This week, the Wall Street Journal reported that the decade-long investment boom is winding down in China. For the lifting equipment industry, the sale of construction equipment also has declined, and U.S. companies looking to China to drive growth have indicated that sales in China are well below those of previous years..
An interesting side note in the article was that Chinese manufacturers are still expanding. Zoomlion reported an 8.3 percent increase in sales in the first quarter of 2011, and Sany also increased sales by 5.2 percent. What is keeping these firms buoyant is their extension of credit to customers. “At Zoomlion, accounts receivable rose to more than 200 percent of sales in the first quarter, up from 90 percent in June 2010,” the WSJ reported. “Sany's ratio of accounts-receivable to sales is also on the rise.”
With the lack of financing for equipment owners in the United States—particularly small business owners with little collateral—will U.S. manufacturers take direction from the Chinese and begin offering more financing in order to bolster their sales? Voice your opinion on our Facebook page.