It's an economic move to aid manufacturing logistics and maximize market share. The Chinese, due to cheap labor have made huge inroads into oilfield equipment supply and recognize the need to improve their logistics. No one in the U.S. can provide similar equipment that can compete with their low price. You used to be able to make a good profit margin on the equipment but the low cost of chinese equipment versus U.S. equipment has changed the whole dynamic.
the process of Fracturing directionally drilled horizontel Shale seams to release the captured natural gas is the new play so most companys that will survive are moving into the rental aspect of the business. Everyone is buying the wellhead equipmethent for virtually the same price so in order to compete you offer a low markup on the wellhead equipment necessary to complete the well in order to get the lucrative Frac Stack rental work where the real big revenue is. The cheaper you can buy it the better chance you have of winning the work. The wellhead is just a lost leader these days and if you make a good margin here and there more power to you.
It normally takes about 60 days or more from the time a vendor in the U.S. places an order for equipment in China until it gets produced and then shipped to the U.S. port on a container vessel. I frequently buy stuff from my vendors "on the water" to secure product for upcoming work. If you move all of the production of raw materials, forging, manufacturing, assembly, distribution, and a cheap workforce that would be happy to live in the land of the "Big Mac" into a subsidized economic zone you can corner the market right in the U.S. backyard just as the oil and gas boom is hitting it's stride. Make no mistake, business is booming bigtime and the Chinese hold a 30% stake in Chesapeake Natural Resources which is signing leases with farmers, ranchers, and land owners everywhere they sniff oil or gas to drill and Frac all over the country. In my small South Texas county sitting above the Eagle Ford Shale zone we have 60 new overnight Millionaires when the well drilled on their leased land hit big and their share became about $25,000 or more a WEEK.
When we get a president that really wants to drill baby drill and opens the tap on new places for exploration and production in the U.S. you better be in the oil industry if you'd like a job for a lifetime. I have been employed with the same Oilfield Sales & Service company for 17 years and it's been a great ride.
The Chinese are positioning themselves to ride the wave and they always think three moves ahead.