Sany, one of China’s biggest machinery makers, is embracing technology in new ways as Beijing looks to upgrade its corporate champions

By Natasha Khan | Photographs by
Giulia Marchi for The Wall Street Journal
Aug. 25, 2018 8:00 a.m. ET

CHANGSHA, China—The blueprint for China’s industrial future lies on a dustless factory floor known as Workshop 18, where workers in dark blue uniforms work alongside robots to build pump trucks that can blast cement up the world’s tallest skyscrapers.

Engineers at the plant run by Sany Group Co. figure out how to make better products by analyzing information fed in real-time from machines operating around the world to a data center nearby. The company tracks 380,000 of its internet-connected concrete mixers, excavators and cranes, and it has collected more than 100 billion items of engineering data.

Workshop 18 is designated by Chinese industry officials as a model demonstration facility for Beijing’s plan to upgrade its corporate champions so they can better compete in the world, a policy known as “Made in China 2025.” The adoption of robots, big data and other technological advancements is seen by Chinese leaders as key to developing domestic giants in areas such as power equipment, electric cars, marine products and chips—sectors it aims to become largely self-sufficient by the middle of the next decade.

Sany, one of China’s three big heavy machinery makers, said the integration of technology has increased capacity, shortened order-delivery times and slashed operational costs, all by at least 20%. The company is also betting that the technology will enable it to build a reputation for innovation and quality, rather than for lower prices for copycat products that made Sany a big player domestically.

“The future of the heavy-equipment industry will rely as much on software and data as it does on hardware,” Sany’s Chief Information Officer Pan Ruigang said.

The “Made in China 2025” strategy has drawn criticism in Washington, with members of President Trump’s administration accusing Beijing of using subsidies and protectionism to unfairly bolster Chinese companies. China has said its targets are transparent and that other countries have policies aimed to strengthen domestic industries.

Beijing has made billions of dollars available through state and provincial programs to help companies catch up with foreign rivals. Chinese companies that want to build or invest in plants similar to Workshop 18 can apply for government subsidies worth up to $45 million, according to ministry documents.

Loans are plentiful: The country’s development bank is working with China’s industry ministry to provide about 300 billion yuan ($43.9 billion) of financing for major projects.

Incentives offered for Chinese manufacturers to buy more robots have made China the world’s fastest-growing automation market. In 2016, China installed a record 87,000 robots, more than the U.S. and Germany combined, according to the International Federation of Robotics. Beijing wants to reach a robot density of 150 per 10,000 employees by 2020, more than double 2015 levels, though still behind the U.S., where the ratio is 189.

Based in the central province of Hunan—the birthplace of Mao Zedong, founder of modern China—Sany has for three decades faithfully adhered to Beijing’s economic goals, and its business mostly boomed along with China’s infrastructure-led economy. Sany started by reverse-engineering foreign machinery to make cheaper copies, and was one of the biggest Chinese companies to go public at home in the 2000s.

In 2012, it paid €324 million ($375.8 million) for a 90% stake in German pump maker Putzmeister Holding GmbH.

Sany has built four smart factories since 2012 as it heeded Beijing’s call to upgrade. Its real-time data collection program garnered praise in June from Chinese Premier Li Keqiang. Sany also uses unmanned vehicles in Workshop 18 to deliver materials and parts to assembly-line workers.

Another Sany facility 800 miles north, in Beijing, is festooned with flags bearing inspirational slogans. One reads: “To achieve the China Dream, achieve the Sany Dream.” Engineers there use robotics to make better pile drivers.

Welding robots—made by Japan’s Fanuc Corp. —allow workers to design a drilling rig that can run around the clock in extreme conditions, according to workers there. Sany has drills in the world’s northernmost construction site in Russia, pounding the Arctic seabed for natural gas. Now, company executives are working with domestic manufacturers to customize robots.

Sany has received various subsidies from the government through the years, documents show, but the company has largely grown through its reinvested profits, becoming the world’s eighth-biggest machinery maker. At home, it and other Chinese companies ate up market share from foreign operators, such as Deerfield, Ill.-based Caterpillar . Caterpillar declined to comment.

Sany and other machinery makers were hit by a production glut after 2012—oversupply is a frequent result of China’s economic plans. But Sany’s sales began to rebound last year.

Globally, Sany has a 3.7% share of the global construction equipment market by sales, according to trade publication International Construction’s 2018 Yellow Table, based on an annual survey of the top 50 companies. Sany has made small investments in the U.S., including a $60 million factory in Georgia.

Sany is also focused on following another of Beijing’s plans: targeting developing markets in Southeast and Central Asia along an infrastructure corridor, called the Belt and Road Initiative.

“If not for the Party and for its support,” said a video shown to visitors at a Sany facility, “it’s hard to imagine Sany’s success.”