Mr Su reported that the Chinese domestic construction machinery market has declined substantially, and is still declining: The slide in domestic demand has been continuous, and inventory is still high, although lower than it has been. There are signs of stabilisation, and there are still challenges ahead, but CCMA believes the situation also presents opportunities.
Equipment types worst affected by the fall in demand have been rollers, pavers, truck cranes, and excavators, all of which are showing year-on-year sales off by between 37% and 41%. Least affected have been sales of industrial vehicles, down by just over 7%. Against this backdrop, exports have risen by 27% on 2011, and are now three times imports by value.
It is clear that the Chinese industry is going through a very important transformation: Mr Su described the construction machinery manufacturing business as a ‘Sunrise Industry’, characterised by high technology, a high level of required investment, and therefore difficult to break in to. The current situation is seen as providing the industry with an opportunity to transform itself by innovative internal developments that will make it better suited to compete in international markets.
He went on to say that the Chinese manufacturers were increasing their efforts to generate exports by establishing overseas marketing and service networks, and also by looking for ways to speed up mergers and acquisitions. These initiatives are being led by the top enterprises, and that these ‘high-grade, high-precision, and advanced companies had withstood this market test’. In this case, size and strength had proved themselves to be virtues.
At the same time as the leading Chinese companies have been ramping up their investment to meet the needs of increasing exports, so foreign companies have also been increasing their investment in China, to the overall benefit the economy. The production of high-end componentry is also progressing well.
CCMA’s view is that the current rebalancing and adjustment is good for the long-term health of the Chinese construction equipment industry, which currently exports a much lower percentage of its production than do other major industrialised nations. It sees the drive to increase exports as a ‘must choice’.
It is predicting that 2013 will be a year of recovery, despite the fact that the rate of productivity growth has slowed. Stock levels have also reduced substantially. In the meantime, the bigger enterprises have made significant progress in transforming their operations.
