Sany Heavy Industry Co., Ltd The Sany Heavy Industry Co.

Case:
Sany Heavy Industry Co., Ltd

The Sany Heavy Industry Co., Ltd is China’s largest pro-
ducer of heavy equipment. In fact, it is the fifth largest
producer of this type of equipment globally. In 2014,
its revenue was decreasing because of the downturn of
overall GNP in China. Sany’s total sales revenue in 2012
was $12.9 billion, well behind industry leader Caterpillar
at $65.9 billion. However, Sany has a goal of eventually
unseating Caterpillar as the industry leader. Sany plans
to achieve $47 billion in annual sales within 10 years.
Sany has already surpassed Caterpillar as a leader in its
Chinese domestic markets.

Sany has four core businesses: (1) cranes, (2) road
construction machinery, (3) port machinery, and
(4) pumpover machinery. While each is distinct, some
similar technologies are used in the production and
equipment. Furthermore, similar technologies allow
similarities in production processes and equipment for
certain parts. Therefore, there is a transfer of knowledge
across these businesses. In addition, customers and mar-
kets share some similarities because all relate to some
form of construction. For this reason, in the United
States, Sany has become a major sponsor of a Chevrolet
on the NASCAR auto racing circuit. Sany America’s
marketing director, Joe Hanneman, said that research
showed NASCAR racing events to be the primary recre-
ation event for people in the U.S. construction industry.

Sany invests 5 percent of its annual sales in R&D to
continuously improve the quality of existing products,
identify new technologies, and develop new products.
Through the end of 2012, Sany held 3,303 patents as a
result of its R&D efforts. Indicative of its intent to be a
technological leader in its industry, Sany has developed
new postdoctoral research centers to attract top research
scientists. In 2013, the company was awarded China’s National Technology Invention Prize for its “super-
length-boom” technology.

Although it has been pursuing technological inno-
vations, Sany was recently accused of patent violations
by Manitowoc, a diversified producer of equipment
including large cranes. In 2014, a judgement went against
Sany concluding “one Sany crane product infringed
one of Manitowoc’s patents and that six trade secrets of
Manitowoc were both protectable as trade secrets and
misappropriated.” This is a negative signal for Sany as it
seeks to pursue more diversified growth outside of China.

Sany continues to grow organically and through acquisitions. For example, in 2012, it acquired Putzmeister, a
well-known concrete pump manufacturer. In addition, it
has established subsidiaries in many countries, including
the United States, Germany, and Brazil, to enhance its inter-
national equipment sales and broaden its market reach.
Largely because of its major goal of internationalization,
it is moving its corporate headquarters from Changsha to
Beijing for enriched international connections.

Question:
How does the level of change in gross domestic product (indicator of country economic health) influence a firm like Sany?