Following the delivery of its first five LiuGong units, AIMS Group – the commercial arm of Ajman Municipality – could well become a repeat customer for Gargash Machinery. However, aftersales support looks set to play the deciding role. PMV reports.
It’s been a productive start to the year for Gargash Machinery. Less than six months after becoming LiuGong’s authorised dealer for the UAE, the Dubai-headquartered equipment supplier has succeeded in securing its Chinese principal’s first-ever municipal deal in the Middle East.
The high-profile customer in question is AIMS Group, the commercial arm of the Municipality & Planning Department of Ajman. At the end of March, the government-owned company took delivery of five LiuGong machines: a B320 tracked bulldozer, an 856 wheel loader, two 355A skid-steer loaders, and a three-tonne capacity forklift truck.
This is a significant order, and not solely from LiuGong’s perspective. Across the Middle East, instances of governmental customers opting to purchase Chinese-manufactured machines remain few and far between. This is not only a success story for Gargash; it is an indication that the regional perception of the so-called ‘value segment’ is shifting.
Moreover, LiuGong’s dealer for the Emirates is confident that this is just the beginning. Depending on the number of projects undertaken – and providing the machines live up to their owner’s expectations – Gargash Machinery expects AIMS Group to place significant orders throughout the course of 2015.
“It depends on demand, of course, but we expect to sell between 20 and 30 LiuGong machines to AIMS Group this year,” revealed Eng Ahmad Husayyan, business development, sales, and aftersales manager at Gargash Machinery.
“As projects come to fruition, they will request more. I believe that today’s order will form part of a longer-term strategic relationship,” he explained.
The initial five units were handed over to AIMS Group at one of Ajman Municipality’s waste management facilities in the presence of senior management figures from both LiuGong and Gargash. Whilst the machines are suitable for a broad array of applications, their new owner plans to use its first LiuGong contingent to deal with Ajman’s refuse.
“The first five LiuGong machines will be used primarily for waste management purposes, but they have the potential to be deployed elsewhere,” said Husayyan. “Through AIMS Group, Ajman Municipality conducts a broad range of applications, including facilities management, construction, and road building.”
As senior manager of fleet operation and maintenance at AIMS Group, Eng Anis A Siddiqui was instrumental in the selection of Ajman’s first LiuGong units. Like Husayyan, he concedes that repeat business with Gargash is a possibility. Nevertheless, Siddiqui was also keen to point out that the machines must first prove their worth in the field. Only then will he and his colleagues consider further orders.
Speaking to PMV during the handover, he said: “We plan to purchase more machines in the near future, but those will probably be from Caterpillar, Komatsu, and Volvo. The LiuGong machines that you see here today have been acquired for trial and testing purposes.”
Siddiqui added that so long as the initial five LiuGong machines prove themselves effective, AIMS Group will consider ordering additional units from Gargash during periods when its budget will not allow for high spending.
Irrespective of Siddiqui’s caution with regards future orders, this deal spells excellent news for LiuGong in the Middle East. To focus solely on government customers would be to miss the larger picture. If wielded effectively by Gargash’s sales team, this deal represents a powerful weapon in the battle to attract contractors operating across the Emirates.
“We have a solid presence within the UAE’s private sector, but this is the first time that we have received an order from a municipality,” revealed Benjamin Zhu, general manager of the Chinese manufacturer’s regional subsidiary, LiuGong Machinery (Middle East).
“This is exciting news for us; it’s an opportunity to provide high-quality machinery to government. Obviously, the public sector does not order machinery in the same volumes as the private sector. Nevertheless, this is an excellent chance for us to demonstrate the capabilities of our products, and the high levels of aftersales support that we can provide in collaboration with Gargash,” he added.
Although the AIMS Group sale comes just months after LiuGong partnered with Gargash, the deal was not easily won for either party. On the contrary, it is the result of significant investment in both product quality and aftersales support capabilities, according to the firms.
“Everybody is optimistic about this relationship,” Husayyan commented. “It’s still in its infancy, but we’ve already done good business in conjunction with our principal. We’ve succeeded in convincing a governmental customer to purchase Chinese products, which represents big news for the industry. This is reflective of the high confidence levels that exist on all sides.
“Speaking frankly, LiuGong is one of the best Chinese manufacturers. Take, for example, its joint venture with engine manufacturer, Cummins, known as GCIC. LiuGong is the only manufacturer to have such an arrangement with Cummins in China. It also has a joint venture with Germany’s ZF. LiuGong has access to expertise and support from the biggest names on the global stage. It has a very good technical background, and it is investing in its aftersales networks. This is a manufacturer that understands the language of international business,” he said.
Unsurprisingly, LiuGong is eager to emphasise its commitment to aftersales support in the Middle East, not only in terms of maintenance and spare parts provision, but also with reference to training. In the second quarter of 2014, the manufacturer opened a GCIC training centre in Jebel Ali, Dubai. Collocated with the its GCC office and parts distribution centre (PDC), the facility is geared up to train technicians, engineers, and service managers from the company’s dealer network, and even operators from its regional customer base.
Of course, LiuGong’s investment in aftersales is by no means altruistic. It is a calculated business strategy designed to cement the firm’s long-term future in the region.
Traditionally, one of the major factors behind the success of Chinese equipment manufacturers in the Middle East has been their competitive pricing models. However, this has transformed into somewhat of a double-edged sword; the segment’s reputation for value is not always associated with reliability.
Zhu is acutely aware of this perception. Whilst he conceded that the initial price tag remains a major strength for LiuGong and its regional sales partners, he was adamant that in order to secure a long-term presence in the Middle East, the brand must focus on product quality and customer service.
“LiuGong’s mission is not only to supply global customers with high-quality equipment, but also to provide effective service,” he explained.
“For LiuGong, we never focus solely on price. Price is very important, but I think that the first step should always be to supply excellent machinery. Our primary objective is to give our customers the fastest possible returns on their investments. That’s our mission.
“This starts with the supply of excellent machinery at a reasonable price, but it doesn’t end there. From this point, LiuGong must focus on its aftersales support network. In conjunction with our channel partners, we must deliver the best possible aftersales support to our customers.
“It’s difficult to get on the list of government suppliers. This is one of the reasons behind our decision to establish an expansive aftersales network in the Middle East. This investment will benefit both public and private customers, and forms part of LiuGong’s long-term strategy to grow its presence in the region,” said Zhu.
Moreover, LiuGong’s regional general manager told PMV that this philosophy extends to its local representatives. Indeed, this was one of the major reasons behind its decision to partner with its new dealer for the Emirates.
“We knew of Gargash Machinery before we decided to join forces at the end of last year,” said Zhu.
“When we began discussions with the company, we considered the capacity of its facilities. We communicated extensively with the firm’s management and sales team, and we were extremely impressed, both in terms of their professionalism and ability to provide effective aftersales support.
“Gargash has excellent facilities here in the UAE, and LiuGong has the advantage of its locally-situated warehouse, parts centre, and training facility. That’s why our companies decided to join forces in the Emirates,” he explained.
Husayyan certainly agrees with Zhu on this point. He contends that Gargash’s aftersales support capability was a major influencing factor in securing its inaugural order from AIMS Group.
“Sealing this deal was by no means a simple process; it involved many steps,” Husayyan recounted.
“Firstly, the customer witnessed these machines working in the field. Secondly, Gargash offered an extended warranty; full support. This is particularly important to AIMS Group as it is a semi-governmental operator. Like any other company, it is looking at things from an economic point of view, identifying ways to save money.
“From the customer’s perspective, why buy one wheel loader from our competitors when – for a similar cost – they can take two from LiuGong? One will be on standby whilst the other can be put to work. If we provide this option in conjunction with effective aftersales support and spare parts availability, what’s the downside?” he asked.
Although Gargash does not own any aftersales support facilities in Ajman, the dealer is confident that through a combination of convenient transport links, mobile maintenance capabilities, and backup from LiuGong’s Jebel Ali hub, its levels of service will prove second to none.
“It is less than an hour’s drive from Dubai to Ajman, and the good thing about Gargash is that we have several mobile workshops,” Husayyan pointed out.
“This means that we can offer 24-hour support to AIMS Group. For anything more complicated – beyond the realms of general servicing and maintenance – we have LiuGong’s dedicated technical team down the road in Jebel Ali. They are ready to move with us and support the customer whenever necessary,” he added.
AIMS Group, meanwhile, seems content to follow its tried and tested, ‘wait-and-see’ approach to equipment acquisition.
“It’s important to bear in mind that the selection process involved only LiuGong and Hyundai machines; no other brands were considered,” Siddiqui told PMV.
“The quality of both manufacturers was similar, but because of the Cummins engines, the transmission systems, and the types of application for which the units will be used, we decided to opt for LiuGong.
“This is the first time we’ve chosen LiuGong. We were thinking of choosing Hyundai, but [Gargash Machinery] came to us with a more competitive proposal,” he concluded.
Of course, confidence – especially within the realm of governmental customers – is won over years, not overnight. Nevertheless, this is an important first step in the process.
Whatever the future holds, AIMS Group’s decision to invest in LiuGong represents a significant vote of confidence for the brand. The Chinese manufacturer and its UAE dealer can certainly talk the talk when it comes to product quality and aftersales support. It’s now up to both parties to prove that they can also walk the walk.
