Construction machinery encounters small businesses in winter and winter

The industry's leading capital chain is tight, SMEs are dead

From the second half of last year, the growth rate of the construction machinery industry began to decline rapidly. Even the listed companies such as the Dragon Head Banner Sany Heavy Industry Co., Ltd., and Zhonglian Heavy Industry Co., Ltd. were caught in the capital chain tension. The deteriorating operation of the leading industry leaders has triggered the start-up of corporate liquidation actions, which has caused many SMEs to face life and death choices.

Wang Dayong (a pseudonym) sat dumbly on the construction site next to the wreckage of a static pile driver that had just been forcibly taken away by the People’s Court of Liuyang City. Just half an hour ago, more than 20 people from the People’s Court of Liuyang City and the local police station in Suzhou and Hunan Debon Heavy Industry came to the construction site on the construction site because 30 million yuan was not paid in due time. Some of the key components have been pulled away.

Affected by the economic environment, the construction machinery industry is facing a severe test in 2012. Overdue claims have become a common problem in the construction machinery industry, and it is not uncommon for debts to be recovered through judicial procedures or tough measures. Commercial Daily reporter learned that Sany Heavy Industry (600031), Zoomlion (000157) and other listed companies have been trapped in the financial chain, while many SMEs have faced a life and death choice.

The last craziness

In 2011, when he saw good business in the field of engineering construction at that time, Wang Dayong purchased a 800 ton static pile driver from the Hunan Debang Heavy Industries Co., Ltd. and nearly 2 million machines through a loan shark loan. The price almost exhausted their life savings and owed a usury loan. At the same time, it also agreed with Debon to leave 300,000 funds and pay it after one year.

At that time, at a time when the market was at its height, the 4 trillion yuan invested by the state was gradually making good use of it. All industries were in full swing. There were all kinds of construction sites everywhere, and as long as there was investment, we could earn money. At the same time, the construction machinery factory in Hunan, a major heavy machinery industry, is also in a good situation. At that time, Debon Heavy Industry’s business volume has also increased dramatically, even to the point where it was in short supply. In order to get the machine as quickly as possible, it was even necessary to bribe production. Workshop staff, strive to make money as soon as possible.

In that last crazy moment, the construction machinery industry had a blowout market. As the financial crisis gradually subsided, the state has introduced a “package of economic plans” to stimulate the economic recovery. Most of them have invested in the construction of railways and large-scale projects. Driven by the construction of high-speed railways, China's piling machinery enterprises are in a period of golden development. The industry is growing at an annual rate of 20%. In the face of this gratifying situation, Debon Heavy Industries, the second-tier company in Hunan's heavy industry sector, has also set ambitious plans for listing, and has even quietly prepared for the listing.

Winter suddenly comes

However, since the second half of last year, the growth rate of the construction machinery industry began to decline rapidly. According to a survey conducted by the China Construction Machinery Business Network, in September last year, 26 major excavator manufacturers in China sold 8,886 excavators, a year-on-year decrease of 23.86%. Excavator cumulative growth has climbed to highs since February last year and has fallen for months.

The cold winter suddenly arrived and everyone had no idea, and for Wang Dayong, the most intuitive feeling was that “the livelihood is not so easy to find, even if the livelihoods found through various relationships are not the price is very low, that is, the payment deadline. Extending.Some live prices have been low enough to support workers and normal construction expenditures, and even if this is done, the contractual promises of payment cannot be fulfilled.

Wang Dayong told reporters that since the beginning of 2012, he has done three consecutive activities, the contract price is about 600,000 yuan, but, until now, "the cost of a penny has not been obtained."

Wang Dayong's days have become more and more difficult. "The machine always needs to run. Workers need wages and living expenses. Every time I transfer, I need to pay a small transportation fee. There is no way. I had to borrow a loan shark by relatives and friends to ease the financial situation and let the machine reopen. stand up."

However, many of the construction machinery manufacturers in Hunan Heavy Industry Base have had a hard time. After years of ambition to launch a listing plan at Debon Heavy Industries, all of a sudden the orders have suddenly been reduced. Many years ago, many customers who have paid a deposit have also postponed plans to raise the machine, even though several machines have been requested by the customer. The production was completed. However, due to the decline in business, many customers were unable to withdraw machines on time. The factory had to continuously delay production plans. Workers also became less and less able to do their jobs. Even a lot of workshop workers had to go home.

Unprecedented liquidation

The decrease in customer orders, production was unsustainable, and income plummeted, resulting in a significant decline in profits. Debon Heavy's listing plan had to be shelved, and survival became crucial. In early 2012, Debon began a restructuring plan, hoping to find the right investment in order to solve the immediate needs of the company. After several inspections, a company from Shandong Province took over Debang, obtained a controlling stake in Debang Heavy Industries and began a large-scale reform process.

After the new company comes in, the first step is to clear the historical debt. This time, the company took a more extreme approach. With the cooperation of the Liuyang City People's Court, the basic maturity and soon-to-be-accepted accounts receivable were all forcibly resolved through the court's freezing of assets. According to the company’s legal department staff, the company once passed the court and frozen hundreds of customers’ assets. After the assets were frozen, all the personnel of the company's legal department were dispatched to various parts of the country to collect debts. At the same time, legal proceedings were immediately initiated and all of them were appealed to the court, setting off an unprecedented debt-paying action.

"Actually, the same companies that are busy with debt collection for construction machinery are everywhere," said a person from the legal department of another construction machinery company in Hunan, including industry leaders such as Sany Heavy Industry and Zoomlion. Both have started liquidation actions. Sany Heavy Industry reported in a quarterly report that the company’s accounts receivable amounted to RMB201.23 billion, an increase of 78% from the beginning of the year, and the operating cash flow decreased by RMB9.838 billion compared with the same period of last year. According to a quarterly report of Zoomlion, the company’s accounts receivable amounted to 14.193 billion yuan, an increase of 17.8% from the balance at the beginning of the year. The industry leader's operating data is still the case, and the survival conditions of other SMEs are evident.

Upstream and downstream rings are forced

With the commencement of corporate liquidation actions, a large number of small machine owners struggling with their lives and deaths complained. On the one hand, business has declined and revenues have fallen sharply. On the other hand, bank assets and construction machines have been frozen by the courts and even forced to take away, resulting in heavy losses.

Wang Dayong became a member of them. What's more serious is that at the best time of last year's business, due to the failure of one of the cylinders of the machine, and repeated changes, the cylinder was replaced again. However, due to delays in the construction period, it caused him more than 300,000 yuan in losses. He reluctantly told reporters that he would have hoped to finish the construction site, get some construction money, and quickly pay off the money. Then Debon's move completely drove his hope out.

On the day when the court came and took away the machine, Wang Dayong pleaded hard and expressed the hope that they would not take the machine away first. He promised to repay the debt within three days. Then everything was useless and the machine was eventually forced to pull away. In the grey sky, he wanted to cry.

At the other end of the day, Debon’s heavy work is not easy. According to sources, due to the failure to repay the upstream steel traders as scheduled, Debon Heavy's current corporate capital account has also been frozen. This year, the price of steel products has fallen steadily. The entire steel industry has fallen into a loss, and steel trade days between steel mills and downstream users have become even more "hard-pressed." It can be seen that due to the slowdown in the domestic economic growth, the “triangular debt” triggered by the sudden drop in downstream demand has penetrated between the upstream and downstream industrial chains.

Behind the capital chain tension

The difficulties faced by Wang Dayong and Debang Heavy Industries reflect the pressure and challenges currently faced by the entire construction machinery industry. At present, under the influence of many factors such as the economic environment, the drastic downturn in downstream demand has caused a sharp increase in the payment pressure for construction machinery companies. Overdue claims have become a common problem in the construction machinery industry. The construction machinery industry as a whole faces the problem of tight capital chain, and small and medium-sized enterprises have been struggling on the life and death line.

According to a senior analyst from China Construction Machinery Business Network, in the period of high-speed expansion of the industry, in order to capture market share, irrational promotion methods such as low down payment and zero down payment for construction machinery companies have caused a sensation. However, the construction machinery industry has continued to grow rapidly for several years. Suddenly, when the industry encountered adjustments, the rapid increase in sales and profits concealed behind the market risks also followed, the surge in accounts receivable, cash flow tension and other phenomena has become the most difficult problem for many manufacturers. Overdue claims It has become the key to test the survival of engineering machinery enterprises.

The root cause of this situation is that, starting from the second half of 2011, the demand for construction machinery products has been declining with the slowdown and delay of infrastructure projects such as real estate and road and bridge construction. In order to expand the market share of construction machinery manufacturing enterprises, the first payment for financial leasing fell and then fell until the zero down payment. Some users couldn't resist the temptation of zero down payment and they had increased orders. However, they quickly discovered that the investment failed and they were unable to maintain the repayment, and the user’s losses were ultimately transmitted to the company. The company also started a series of lock-up and dragging operations because of the continuous increase in the repayment pressure, which eventually led to a win-win situation for both users and enterprises.

Construction machinery analysts said that half of 2012 is already halfway and the overall situation of the construction machinery industry is still not optimistic. However, in the second half of the year, various policies such as “steady growth, rate cut” and other policies will be implemented and implemented, and it is believed that the overall recovery of the industry is only a matter of time.

News Links Downstream Demand Dips Rapidly Overdue Credit Tests Comprehensive Report on Corporate Life and Death Business News The construction machinery industry is facing severe challenges in 2012 due to the economic environment. Overdue claims have become a common problem in the construction machinery industry.

As a member of the machinery industry, Komatsu Henan Kailong recently held a debt collection meeting. Although many senior executives of the company set a military order and promised to complete the collection task, people in the industry believe that because many users have limited repayment ability, there is a certain degree of difficulty in the collection work.

According to a quarterly report of the leading industry giant Zoomlion, the company’s accounts receivable amounted to 14.193 billion yuan, an increase of 17.8% from the balance at the beginning of the year. The industry leader's operating data is still the case, and the living conditions of other SMEs are even more unbearable.

At present, overdue claims have become a test for the survival and death of engineering machinery companies. To this end, many construction machinery vendors have set up a special "law department" to solve the debt problem.

The root cause of this situation is that, starting from the second half of 2011, the demand for construction machinery products has decreased as the infrastructure projects such as real estate and road and bridge construction have slowed down and delayed. In order to expand the market share of construction machinery manufacturing enterprises, the first payment for financial leasing fell and then fell until the zero down payment. Some users couldn't resist the temptation of zero down payment and they had increased orders. However, they quickly discovered that the investment failed and they were unable to maintain the repayment, and the user’s losses were ultimately transmitted to the company.

The industry is currently facing a dilemma: On the one hand, companies can only continue to implement the mode of financial leasing, that is, the sales mode with low down payment. If they do not adopt this approach, market share will soon be taken away by competitors; on the other hand, If we continue to implement the financial leasing model, we are worried that if the economic situation continues to be poor, some accounts will not be received.

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