Chinese power generations companies which rapidly expanded operations in India in recent years are complaining of pressure due to depreciation of rupee and appreciation of China s currency RMB, saying it has eroded their profits.
Indian rupee devalued about 20 per cent at one stage in 2013, while the RMB appreciated five per cent, eroding 25 per cent of the gross profit margin, Xu Huadong, Chairman of Chinese machine and generator manufacturer Power HF said.
"We are forced to improve management efficiency and lower operation costs. But there is a limit. Our price advantage is diminishing, and we are considering opening production plants globally," he told state run Xinhua news agency.
Power HF, based at Weifang City in east China's Shandong Province, has exported 38,500 engines to India for use in telecom base stations across the country. If those base stations break down, more than 100 million Indian mobile users will be affected.
The firm has also set up a network of 174 service stations employing more than 1,500 local people across India to provide 24-hour maintenance services. Its business in India started in 2007, when the Reliance Group, one of the top three telecom companies in India, ordered the engines. The Indian market now comprises more than 30 per cent of the total revenue of Power HF, which now has bigger plans.
"Currently we mainly provide maintenance services for the engines of the telecom base stations. In future, we hope to offer maintenance of air-conditioners, antennas and other equipment at the stations, based on our established network," Xu said.
The firm is eyeing other countries and regions, with Africa as the next key market. "We want to copy the successful model in India, but adjustments must be made according to the situation in different countries," Xu says. When Power HF entered India, the enterprise redesigned its products according to the hot and humid environment.
Since India has stricter noise restrictions, it also adjusted their engines to reduce noise. "Now we are entering Egypt and we must take the heat, wind, sand and dust into consideration," says Xu, adding skilled workers were harder to find in Egypt than in India.
So training maintenance workers will be given priority. "The quality of Chinese machinery is already world level. But Chinese machinery manufacturers must focus on service if they want to go abroad," Xu said.
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