AMKODOR Enters a New Level of Cooperation with the Chinese Mechanical Engineering Giant

On 3-8 September 2017, the delegation of CHINA SINOMACH HEAVY INDUSTRY CORP (PRC) headed by Assistant to Director General Wang Chuan Ming visited the AMKODOR holding. The purpose of the visit was to hold negotiations on the development of bilateral cooperation and the establishment of a joint venture to produce excavating and bulldozer machinery.

For reference. China SINOMACH Heavy Industry Corporation is a subsidiary of China National Machinery Industry Corporation (SINOMACH Group) and is a major producer of industrial equipment and heavy machinery. Its main activities are to conduct research, development and production of engineering machinery, client services related to the above mentioned activities, engineering and commerce. At present, the company is a proprietor of 28 holding companies and joint stock companies, including one open joint-stock company and four foreign corporations. SINOMACH Heavy Industry has large production facilities in different cities of China. In addition, the company has established a joint venture together with world-wide known manufacturers of industrial equipment, such as Terex Corporation from the USA, Hyundai from South Korea, Komatsu from Japan, and Martec from Canada. The goods are exported to over 100 countries around the world. SINOMACH Group is included in the list of 500 largest enterprises in the world.

The negotiations were held at the JSC AMKODOR, holding managing company, and at the JSC Amkodor-KEZ, a part of the holding engaged in the production of excavating machinery.

Andrey Yarotsky, Director of Amkodor-KEZ, told the press service of the enterprise that the negotiations of the JSC AMKODOR, holding managing company, with the SINOMACH corporation on establishment of a joint venture on the basis of the JSC Amkodor-KEZ to manufacture excavating, bulldozer and other special-purpose crawler machinery started in December of 2014. On 20 September 2015, the parties signed the Protocol of Intent, and on 4 December 2015 and on 3 March 2016 extra Memoranda of Understanding were signed. At that time there were several meetings where the issues of expanding cooperation were discussed. The most important moment in the mutual cooperation was assembly of semi-knockdown kits of four excavators SINOMACH at Amkodor-KEZ in February of 2017. They included crawler excavators with the bucket capacity of 1.0 and 1.2 cubic meters, one of the most popular special-purpose machines in the world which demand was constantly growing.

During the negotiations which took place these days at the AMKODOR holding, the parties discussed the steps for further cooperation. All contradictions were removed and in fact a sequence of steps to the ultimate goal to establish a joint venture was developed.

According to the results of the negotiations, the parties signed memoranda on commercial issues and excavator localization. In the next three months Amkodor-KEZ would get 35 SKD excavators SINOMACH (the contract price is about 3 mln. of US dollars). The deliveries are planned taking into account step-by-step localization. According to the decisions made, it is to be held in three stages. At the first stage, Amkodor-KEZ will manufacture a range of components for these machines that will allow reaching 30% of localization on the available technological base. As a result, the manufactured excavators will be the products of the JSC Amkodor-KEZ. In the future, there will be localized the production of major components which require extra study or purchase of extra attachments, and then the same for the components of the structure and interior, as a result thereof the localization level will exceed 51 percent.

Mr. Yarotsky emphasized that the agreements reached were a big step up on the way to establish a joint venture of the AMKODOR holding and SINOMACH Heavy Industry. According to him, after the production localization and drafting of all required documents and introduction of the goods to the market, the establishment of a joint venture would become really achievable and commercially justified purpose. Naturally, further negotiations with the Chinese partners would continue.  

The cooperation of the JSC Amkodor-KEZ with SINOMACH Heavy Industry has not only commercial prospects.

Director of the enterprise said that nowadays the Chinese partners have risen the engineering and the machinery to a higher level what means that the cooperation will enable us to rise to a new technological level, while increasing the skills and competence of our employees in the field excavator engineering. We will get a new sophisticated product which we will promote and sell on the markets where the AMKODOR holding works and where it has a developed commodity distribution network.