AVIATION Industry Corp. of China (AVIC) is awaiting regulatory approval to take control of loss-making Xiamen XGMA Machinery Co., giving the firm a chance to diversify into the aviation industry amid a sustained downturn in China’s construction machinery market.

    The move, coming less than four months after Zoomlion Heavy Industry Science and Technology Co. bought control of a domestic farm machinery builder, highlights challenges facing Chinese machinery makers due to a supply glut created by Beijing’s 4 trillion yuan stimulus program announced in 2008.

    In October, Zoomlion issued its third profit warning in 18 months. Rivals such as Sany Heavy Industry Co. and XCMG Construction Machinery Co. are also feeling the pinch. Xiamen XGMA, a much smaller player, slipped into a 590 million yuan (US$95.94 million) net loss for the year.

    In a stock exchange filing, Xiamen XGMA said it would be joining AVIC’s sprawling family after its previous State parent handed over its 54 percent stake in the firm to two subsidiaries of AVIC for free.

    The State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and Xiamen’s own parent, the local SASAC of Xiamen, are the brokers of the deal, it said, adding the transaction still needs government approval.

    (SD-Agencies)