China's Sany eyes localizing heavy equipment production in Russia

SOCHI. June 1 (Interfax) - Sany Heavy Industry, a major Chinese manufacturer of heavy equipment that works on the Russian market, is interested in localizing production in Russia and has discussed a special investment contract (SPIC) with the Industry and Trade Ministry, the first deputy CEO for investment policy at state company Russian Highways (Avtodor), Igor Koval said.

Sany's mini excavator was displayed at the Innovative Technology and Smart Transport Systems in Road Construction forum in Sochi organized by Avtodor.

Speaking with reporters on the sidelines of the forum, Koval said that the share of Chinese equipment on the Russian market will increase in the foreseeable future, including the Sany brand.

"They do not have localized production here, but their market share has been increasing in recent years. One must assume that, given restrictions, it will continue to grow. Our colleagues from Sany have expressed a tentative, cautious interest in potential localization of production in Russia," Koval said.

"A site was not discussed, as far as we know. But negotiations were held, including with the participation of state company Avtodor, at the Industry and Trade Ministry on the potential possibility of setting up production here. In what form has not been worked out in detail yet. Perhaps under a special investment contract. Our colleagues went to think about how economically viable such a decision would be," Koval said.

Plans for Sany to localize production in Russia were discussed not more than two months ago, he said. Avtodor was involved in these talks because options are being explored to ensure that the state company's contractors continue to get the construction equipment they need.

Koval said backhoe loaders, wide-reach asphalt pavers and material transfer vehicles are needed. "There are Russian producers who cover a number of items. But the market's needs are greater than the capacity of the domestic manufacturing sector at the moment. Without equipment from friendly countries, we simply won't be able to cover the market's needs in the near future. Perhaps it will be possible to do this in a while," he said.

Koval did not specify the proposed parameters of the possible SPIC with Sany in Russia, or the models that the Chinese company might localize.

A representative of a Russian Sany dealer who participated in the exhibition of equipment at the Sochi forum told reporters that the Chinese company was interested in the possibility of localizing production at the Ivanovo site of the Kraneks Machinery Group. Kraneks worked with Japan's Komatsu, which announced the suspension of production in and imports into Russia after the start of the military operation in Ukraine.

"Sany has an option somewhere in Ivanovo. There was a Kraneks plant that produced cranes. They're trying to create something there, but they have some sort of sticking points with our side," the dealer's representative said during a report to Avtodor CEO Vyacheslav Petushenko.

Sany's Russian division, Sany LLC, which was registered in Moscow at the end of 2007, saw its revenue surge by 12 times to 3.7 billion rubles in 2021, data from the SPARK-Interfax system showed.