Song Zhiping: CNBM plans to speed up overseas business

Byswb

Updated 2009-09-22

Mr. Song Zhiping, chairman of CNBM

China National Building Material Group Corporation, China's largest building materials manufacturer, plans to expand its overseas sales volume to 50 percent of its total business to meet the increasing demand from overseas markets.

The parent company of Hong Kong-listed China National Building Material Co (CNBM) will accelerate the development of overseas business to 50-percent proportion from the current 30 percent in five years, the company chairman Song Zhiping said.

"The company will speed up the construction of cement production lines in developing countries in South Asia, Middle East and Africa, and promote high-value added products such as glass fiber in European and American market," he said.

The company's sales revenue reached 36 billion yuan by August this year, up 32 percent compared with the same period last year, according to Song.

Building material sales in the country rose 16 percent in the first half of this year, compared to the same period last year.

"CNBM's overseas expansion is in line with the company's internationalized strategy and the trend of growing demand in cement sector from other developing countries," said Pu Zhongdong, analyst, Guohai Securities.

"Some Chinese companies such as Sinoma International Engineering Corporation did a very good job in building cement production lines in developing countries by combining multiple advantages of China's advanced technology and cheap labor force," said Pu.

Although China produced nearly half of the world cement output last year, the country has a problem of surplus production capacity, while some other countries present a comparatively high growth speed. Given the long-term development, further expanding the overseas market is an economically reasonable decision, she said.

China produced an estimated 2.1 billion tons of cement last year, including 600 million tons of small cement capacity which is due to be shut down by 2013, according to Song.

The Ministry of Industry and Information Technology and the National Development and Reform Commission have agreed to shut down 600 million tons of small cement capacity by 2013, beginning in 2010, he said.

It also means the cement industry has more consolidation opportunities.

The nation's total cement output is shared with 5,000 competing companies. The output of the domestic top 10 cement producers accounts for only 21 percent of the country's total production.

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