Rail & Infrastructure

Out of town

Sany decides to swap Changsha for Beijing

Politicians the world over know that going ‘off-message’ can damage the chances of achieving high office. But Liang Wengen, one of the China’s richest people, seems to have forgotten that lesson earlier this month, when he started discussing one of the lesser-known benefits of joining the Communist Party.

Speaking at the National Party Congress, the tycoon behind Sany Heavy Industry said that Party officials always get the best women. “The wives of Communists are more beautiful,” Liang claimed, according to China Business.

Why? Liang then explained that pretty girls like the Party seniors for their ideals before fondly recalling his own decision to apply for Party membership as a young man.

Before the Congress started, Liang was widely expected to be awarded a seat on the Politburo’s Central Committee (see WiC170), in what would have proven a historic decision: no private sector businessperson has ever been invited to join this exclusive group.

After his gaffe, the call never came. But prolific microblogger and real estate developer Ren Zhiqiang said the rejection was less about Liang’s offhand remark than a snub to the private sector. Ren went on to compare privately-owned businesses to a son raised by a stepmother “who is not truly valued unless it comes to the rescue of the economy, and does not get the political status that is equal to its contribution.”

Entrepreneurs remain second class citizens in Beijing’s hierarchy, reckons Ren.

Meanwhile Liang is in the news again – once more because of his ambitions in Beijing. This time it’s for business reasons: his company is looking to move its headquarters to the capital, reports Xiaoxiang Morning Post.

One executive told the newspaper that the switch to Beijing is similar to the move Sany made in 1992, when it transferred from Lianyuan County in Hunan to the provincial capital, Changsha. The aim was to be in a better place to expand its business and the current change in location has a similar motivation. Sany has already met its five-year target to achieve sales of Rmb100 billion ($16 billion). But in order to hit its next goal – Rmb300 billion of sales over the next 10 years – the company has no option but to go abroad, said Xiaoxiang Morning Herald. Being in Beijing will help to secure the resources for the company to do that.

Sany’s road machinery, port machinery and crane divisions, along with its administrative offices, will all transfer to Beijing. Its pump business, which accounted for more than half of the company’s revenue in 2011, will stay in Changsha, reports Shanghai Evening Post.

The desire to expand in overseas markets might not be the only reason behind Sany’s move. Other reports point to the company’s long-term rivalry with Zoomlion, another big manufacturer of construction equipment in Changsha (see WiC157).

“Competition with rivals may not be the main factor, but when Sany was making the relocation decision, it certainly had this factor in consideration. After all, the fighting between Sany and Zoomlion is so intense,” construction machinery analyst Wang Hexu told National Business Daily.

As a private company, Sany might feel disadvantaged in Changsha.

“Zoomlion is state-owned, so the local government is more inclined to Zoomlion. Sany may be leaving out of anger,” a source close to the company told Shanghai Evening Post.

The newspaper also highlighted how relations between the two firms have deteriorated in recent weeks. Zoomlion has accused its rival of planting spies to steal trade secrets, a claim that Sany denies.

Whatever the reason behind Sany’s decision to up sticks, it looks as though the real loser will be the local government in Changsha, which will forego an important source of local tax revenue.

As for Liang, moving to Beijing will put him closer to the corridors of power, and may leave him better placed for another run at a seat on the Central Committee.

Next time, though, he might be advised to keep his views on winning over the ladies to himself…


© ChinTell Ltd. All rights reserved.

Exclusively sponsored by HSBC.

The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.