Forbes magazine has ranked SANY No. 85 on its 2012 list of the world’s 100 most innovative companies, the second year in a row SANY has made the prestigious ranking.

SANY Heavy Industry, the publicly traded parent company of SANY America, was one of seven China-based companies to make the Forbes Top 100 list for 2012. SANY was among five construction-equipment manufacturers to make the ranking.

Forbes uses something they call the “innovation premium” to calculate the rankings, based on each company’s projected income (cash flow) and its market capitalization. SANY had a 12-month sales growth of 32.4 percent and five-year annualized total return of 16 percent to garner an innovation premium of 19 percent, according to Forbes.

“This is the result of years of investment and hard work,” said Tim Frank, chairman of SANY America. “We have made research and development the focus and center point of our growth strategy. It is reflected in our equipment lineup and our financial results.”

On average, SANY invests 5-7 percent of annual revenue in research and development activities, higher than industry averages. Globally, more than 7,000 SANY employees are involved in R&D — half have master’s degrees or doctorates. In addition to its R&D centers of excellence in China, SANY has opened research and development operations in the United States, Brazil, Germany and India. A factory with state-of-the-industry technology just opened near Shanghai that can produce an excavator every five minutes. SANY Group is also investing $1.6 billion to build the SANY Marine Heavy Industrial Park, a 9,000-acre seaside campus near Zhuhai, China, that will produce port equipment and marine engineering and shipbuilding machinery.

SANY’s investments go well beyond product innovations, according to Xiang Wenbo, president of SANY Heavy Industry. “Management innovation, organizational innovation and technological innovation all drive competitiveness and profitability,” Xiang said.

Hal Gregersen and Jeff Dyer, collaborators on the Forbes innovation list, said at least three things help create and sustain the innovation premium. “How well companies leverage people, process and philosophies (what we call the 3 Ps) differentiates the best in class from the next in class when it comes to keeping innovation alive and delivering an innovation premium year after year,” they wrote in an article accompanying the rankings. In addition to the Forbes rankings, the men have co-authored a book with Clayton Christensen called The Innovator’s DNA.

The Forbes list includes many of the world’s best-known companies, including Apple, Colgate-Palmolive,, Google, Procter & Gamble, Monsanto, Hershey and General Mills. In the construction equipment sector, the list includes Sandvik (#74), Atlas Copco (#84), Zoomlion (#86) and Kubota (#98). In addition to SANY, Chinese companies on the list include Baidu (#5), Tencent Holdings (#11), Kweichow Moutai (#18), Wuliangye Yibin (#20) and China Oilfield Services (#67).

Based in New York City, Forbes is a biweekly magazine devoted to business, finance, economics and investing. Forbes is well known for its lists and rankings, including the World’s Billionaires, Global 2000 Leading Companies, Top Earning CEOs and America’s Top Colleges.