Strategic Transition Study Of Chinese CE Manufacturer: An Example Of Liugong

Construction machinery (CE) industry is an industry which is mainly driven by the fixed assets investment and closely related to the cycle of the national economy. As a fiercely competitive industry, China construction machinery industry which boomed in the past twenty years has entered a deep transition period since 2012.The domestic demand of new construction machinery is quite weak for these years and almost all the Chinese players meet the internationalization bottleneck since the slowdown of emerging economies which traditionally are the main export market.Enterprises are facing a situation of weak demand, excess capacity, high inventory and accounts receivable. The paper focused on the strategy of LiuGong based on the study of industry economics, corporate strategy and financial analysis. The SCP model is carried out to study the history and the trend of China construction machinery industry. Then the financial framework based on the analysis of strategy, accounting, finance and prospect is carried out to study the case of LiuGong, aiming at figuring out how LiuGong adjust the strategy to meet the huge challenge of the severe market situation. The history of two benchmark company, Caterpillar and Komatsu, are reviewed to discusses the strategy as a reference of LiuGong. The former is a best example that totally qualify the built-to-last, and the latter is also a great example as a global rise-up during the last century. Finally, some comments related with the strategy of LiuGong are proposed.