Liugong Machinery

Transcript of Chairman Zeng Guang’an CNBC Interview on One Belt, One Road

2017-05-23

LiuGong chairman talks 'One Belt, One Road'

On May 14, 2017, Chairman Zeng Guang’an of LiuGong Group had an interview with CNBC, during his attendance of One Belt and One Road Forum (OBRF) in Beijing. The interview was broadcasted at 6:05 local time on May 15 and featured top in CNBC’s website at the same time. This transcript is edited based on CNBC’s interview. Please click here for more information.
The initiative has brought clear benefit to machinery manufacturers like LiuGong as China looks to build advanced infrastructure in neighboring countries. LiuGong already does business in 140 countries — 50 of which is specifically named in China's "One Belt, One Road" plan. The company has invested in 3 overseas manufacturing facilities in India, Poland and Brazil. For now, about one third of its revenue comes from overseas and LiuGong is aiming to further boost the proportion.
"I don't worry too much about profitability," Zeng said. "I worry about the political risks and the market risks." There are also currency fluctuations and challenges in adapting to the local environment and culture, he added. The firm takes years — sometimes as long as a decade — to study these risks before getting into certain countries. In some cases, LiuGong has decided against or halted overseas investment given concerns.
Talking on the concerns of return on investment along OBOR construction projects, Zeng said he didn't see this as an issue, as plenty of private investors have already piled in, or seem to be interested in doing so. The projects pursued "have a good return on their investments," he said.
Given slowing growth at home, it's "a very important strategy to have more business from outside China and to balance the domestic risk," Zeng said.
LiuGong is listed in Shenzhen, and shares are up 10 percent so far this year.
Here is the interview transcript:
Zeng Guang’an: The business environment is getting better than before, especially in the past two years. The countries in the one belt and one road region - the people and the companies, customers - they understand it is good for their countries. We can find some countries that are more open to Chinese products. Yes, this is [the initiative has helped the firm] for sure.
CNBC: Do you think China can attract private capital internationally for this kind of project under OBOR?
Zeng Guang’an: I believe so. Because some of the projects are very good projects. They have good return on their investments. And also if we can control the risks, even for the manufacturers they already have invested in some countries. They are going to invest more in these regions.
CNBC: And how does your company plan to turn a profit over the years with international expansion?
Zeng Guang’an: In general, we have [done] quite well for the outside projects. The profitability [has] improved in the last two years. So I don’t worry too much on the profitability. I worry about the political risks and market risks much more than the investment.
CNBC: Has LiuGong ever choose to not to invest in a country outside of China because of these risks?
Zeng Guang’an: Yes. We stopped or slowed many projects because of the political risks and some of the social risks.
CNBC: So what the biggest challenges you see in international partnerships? Like the ones LiuGong has in expanding and investing abroad?
Zeng Guang’an: From the business side, I think the challenge is always the market uncertainty. Because some of the countries, their economy is not stable and easy to change. This year is very good [while] next year turns down to a very bad situation. I think the control of the risks of their market is quite often. And secondly is the currency. Exchange rates also in the last10 years changed very fast.
CNBC: China’s domestic economy has slowed; the growth has slowed here more recently. Do you find great opportunities outside of China to help the rebalance with the company be able to recruit?
Zeng Guang’an: I think this is very important for international companies, big companies. Today you have to balance the domestic market and the outside market. This is very important strategy to explore more business opportunities from outside China and to balance the risks.
WWW.LIUGONG.COM  ©2009-2011 Liugong Machinery Co., Ltd.All Rights Reserved
Dealer Login | Legal Notice | Contact Us | Sitemap