Sany Group, one of China’s biggest makers of construction machinery, is reportedly planning to move its headquarters to Beijing from Changsha as part of its plan to become a global powerhouse.
The costly relocation has ignited questions about how the decision will affect Sany’s business and, more important, why it is necessary for a private-sector firm to move to the country’s political centre.
Sany’s chairman Liang Wengen is reported to have been very keen to join the 18th Central Committee of the Communist Party of China (CPC), the highest authority within the party, but failed to secure a seat in the 205-member group.
It is unclear how investors will react to the perception of a listed company being used as a vehicle for its chairman’s political ambitions.
Liang, China’s richest man, announced the decision at an internal breakfast meeting last week, saying the strategic relocation will help the group’s global expansion. The move of core divisions should be finalised within two months.
The chairman’s office will be among the first to head to the north. Three of the four core businesses — cranes, road construction machinery and port machinery — will shift to Beijing, while the concrete pump business will remain in Changsha.
The company has been based in Hunan province since its establishment in 1986 and moved to Changsha in 1991, when it first adopted the name Sany.
The new headquarters will be in the suburban Beijing district of Changping, where Sany bought a plot of land in 2003 to set up operations of its rotary-drilling rig unit.
Around 30 senior executives and more than 1,000 staff are expected to transfer to the capital city, according to local media. Sany’s departure will be a loss for Hunan’s economy as the company is a big taxpayer and has created tens of thousands jobs in the region.
However, being based in Hunan means living in the shadow of its closest competitor — and bitter rival — Zoomlion, which is state-owned. Moving to Beijing may give Sany more political bargaining power.
Liang has repeatedly expressed his patriotism and loyalty to the party at high-profile meetings. Commenting on the flurry of Chinese billionaires signing up for foreign passports, he said that even if he was given a thousand choices, he would still choose to be born in China.
Sany has countered slowing domestic sales with strong overseas sales growth. The machine maker’s exports surged 50% year-on-year during the first nine months this year. Liang told the CPC that Sany will have sales of Rmb300 billion ($47.6 billion) by 2020 and that this year’s target of Rmb100 billion has nearly been achieved.
The company boosted its international footprint earlier this year with the high-profile acquisition of German concrete pump maker Putzmeister in the biggest Chinese-German transaction to date.
But its ambitions in the US were hindered when US President Barack Obama ordered the dismantling of four wind farms the company had bought, citing national security concerns. Sany sued Obama and the Committee on Foreign Investment in the US.