The bottleneck in the development of the construction machinery industry urgently needs to be overcome

According to new statistics from the China Construction Machinery Industry Association, the construction machinery industry faced even more severe challenges last year after experiencing a decline in market sales in previous years. The industry encountered more difficulties in product sales, enterprise efficiency, and capital turnover than in previous years. According to statistics compiled by the association, after deducting incomparable factors, duplicate data submission, and non construction machinery industry operating income, the entire industry achieved operating income of 457 billion yuan last year, a decrease of 11.7% from 2014.

Currently, despite positive changes in industry statistics, the downward pressure on the construction machinery industry has not been relieved, and the industry still faces many challenges in its development. Su Zimeng, Executive Vice President and Secretary General of the China Construction Machinery Industry Association, pointed out that breaking through difficulties requires a combination of international demand management and supply side structural reform, accelerating transformation and upgrading, and consolidating the foundation for development.

The downward pressure does not decrease

According to industry statistics from the Secretariat of the Excavation Machinery Branch of the China Construction Machinery Industry Association, in the first half of 2016, the 27 host manufacturing enterprises included in the statistics sold a total of 33669 units of various types of excavation machinery products in the domestic market (excluding Hong Kong and Macao), a decrease of 4.8% compared to the same period last year. The excavator industry has been operating steadily in the first half of this year. According to the prediction model of the Mining Machinery Branch, taking into account the current economic situation and market research visits, it is predicted that the sales volume of domestic mining machinery products for the whole year of this year will be 51000 units (excluding exports), a decrease of 2.3% compared to last year.

This year, the overall development situation of the construction machinery industry remains severe. Su Zimeng stated that currently, the world economy is in a period of deep adjustment, and the recovery of the world economy is still difficult and tortuous. The unfavorable factors that constrain the stabilization and recovery of the Chinese economy still exist. The situation of insufficient effective demand, overcapacity, and declining enterprise efficiency in the construction machinery industry has not fundamentally changed, and the deep adjustment of the industry will continue.

He also admitted that the downward pressure on the industry has not yet been relieved, and the positive changes in the first quarter data are mainly based on the product upgrade benefits brought by the upgrade of emission standards. However, many uncertain factors have led to a sustained slowdown in demand for the international construction machinery market, and the declining profitability of some enterprises, especially large and medium-sized enterprises, has not changed. The industry's structural adjustment and supply side structural reform have far from meeting expectations.

After the 4 trillion stimulus, the mining machinery industry is facing severe challenges such as cold demand, intensified competition, and rising costs. Data shows that the sales volume of excavators in China in 2015 decreased by 70.9% compared to the historical high of 2011. The construction machinery industry is closely related to infrastructure and real estate, but since the end of last year, the booming first and second tier real estate transactions and the continuous increase in infrastructure investment have lost their pulling force on the machinery giants. If we observe the production and sales situation of the construction machinery industry over a longer period of time, it can be clearly seen that after experiencing strong stimulus and rapid growth, the entire industry has become numb to the stimulus in the past few years.

Today, China's excavator industry is in a period of downturn and adjustment, but with the implementation of the "the Belt and Road" policy, the trend of government infrastructure and public finance, as well as export activities, China's economy may have begun to bottom out.

Opportunities still exist

From the perspective of the domestic market, the "Three Year Action Plan for Major Construction Projects of Transportation Infrastructure" clearly states that from 2016 to 2018, the focus will be on promoting the construction of major national transportation infrastructure projects. Investment opportunities for railway, highway, airport, urban rail transit and other projects with a total investment of about 4.7 trillion yuan will continue to emerge.

From the perspective of the international market, along with the continuous promotion of the "the Belt and Road" initiative, based on the fact that the original infrastructure of 65 countries along the Silk Road is relatively weak, relying on the economic corridor, taking transportation infrastructure construction as a breakthrough, with the cooperation and support of the Asian Infrastructure Investment Bank, the the Silk Road Fund and other relevant funds, the countries along the Silk Road will set off a round of infrastructure construction boom. According to the Asian Development Bank, the annual infrastructure investment demand in the Asian region will reach 730 billion US dollars before 2020. The implementation of the above-mentioned major strategies and projects will undoubtedly drive the development of the construction machinery industry closely related to infrastructure construction.

In terms of domestic investment landing, according to statistics, from January to June this year, China's infrastructure investment (excluding electricity, heat, gas, and water production and supply industries) was 4908.5 billion yuan, a year-on-year increase of 20.9%, with a growth rate 0.9 percentage points faster than from January to May, and the investment growth rate continued to increase. In the first half of the year, infrastructure investment plans were intensively introduced, and investment benefits were frequent. For construction machinery, while waiting for favorable news to come, construction machinery enterprises are actively transforming, adjusting their models to promote upgrading, in order to gain development and survival space in the subsequent infrastructure boom.

In terms of railways, during the 13th Five Year Plan period, we will accelerate the construction of major projects such as central and western trunk railways, high-speed railways, intercity railways, and domestic sections of surrounding interconnected railways. In the next five years, we will add 30000 kilometers of railways, including 11000 kilometers of high-speed railways. It is expected that by the end of the 13th Five Year Plan period, the total operating mileage of railways in China will reach 150000 kilometers.

In terms of highways, during the 13th Five Year Plan period, the focus will be on implementing the expressway networking and smooth construction project, the upgrading and renovation project of national and provincial trunk lines, and the rural road smooth and safe construction project. In the next five years, 430000 kilometers of new highways will be added, and 30000 kilometers of newly built and renovated expressways will be opened to traffic. It is expected that by the end of the 13th Five Year Plan period, the total length of highways in China will exceed 5 million kilometers, of which the total length of expressways will reach 150000 kilometers.

In terms of water transportation, during the 13th Five Year Plan period, we will accelerate the construction of a maritime power, create a golden waterway for the Yangtze River, and promote the transformation and upgrading of ports. 500 new deepwater berths will be added to coastal ports in the next 5 years, and it is expected to reach 2610 by 2020. Over the course of 5 years, 4500 kilometers of new and improved waterways have been added, and the planned 19000 kilometers of high-grade inland waterways have been basically completed.

In terms of civil aviation, during the 13th Five Year Plan period, we will further improve the airport layout system, expand coverage, optimize network structure, and build a national comprehensive airport system. More than 50 new airports will be added in 5 years, and it is expected that the total number of civil transport airports in China will exceed 260 by 2020. The future of the domestic construction machinery industry market is still full of opportunities.

Faced with market changes, leading enterprises in various industries that have traditionally been known for their manufacturing capabilities are actively introducing intelligent concepts and opening up new markets. Intelligent manufacturing is becoming a new direction for the development of a group of Chinese manufacturing enterprises. It is reported that by 2020, the level of intelligence in key areas of the manufacturing industry will significantly improve, with a 30% reduction in operating costs for pilot demonstration projects, a 30% reduction in product production cycles, and a 30% reduction in defect rates. By 2025, key areas of the manufacturing industry will fully achieve intelligence, with a 50% reduction in operating costs for pilot demonstration projects, a 50% reduction in product production cycles, and a 50% reduction in defect rates.

The aftermarket should receive sufficient attention

With the significant increase in sales and ownership of construction machinery in China, it is imperative to find a sustainable production and consumption model to promote energy conservation and emission reduction in the construction machinery industry; Under the influence of the "the Belt and Road" and other policies, the export volume of China's construction machinery products has grown at a high speed. Foreign businessmen have put forward clear requirements for the remanufacturing of construction machinery products sold in China. Multiple demands have forced the remanufacturing of construction machinery to become a key market opportunity for all parties to examine. Experts have pointed out that the construction machinery industry has entered the era of service competition, and the quality of service is crucial to the survival of enterprises. Some well-known construction machinery enterprises in foreign countries such as Germany, Belgium, Japan, and the United States all have a strong and complete industrial chain, and have built good profit models in marketing, service, and after-sales, forming sustainable development advantages, which are worth learning from

However, in the current domestic situation, the aftermarket for construction machinery has not received sufficient attention from enterprises. Therefore, facing fierce competition in foreign markets and limited domestic market capacity, shifting to the after-sales service market is a good strategy.

This requires numerous brands in the domestic aftermarket to self regulate and strengthen their management under the leadership of industry associations, change the previous spontaneous and loose state of the market, and achieve standardization and stability in network construction. At the same time, it is necessary to improve the post market service system, enhance the technical level of after-sales service personnel, accelerate timely response, and strengthen competitiveness.

With the hot auction of second-hand mobile phones in various regions, the second-hand mobile phone market has gradually begun to develop and has huge profits. Standardizing the order of the second-hand mobile phone market will provide good raw material support for downstream remanufacturing industries, solve the embarrassing situation of the construction machinery remanufacturing industry running out of rice, and further promote the green development of construction machinery.

In addition, Chinese construction machinery enterprises have also increased their technological innovation efforts, focused on market demand, established energy-saving and environmental protection concepts, promoted green manufacturing, achieved transformation and upgrading, and produced new products that meet the market demand and development trends of the new era, striving to occupy the market high ground in technology, quality, and functionality.