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The global HDD market is a dynamic and expanding area. A new innovative market emerging from the east is set to challenge the dominance of the traditional manufacturers.

The prolonged and extensive period of construction growth in China has enabled the country's huge cities to modernise utilities such as water, wastewater, and telecommunications. Above ground construction has been achieved so rapidly that in many of China's populous cities no-dig construction is the only practical method to install and repair the necessary supporting infrastructure.

The use of HDD has been a factor in the development of a growing export market. Despite the slow down in China's growth rates, the trenchless industry continues to gain momentum domestically. Chinese companies are finding success exporting machinery such as HDD rigs to the rest of the world.

The HDD market

In the past Chinese "~knock-offs' have been dismissed as unreliable, based on quality concerns. However, international partnerships, increased technological capability and lower costs are combining to create a market for the Chinese product.

HDD Broker General Manager Bob Martin spoke to Trenchless International regarding the international HDD market. Mr Martin said that historically the North American market has been unwilling to accept Chinese manufactured equipment. Mr Martin said "Even the Chinese do not readily accept their own equipment, acknowledging the quality shortcomings and instead opt for the much more expensive US-manufactured drills."

However, this situation is changing. The impact of the global financial crisis is reverberating around the world. Project managers are looking for ways to cut costs while still maintaining the high standards expected in the industry.

The economic downturn is not the sole reason for the increase of exports of Chinese manufactured drills. Mr Martin said there has been a marked increase in the quality of the Chinese product. "Demand for cheaper, simpler machines is increasing at a very fast pace as the demand for work remains constant but the money available to purchase decreases," he explained.

East meets west

HDD rigs have been manufactured in China for over a decade. The Chinese domestic market has grown as people discover the benefits of trenchless solutions. Professional relationships between non-Chinese and Chinese companies have also encouraged an improvement in the quality and production capabilities of Chinese machinery manufacturers.

Hanlyma, founded in 2003, is one of China's leading manufacturers of HDD rigs. Hanlyma spokesperson Jerry Liang said that rapid growth and strong branding has culminated in the company supplying 30 per cent of the domestic market.

The first American HDD rig was imported into China in 1988. Ten years later the first Chinese rig was created. Mr Liang said that prior to 2003, 90 per cent of the HDD market was shared between prominent international companies including Vermeer, Ditch Witch and Case.

Mr Liang said that over the last five years Chinese rigs have come to dominate the Chinese domestic market, accounting for almost 95 per cent of market share.

There are currently more than 200 contractors engaged in trenchless construction in China, using more than 2,000 HDD rigs, approximately 700 of which were introduced in 2007 with the biggest HDD rig in the world now in China.

As the quality of the rigs available has improved, Chinese companies have begun to find success on the global stage. Mr Liang said that Chinese HDD machines are well priced to compete in the international market with high quality technological capabilities. In 2008, Hanlyma exported 112 rigs, or approximately 44 per cent of their product.

Another concern levelled at Chinese HDD manufacturers in the past is a lack of after sales service. Hanylama is currently focused on increasing the quality of after sales service. To facilitate expansion and service capabilities, the company has sales and service centres in countries including Australia, Russia, India, Malaysia and Turkey. The feedback from international customers had been positive. Mr Liang said that customers were satisfied by the good performance and quality of the Chinese built machines and the level of service available.

In addition, Chinese companies are now endeavouring to increase their international presence through attending Trenchless conferences such as the Moscow No-Dig Conference 2008 and the Trenchless Australasia Conference September 2009.

International perspectives and relationships

We asked Mr Martin how he thinks people perceive the quality of Chinese rigs, "Not surprisingly, there are two qualities that seem to pervade the perception of Chinese equipment, those being "~cheap' and "~low quality'.

"Interestingly, from my own research and experience with newer Chinese manufactured rigs, I would only partially agree with those statements," he said.

Mr Martin concurred with Mr Liang's opinion on the technological advancements Chinese rig manufacturers have achieved.

"The more successful Chinese companies have made great advances in quality control, going so far as to source the major components for the HDD drills from North America." Mr Martin listed motors, hydraulic components, pups and gearboxes as the parts most likely to be sourced from outside of China.

"The resulting machines are more expensive than their purebred Chinese counterparts; however they offer much of the reliability of North American machines while still being significantly cheaper."

Mr Martin concluded from his research that these Chinese rigs are, on average, 50 per cent less expensive than a US-manufactured drill with comparable pullback capacity. Mr Martin did acknowledge though, that Chinese drills will be slower and offer fewer options than the major manufacturers.

The Chinese machines are still in a process of building a solid reputation. Some Chinese companies, recognising the advantages of expertise and longevity, have sought to forge partnerships with established international companies.

American companies are taking advantage of the increasing technical capability and lower manufacturing costs of the Chinese HDD manufacturers.

In May 2008, Charles Machine Works (CMW), manufacturer of underground construction equipment Ditch Witch, signed a joint venture agreement with Tu Xing Sun No-Dig Tech of Beijing, China. CMW said that Tu Xing Sun is considered to be a leader in the manufacture and distribution of HDD systems in China. CMW CEO Tiffany Sewell-Howard said "This venture allows us to strengthen our position in China and other emerging markets."

The Shanghai Gudeng Construction Machinery manufacturing company, specialising in HDD, exports to Russia, Ukraine, Pakistan, India, Malaysia and Singapore. Their HDD technology recently received first place in the construction machinery branch of the China Quality Association's awards. In order to expand the business, the company is establishing a joint venture in Malaysia to be called Jiangsu Gudeng Construction Machinery Assembly Group. The factory will have a production capacity of 300 HDD machines and 100 static pulling machines per annum.

Developing the industry

The development of the industry is also being assisted by the development of professional organisations. The China Hong Kong Society for Trenchless Technology or CHKSTT was established in 1999 and is one of the societies affiliated with the ISTT. Other societies in the Greater China region include those in Shanghai (SSTT), Beijing (BJSTT), Guangdong (GDSTT), and Taipei (CTSTT).

Chinese HDD companies are beginning to produce reliable, cost effective machinery for both the domestic and international markets. Companies such as Hanlyma are focusing on after sales customer service and forging mutually beneficial international partnerships.

The export of Chinese manufactured HDD rigs is set to continue as companies build their brands through improved quality for the less complex and less expensive machines.

Published on Trenchless International and Trenchless Australasia.