BEIJING (Reuters) - Chinese construction equipment maker Zoomlion Heavy Industry Science and Technology Co Ltd <1157.HK> (>> Zoomlion Heavy Industry Sci & Tch Co Ltd) is close to signing a heavy-truck joint venture with a major global player as it seeks to diversify the types of equipment it manufactures and sells, its chairman said on Friday.

Zoomlion, which was hit hard by an industry downturn last year, will resume growth in 2014, helped in part by China's urbanization drive, Zhan Chunxin told Reuters in an interview on the sidelines of China's annual parliamentary session in Beijing.

"I expect to see replacement demand in coastal cities as they retire old machines. Second and third-tier cities will also be good as they are still in early development stage," Zhan said.

Zoomlion, seeking to transform itself into a diversified manufacturer, has been in talks with several global truck heavy-weights for a 50-50 vehicle and engine joint venture in China.

"The joint venture will be a major player in the medium to higher-end heavy truck segment in China, both in terms of capacity and technology know-how," he said.

Zhan declined to name any potential partner but said the two sides would hopefully close the deal this year.

Other global truck makers have also set their sights on China where a massive urbanization drive is pushing up demand for heavy trucks.

Daimler Trucks (>> Daimler AG), the world's largest commercial vehicle maker, finalised a deal with Beijing Automotive's truck unit Beiqi Foton Motor Co in September 2011. Sweden's Volvo (>> AB Volvo) also teamed up with Dongfeng Motor Group Co (>> Dongfeng Motor Group Co. Ltd) to build a heavy-truck plant early last year.

China's construction machinery industry slipped into a two-year downturn starting in 2012 as major industry players struggled with mounting inventory and low utilization rates after a glut in machinery spending spurred by China's massive stimulus program in 2008.

Zoomlion's net profit fell nearly 36 percent in the first nine months of 2013, while rival Sany Heavy Industry Co Ltd's (>> Sany Heavy Industry Co., LTD) earnings dropped nearly 60 percent during the period.

Zhan expects demand to resume this spring when construction sites nationwide kick into full swing. The overall industry could grow 15 percent year on year in 2014, he added.

EYEING ACQUISITIONS

Zoomlion's overseas operations contribute to about 10 percent of its overall revenue, helped in part by its acquisition of Italian concrete machinery maker CIFA in 2008.

Late last year, Zoomlion took over a German dry mortar equipment producer M-Tec.

Zhan said he is open for more acquisitions both within the construction machinery industry and in other sectors like agricultural machinery.

The company's overseas business could contribute to half of its revenue in three to five years as it continues to grow through acquisitions, he said.

(Editing by Matt Driskill)

By Fang Yan and Matthew Miller