At present, China's economy is transforming towards a new development pattern of dual circulation, and globalization has become a strategic choice for the long-term development of Chinese enterprises.
As a pioneer in going global, China's construction machinery industry leads the world in scale. With the strong impetus of technological progress and industrial upgrading, the Chinese construction machinery industry is accelerating its expansion into the deep sea to better integrate global resources and further enhance its competitiveness.
According to the 2025 Global Construction Machinery Manufacturers 50 Strong Ranking (Yellow Table 2025) released by the magazine International Construction, there are 24 Asian enterprises on the list, among which 13 are from China. XCMG and Sany rank fourth and sixth respectively, with market shares of 5.4% and 4.6%.
It is worth noting that Japan's Komatsu remains the top construction machinery manufacturer in Asia. Last year, it achieved sales of 26.624 billion US dollars, an increase of 5.2% compared to the previous year. Its market share rose from 10.4% the previous year to 11.2%, further narrowing the gap with the US-based Caterpillar. Caterpillar's sales decreased by 7.7% to 37.844 billion US dollars last year, and its market share dropped to 15.9%.
As a follower, Komatsu's global expansion path offers significant references for its Chinese counterparts in the process of Chinese construction machinery industry globalizing.
For enterprises that are moving from regional markets to global markets, there are three major transitions: First, there are free markets around the world that can be exploited; Second, there are global resources that can be integrated; Third, they will face competition from the world's top enterprises. This means that in the construction machinery industry, which is based on scale for competition, if it stands at today's starting point, it must have a more forward-looking vision for global view.
So, how did Komatsu, which experienced economic collapse during World War II, post-war economic recovery, the lost decades, and the era of low birth rates and an aging population, become the leader and perennial champion of the global construction machinery industry over the course of a century?
1,The Globalization Journey of Komatsu
1. Overseas Exploration (1956 - 1970): Consolidating the Domestic Market, and exploring Product Export
In 1921, Kudo Toshio opened a machinery repair shop in a copper mine in Komatsu City, Ishikawa Prefecture, Japan. This was the starting point of Komatsu.
In the 1930s, the Japanese government sought agricultural mechanization. Komatsu produced Japan's first crawler-type agricultural tractor and began to enter the agricultural machinery sector. After World War II, as a defeated country, Japan faced extreme food shortages. The government began large-scale reclamation of new farmland, which led to a continuous increase in the demand for tractors and bulldozers in Japan.
In 1952, as Japan regained its status as a sovereign nation and a member of the international community, Komatsu began to expand its overseas market. In 1955, it exported bulldozers to Argentina, and in 1956, it signed a contract for exporting construction machinery to China. In 1958, it established its first liaison office in India. Agricultural machinery equipment, represented by tractors and bulldozers, was the main product for export at that time.
The turning point of Komatsu's globalization strategy occurred in the 1960s. There was always a towering mountain that Komatsu couldn't overcome - Caterpillar. At that time, Caterpillar's scale was ten times larger than Komatsu, and its product quality was far superior to Komatsu. However, before the 1960s, Komatsu mainly developed domestically and its international business had not engaged in direct confrontation with Caterpillar.
In 1963, the Japanese government decided to start implementing capital liberalization. As the first large-scale foreign-invested enterprise entering Japan, the project was the joint venture between Caterpillar and Japan's Mitsubishi Heavy Industries. This made Komatsu face the impact of Caterpillar directly in its domestic market. At that time, it was widely rumored that if Caterpillar landed in Japan, Komatsu would cease to exist within three years.
To cope with the pressure from Caterpillar, Komatsu began to implement the "A Plan", aiming to surpass the Japanese industrial standard JIS, launch TQC (Total Quality Control, comprehensive quality management) activities, and improve 3,000+ bulldozer parts. Eventually, it launched medium-sized bulldozers that could compete with Caterpillar. At the same time, to make up for the technical shortcomings, Komatsu successively cooperated with American Cummins (engines), Biscaro (hydraulic technology), and International Harvester
to catch up with key technologies.
By promoting the durability benchmarking of medium-sized bulldozers against Caterpillar in the "A Plan", Komatsu stabilized its leading position in the bulldozer market in Japan. In 1977, Komatsu's revenue from bulldozers in Japan was 2.5 times that of Caterpillar-Mitsubishi.
2. Capacity Layout (1971-1985): Initiate global competition and keep a close eye on Caterpillar
After stabilizing the domestic market, Komatsu's true history of globalization began around 1970.
In 1971, with the collapse of the Bretton Woods system, the Japanese yen abandoned its fixed exchange rate system and adopted a floating exchange rate system. Between 1971 and 1985, the exchange rate of the Japanese yen remained on an upward trend for a long time.
Against this backdrop, under the pressure of foreign exchange reserves, the Brazilian government, followed by the Mexican government and the Indonesian government, successively invited Komatsu to set up factories in their countries to achieve the localization of products in the purchasing countries. Komatsu has taken the opportunity to promote the construction of factories overseas and gradually achieve localization.
After the Plaza Accord in 1985, the Japanese yen appreciated rapidly, and Komatsu accelerated the construction of its overseas bases, promoting the establishment of local factories in developed countries such as the United States, the United Kingdom, and Germany.
Meanwhile, Komatsu remains closely monitoring its rival Caterpillar. In 1972-1973, Komatsu proposed "Plan B", with the competitive mindset that "attack is the greatest defense", and put forward the slogan of "catching up and surpassing Caterpillar".
Unlike Caterpillar's strategy of focusing on business evolution, Komatsu's core idea during this period was to use product development and cost reduction as weapons, and to increase the market share of its products by developing products that surpassed those of Caterpillar.
Specifically, Komatsu has focused on developing large-tonnage bulldozers and promoting their overseas expansion, initially establishing a brand effect. In 1968, Komatsu started manufacturing hydraulic excavators earlier than Caterpillar. Based on the forward-looking development of industry demands from engineering construction to the construction market, Komatsu focused its research and development efforts on hydraulic excavators and loaders and promoted product iteration and upgrading.
Furthermore, between 1970 and 1980, the United States experienced two oil crises successively, which led to a continuous rise in crude oil prices and had an impact on traditional industrial giants. Komatsu products have good fuel-saving characteristics, meeting the fuel-saving demands brought about by the oil crisis
By leveraging leading hydraulic technology and seizing the opportunities brought by the oil crisis, it successfully established a firm foothold in the United States, gradually building a solid market position in the US market and achieving an increase in sales and market share. In 1984, Komatsu's sales in the US market rose from 130 million US dollars to 300 million US dollars, and its market share in the US construction machinery market reached 10%.
3. Global Integration (1995 -): Enhance efficiency through global integration and lay out strategic markets
With the completion of overseas market layout and the slowdown of economic growth in the West, the era of high growth has come to an end.
In 2001, Komatsu faced a deficit crisis. Like many other Japanese enterprises, Komatsu established a considerable number of various subsidiaries in the process of promoting business diversification over a relatively long period of time in the past. However, with the decline of the economic situation, many of these companies have become loss-making enterprises.
Facing this crisis, Komatsu began to implement business structure reform and conduct a thorough review of all business segments. When it comes to the issue of business mergers and reorganizations, Komatsu's fundamental belief is that "no matter what kind of business it is, only by having one of the top positions in the world can one win in the fierce competition and survive."
For this reason, Komatsu continuously implemented the selection and concentration of his business and products. The policy he followed at that time was that "only by having one's own unique technology can these technologies achieve the goal of comprehensive effect, and strive to make the business become the world's number one or second."
Meanwhile, Komatsu is promoting global consolidated operations, the basic contents of which include the following two points: (1) In terms of operation, it is thoroughly promoting the localization in the countries of entry. (2) Product manufacturing, thoroughly imparting the Japanese approach to the local area.
Komatsu's global merger operation aims to gain acceptance from the local society by thoroughly implementing localized management and appointing local employees as management cadres, with the expectation of establishing an operation mechanism rooted in the local community. At the same time, they are confident in the competitiveness of domestic product manufacturing in Japan but do not rest on their laurels. Instead, they strive for excellence and thoroughly promote Japanese-style manufacturing in local factories. Because "KOMATSU of Japan" is the origin of "Komatsu of the world".
In addition, Komatsu continues to advance its globalization strategy, conducting in-depth development in Europe and expansion in the Asia-Pacific region in parallel. The WTO was established in 1995, reducing tariff and non-tariff barriers among countries and promoting the growth of international trade. Asian countries have rapidly risen in economy by increasing export opportunities through joining the WTO and attracting a large amount of foreign direct investment by improving the legal and regulatory environment. Komatsu has adapted to the times and successively established localized factories in China, Thailand and India.
2. Two core insights from Komatsu's globalization
Komatsu's global leadership and the core of what is called the "Komatsu Model" come from two aspects: one is to maintain its leading position in the manufacturing field, and the other is to promote the localization of operations.
1. Maintain manufacturing leadership
Technological leadership and scale in manufacturing are the foundation of global competitiveness. Since its early days of competing with Caterpillar in the domestic market, Komatsu has always attached great importance to product research and development. To ensure its leading manufacturing capacity, Komatsu mainly has three distinctive features:
• An absolute advantage project in product development
Komatsu does not adopt an egalitarian approach in product development. Komatsu believes that only by maximizing its capabilities in the field it excels in can its products be original and thereby enhance brand awareness. To develop personalized products and technologies, Komatsu initiated a new product development mechanism known as the "Absolute Advantage Project".
A project recognized as an "absolute advantage project" must meet the following requirements: First, it must have outstanding features in several important performance or specification indicators that competitors cannot catch up with even if it takes several years. The second is that compared with the existing products, the cost is reduced by more than 10%, and the resources saved from this part are used to achieve the absolute advantage.
• Integrated development and production of core components
Production is carried out where there is demand. It is A fundamental principle of Komatsu, but there is one exception to this principle: "Class A assemblies" are entirely produced in Komatsu's factories within Japan.
Behind this lies not only the consideration of local control over core competitiveness, but also the consideration of supply chain collaboration. On the one hand, the separation of research and development from production will greatly limit the efficiency of product innovation and application. On the other hand, if the local supply chain is not mature, it will also restrict the transformation of innovation. Therefore, as long as the relevant industrial chain capabilities within Japan exist, Komatsu's principle of concentrating the production of core components within Japan will not change.
• Promote the parent-subsidiary factory system to pass on Japanese manufacturing to the local area
In the 1990s, while Komatsu was promoting its global factory layout, despite being constrained by domestic wage levels, it still kept its large-scale bulldozer projects, engine factories, advanced parts with technological advantages, and hydraulic machine factories, which it had invested heavily in building, within Japan.
In terms of the factory production system, Komatsu has introduced a "mother factory" system. For the same model of products produced abroad, the mother factory must be responsible for the QCD(quality, cost and delivery time) of the subsidiary factory. Whenever a new model is put into production at an overseas factory, technicians from the parent factory will provide guidance on equipment procurement, cost management and inventory management through business trips or online meetings.
The mother factories in Japan need to train local cadres and employees to achieve technology transfer. This is by no means a task that can be accomplished merely by the few Japanese people stationed there. It is necessary to select suitable candidates for leading cadres from among local cadres and employees for training to expand and strengthen the senior management team.
2. Promote the localization of operations
Komatsu's globalization goal is to achieve "localization of operations". Since the early initiation of overseas factory construction, Komatsu's approach has always been that no matter which country a factory is built in, it should be a truly local production plant, rather than a simple assembly plant.
"Entrusting the operation of overseas businesses to local people" is a fundamental policy of Komatsu. The top leaders of Komatsu's overseas production bases are mostly locals, and to a large extent, the decision-making power is delegated to the locals.
Take China as an example. Komatsu began to consider establishing a sales network in China around 1995, and it was also the period when it started to carry out localized production in China through direct investment.
At that time in China, there was a lack of sales networks, and it was impossible to achieve this goal by acquiring existing networks. Komatsu decided to set up an agency in each of the 31 provinces and entrust them to the Chinese.
Due to the lack of resources among Chinese agents at that time, Komatsu provided the equipment still owned by Komatsu to the agency stores for display, allowing users to see the actual products and also take test drives. In this way, for the agency stores, there is no need to purchase these display devices from the manufacturers outright at present. Therefore, it is more conducive to allowing the agency points to focus on product sales business.
Komatsu will promote the "zero circulation inventory" model it has implemented in the Chinese market to other regions of the world. The ultimate goal of "zero circulation inventory" is to completely achieve "inventory visualization" by reducing the inventory of dealers to zero, so as to avoid the situation where dealers are troubled by excessive inventory.
In terms of product localization, the reason why Komatsu products have been able to gain a foothold and receive favorable reviews in the Chinese market is precisely because Komatsu has provided fuel-efficient and durable hybrid excavators that meet the demands of the Chinese market, which is characterized by high usage intensity.
In terms of supply chain localization, apart from the core "Class A components", Komatsu has a supply chain organization in Japan called "Green Foreign Association". Among the large enterprises, two-thirds are composed of small and medium-sized enterprises that have been supplying components to Komatsu for a long time. The purpose of this association is to enable member enterprises to share the experience of Komatsu and its sister enterprises in quality management and factory operation, thereby comprehensively enhancing the overall level of the outsourced enterprises.
After entering the Chinese market, Komatsu established a Chinese version of the "Green Foreign Association". While calling on member enterprises of the Japanese "Green Foreign Association" to invest and set up factories in China for local production, Komatsu also strongly supported the supply chains of local foreign cooperative enterprises in China.
Finally, in terms of organizational localization, the early 16 subsidiaries in China did not independently handle affairs such as personnel, finance, and legal affairs. For these management affairs, the approach adopted is to have them uniformly handled by Komatsu's regional headquarters in China. This approach itself is also a prerequisite for the localization of the senior management of subsidiaries.