Kion AG takes minority stake in Chinese truck maker EP Equipment

German material-handling supplier KION Group AG said yesterday it will acquire a minority ownership stake in Chinese manufacturer EP Equipment Co. Ltd. as part of Kion's strategy to expand its presence, in China and worldwide, in the light-duty or "entry level" warehouse equipment segment.

The Chinese industrial truck market expanded by 40 percent in the first nine months of 2017, according to Kion. Warehouse trucks were a major factor in this growth, with the entry-level version playing a particularly important role, driven by increased demand for greater mechanization and equipment upgrades, Kion said.

In a 2016 survey, the Industrial Truck Association (ITA) ranked China third among global markets with the greatest potential for lift truck growth over the next three years, behind India and Mexico. In 2015, China ranked seventh.

The EP partnership will "allow us to extend our product offering to a much wider range of customers," said KION Group CEO Gordon Riske at a ceremony marking the signing of the agreement.

Kion is no stranger to China. In 1993 it became one of the first German companies to make direct investments in China when the Linde Group, whose material handling business was re-branded in 2006 as Kion Group, established production, sales and service, and research and development activities in Xiamen. In 2009, Kion acquired Baoli Forklift Co. to penetrate the Chinese economy lift truck segment. The "economy market" includes lift trucks that are more basic workhorse types, with a limited number of features and technology, and priced well below premium or mid-level equipment. They are often referred to as utility, standard, or value trucks. Much of the growth in that "value priced" market seems to be overseas.

Kion currently has about 4,000 employees in China, and touts itself as the largest non-Chinese company in the lift truck market.

EP Equipment was founded in 1999 by He Jinhui, who remains its chairman. The company employs more than 1,000 people around the world and is prominent in the Chinese and U.S. markets. In 2017, EP Equipment shipped more than 50,000 units, a record for the company.

Terms of the transaction, which is expected to close during the year, were not disclosed.