KHD builds solid foundations to lift market share in China

PUBLISHED : Tuesday, 23 November, 2004, 12:00am
UPDATED : Tuesday, 23 November, 2004, 12:00am

China's construction boom is creating a tremendous appetite for cement.

This demand is driving top cement equipment suppliers such as Germany's KHD Humboldt Wedag to expand their mainland presence. KHD has done business in China for years but is now establishing a joint venture, which it will announce later this year.

The company hopes the venture will serve as the foundation of a manufacturing base in the China market.

This is part of a global strategy the company has followed since the late 1960s.

'Whatever we sell to clients, we have it manufactured at a location that is best for transportation and costs, and which avoids large logistical problems,' chief executive Johann Georg Zimmerman said.

KHD is also seeking other Chinese partners for win-win relationships that help meet the mainland's growing needs.

'With all of the construction going on in areas like Shanghai and Beijing there is great demand for high quality cement. China is the largest user of cement in the world,' Mr Zimmerman said.

The China market dwarfs No2 India. 'The cement capacity in China is about 700 million tonnes a year and in India it is about 140 million tonnes. When you estimate between US$80 and $120 per tonne of installed capacity per year, you can imagine what this gap means in terms of investment,' Mr Zimmerman said.

KHD is a 148-year-old company founded in Cologne to make equipment for mining and cement production. Cement now accounts for 80 per cent of its worldwide business. Coal and mineral mining equipment accounts for the rest.

Over the years, KHD has become a known innovator in the cement business. It developed the industry's first pre-heater, a heat exchange that halves energy consumption. Its other inventions include the two-stage kiln and the bypass system, a system for extracting hazardous chemicals from the production process.

'We are always looking for innovation. A lot of the innovative things we have done in the past 50 or 60 years are now industry standards,' Mr Zimmerman said.

Environmental protection is an important business driver for KHD. In China it sees opportunities to replace environmentally harmful shaft kilns with cleaner equipment, and will press for the use of secondary fuels such as waste, which can be burned at low emissions.

'We have to look very carefully and very interestedly at the Chinese market,' Mr Zimmerman said.