Construction machinery imported from China is not a threat as long as the product quality, after-sales service, sales network and spare parts availability are not on par with those of locally made products, says Pranitan Phornprapha, executive vice-president of Bangkok Komatsu Sales Co (BKS).
The threat of the Chinese-made products is looming on the horizon but the segment most vulnerable is the second-hand machinery market with total annual sales of about 5,000 units comprising those imported from Japan and the rest from local sources.
Besides, the imported products are not limited only to China. Similar products from South Korea are also entering the Thai market, said Mr Pranitan.
Equipment imported from China and South Korea makes up no more than 10% of the total machinery market.
BKS, a Thai-Japanese joint venture of Singapore-based Komatsu Asia Pacific and Bangkok Motor Works, a company owned by the Phornprapha family, achieved 50% growth to 3.5 billion baht in 2010 with 1,100 hydraulic excavators sold, of which 900 were new and the balance used ones.
The local market for new machinery is about 3,000 units per year.
The company’s revenue in 2010 accounted for 32-33% of the market value.
Mr Pranitan attributed the good sales growth last year to the government-sponsored Thai Khem Khaeng stimulus campaign in the beginning of the year and private-sector infrastructure projects such as hydropower dam construction and land preparations for large-scale economic crop plantations.
The booming construction projects in neighbouring countries also helped lift BKS’s sales.
Its manufacturing arm, Bangkok Komatsu Co (BKC), produced more than 4,100 excavators last year, 80% of which were slated for export to more than 30 countries.
BKC has a maximum capacity of nearly 10,000 units per year but it plans to raise its production volume at its factory in Chon Buri to 7,000 units this year from 4,100 in 2010 to meet the rising demand at home and abroad.
Mr Pranitan said sales of BKS were projected to grow about 20% this year as the bigger development budget from the government and the strength of the private sector on the back of the economic recovery would help its business this year.
BKS also plans to move aggressively to attract new customers in the mining industry in addition to existing customers such as construction contractors, factories and sand miners.
About 1,400 excavators will be sold this year, of which 900 will be new.
BKS plans to expand its sales and service network this year to 25 branches from the existing 23, all of which will be renovated. One new branch will be located in Chon Buri and the other in Nakhon Ratchasima.
Mr Pranitan said that enhanced after-sales service would be a priority. Because many customers use unauthorised spare parts that lack after-sales service, this could damage their businesses in the long run, he said