Kanoo GM says global economic conditions will inhibit the ability of local and western brands to supply the market, opening the door for Chinese suppliers to fill in the gaps
The region may be preparing for a joint construction boom in Qatar and Saudi Arabia, but Chinese manufacturers will be the main beneficiaries, according to Kanoo GM Bob Jennings.
Despite being on the cusp of an unprecedented – and much anticipated – dual boom, the effects of global economic conditions will inhibit companies’ ability to supply the Qatari and Saudi Arabian machinery markets, paving the way for Chinese suppliers and manufacturers to fill the void left by local and western brands.
“We [the industry] will eventually come to a situation where we are not able to supply the demand, because we will not be in a position to take the risk to put a lot of money into a market, just in case things don’t go the way we plan,” Jennings told The Big Project.
“We are ordering more stock, but manufacturers are coming to a point where their [supply] chains are becoming stretched and delivery times are extending. The industry will invariably end up in the same situation we ended up in between 2004 and 2006,” he added, continuing: “China will come in and start to fill the market gaps because we will not be able to manage it.”
With significant improvements to the quality of goods, compared to those supplied prior to 2008, Chinese companies are also increasing their stakes in the region’s oil and gas industry and China-UAE trade in particularly has experienced a 35% YOY growth over the last decade, according to figures published by Messe Frankfurt.
In recent months, Chinese brand LuiGong, has opened a Middle East base – with the MENA region – which now accounts for 10% of LiuGong’s international revenues – and XCMG has reported huge market shares in the region.
“Asian companies this time will come with a higher quality product and long term mindsets. I think that next time the Chinese will come out with a better reputation and they will get an even bigger foothold in the region than the last time round.
“That will be at the expense of the western and Japanese companies and it will be difficult for them to recover,” Jennings added.
The full interview with bob Jennings will be printed in June issue of The Big Project