unwilling<br />

to accept Chinese manufactured<br />

equipment. Mr Martin said “Even the<br />

Chinese do not readily accept their own<br />

equipment, acknowledging the quality<br />

shortcomings and instead opt for the<br />

much more expensive US-manufactured<br />

drills.”<br />

However, this situation is changing.<br />

The impact of the global financial crisis<br />

is reverberating around the world.<br />

Project managers are looking for ways to<br />

cut costs while still maintaining the high<br />

standards expected in the industry.<br />

The economic downturn is not the sole<br />

reason for the increase of exports of<br />

Chinese manufactured drills. Mr Martin<br />

said there has been a marked increase<br />

in the quality of the Chinese product.<br />

“Demand for cheaper, simpler machines<br />

is increasing at a very fast pace as<br />

the demand for work remains constant<br />

but the money available to purchase<br />

decreases,” he explained.<br />

Chinese rig manufacturers exhibiting<br />

at the Mosow <strong>International</strong> No-Dig<br />

2008.<br />

East meets west<br />

HDD rigs have been manufactured in<br />

China for over a decade. The Chinese<br />

domestic market has grown as people discover<br />

the benefits of trenchless solutions.<br />

Professional relationships between non-<br />

Chinese and Chinese companies have also<br />

encouraged an improvement in the quality<br />

and production capabilities of Chinese<br />

machinery manufacturers.<br />

Hanlyma, founded in 2003, is one of<br />

China’s leading manufacturers of HDD rigs.<br />

Hanlyma spokesperson Jerry Liang said<br />

that rapid growth and strong branding has<br />

culminated in the company supplying 30<br />

per cent of the domestic market.<br />

The first <strong>American</strong> HDD rig was imported<br />

into China in 1988. Ten years later the first<br />

Chinese rig was created. Mr Liang said<br />

that prior to 2003, 90 per cent of the HDD<br />

market was shared between prominent<br />

international companies including Vermeer,<br />

Ditch Witch and Case.<br />

Mr Liang said that over the last five years<br />

Chinese rigs have come to dominate the<br />

Chinese domestic market, accounting for<br />

almost 95 per cent of market share.<br />

There are currently more than 200 contractors<br />

engaged in trenchless construction<br />

in China, using more than 2,000 HDD rigs,<br />

approximately 700 of which were introduced<br />

in 2007 with the biggest HDD rig in<br />

the world now in China.<br />

As the quality of the rigs available has<br />

improved, Chinese companies have begun<br />

to find success on the global stage. Mr<br />

Liang said that Chinese HDD machines<br />

are well priced to compete in the international<br />

market with high quality technological<br />

capabilities. In 2008, Hanlyma exported<br />

112 rigs, or approximately 44 per cent of<br />

their product.<br />

Another concern levelled at Chinese<br />

HDD manufacturers in the past is a lack<br />

of after sales service. Hanylama is currently<br />

focused on increasing the quality of<br />

after sales service. To facilitate expansion<br />

and service capabilities, the company has<br />

sales and service centres in countries<br />

including Australia, Russia, India, Malaysia<br />

and Turkey. The feedback from international<br />

customers had been positive. Mr<br />

Liang said that customers were satisfied<br />

by the good performance and quality of<br />

the Chinese built machines and the level of<br />

service available.<br />

In addition, Chinese companies are now<br />

endeavouring to increase their international<br />

presence through attending <strong>Trenchless</strong><br />

conferences such as the Moscow No-Dig<br />

Conference 2008 and the <strong>Trenchless</strong><br />

Australasia Conference September 2009.<br />

<strong>International</strong> perspectives and relationships<br />

We asked Mr Martin how he thinks people<br />

perceive the quality of Chinese rigs,<br />

“Not surprisingly, there are two qualities<br />

that seem to pervade the perception of<br />

Chinese equipment, those being ‘cheap’<br />

and ‘low quality’.<br />

“Interestingly, from my own research and<br />

experience with newer Chinese manufactured<br />

rigs, I would only partially agree with<br />

those statements,” he said.<br />

Mr Martin concurred with Mr Liang’s<br />

opinion on the technological advancements<br />

Chinese rig manufacturers have achieved.<br />

“The more successful Chinese companies<br />

have made great advances in quality<br />

control, going so far as to source the major<br />

components for the HDD drills from <strong>North</strong><br />

America.” Mr Martin listed motors, hydraulic<br />

components, pups and gearboxes as<br />

the parts most likely to be sourced from<br />

outside of China.<br />

“The resulting machines are more<br />

expensive than their purebred Chinese<br />

counterparts; however they offer much of<br />

the reliability of <strong>North</strong> <strong>American</strong> machines<br />

while still being significantly cheaper.”<br />

Mr Martin concluded from his research<br />

that these Chinese rigs are, on average,<br />

50 per cent less expensive than<br />

a US-manufactured drill with comparable<br />

pullback capacity. Mr Martin did acknowledge<br />

though, that Chinese drills will be<br />

slower and offer fewer options than the<br />

major manufacturers.<br />

The Chinese machines are still in a<br />

process of building a solid reputation.<br />

Some Chinese companies, recognising the<br />

advantages of expertise and longevity,<br />

have sought to forge partnerships with<br />

established international companies.<br />

<strong>American</strong> companies are taking<br />

advantage of the increasing technical<br />

capability and lower manufacturing costs<br />

of the Chinese HDD manufacturers.<br />

In May 2008, Charles Machine Works<br />

(CMW), manufacturer of underground construction<br />

equipment Ditch Witch, signed<br />

a joint venture agreement with Tu Xing<br />

Sun No-Dig Tech of Beijing, China. CMW<br />

said that Tu Xing Sun is considered to be<br />

a leader in the manufacture and distribution<br />

of HDD systems in China. CMW CEO<br />

Tiffany Sewell-Howard said “This venture<br />

allows us to strengthen our position in<br />

China and other emerging markets.”<br />

The Shanghai Gudeng Construction<br />

Machinery manufacturing company, specialising<br />

in HDD, exports to Russia, Ukraine,<br />

Pakistan, India, Malaysia and Singapore.<br />

Their HDD technology recently received<br />

first place in the construction machinery<br />

branch of the China Quality Association’s<br />

awards. In order to expand the business,<br />

the company is establishing a joint venture<br />

in Malaysia to be called Jiangsu Gudeng<br />

Construction Machinery Assembly Group.<br />

The factory will have a production capacity<br />

of 300 HDD machines and 100 static pulling<br />

machines per annum.<br />

Developing the industry<br />

The development of the industry is also<br />

being assisted by the development of professional<br />

organisations. The China Hong<br />

Kong Society for <strong>Trenchless</strong> Technology<br />

or CHKSTT was established in 1999 and is<br />

one of the societies affiliated with the ISTT.<br />

Other societies in the Greater China region<br />

include those in Shanghai (SSTT), Beijing<br />

(BJSTT), Guangdong (GDSTT), and Taipei<br />

(CTSTT).<br />

Chinese HDD companies are beginning<br />

to produce reliable, cost effective machinery<br />

for both the domestic and international<br />

markets. Companies such as Hanlyma are<br />

focusing on after sales customer service<br />

and forging mutually beneficial international<br />

partnerships.<br />

The export of Chinese manufactured<br />

HDD rigs is set to continue as companies<br />

build their brands through improved quality<br />

for the less complex and less expensive<br />

machines.<br />

SPECIAL FEATURE<br />

April 2009 - <strong>Trenchless</strong> <strong>International</strong><br />

18<br />

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