The Chinese construction machinery industry has huge market potential after a sustained downturn

The Chinese construction machinery industry has experienced a continuous downturn in the past five years: severe overcapacity, high accounts receivable, rapid risk accumulation, frequent shutdowns, mergers and acquisitions, and reorganization, becoming the "new normal" of the industry. However, the demand for "aftermarket" services such as maintenance services, parts supply, leasing, and second-hand equipment from users is becoming increasingly strong. In mature markets such as the United States and Japan, the ratio of complete machine sales revenue to aftermarket service revenue is 0.64, while in China, the data is as high as 3.5, far exceeding the level of mature markets. Therefore, "post market construction" is a "good opportunity" with huge development space for Chinese construction machinery enterprises.

The concept of "aftermarket" was first proposed by American car companies, which originally referred to a $8 related service market generated when a $1 car is sold, including car parts supply, car modification, maintenance, boutique beauty, and in car appliances. In short, the aftermarket refers to the various services provided during the use of a product after its sale. The huge development space and "profit stimulation" are the "second" opportunities for the development of construction machinery enterprises.

The intense competition in the industry has led to the homogenization of many construction machinery products. The diminishing advantages at the product level have highlighted the importance of product services. The enterprise is well aware of its intentions and has upgraded its service concept: implementing precise and strong guarantee services, focusing on refining proactive service cycles and projects, improving the proactive service rate within the package, reducing the loss rate and failure rate of the three guarantees, and creating zero distance services; Strengthen the pre-sales service function of R&D, quickly form design solutions for personalized customer needs, and take measures such as personalized customization and differentiation advantages to enhance service timeliness and accuracy, so that customers can truly experience value marketing and service.

Qi Jun, President of the China Construction Machinery Association, said that the aftermarket has enormous potential. In the future of China's construction machinery industry, users will not only focus on "price", but also on "brand" and "quality". Enterprises must establish true user thinking, product thinking, technical thinking, and innovative thinking. Manufacturers must break away from mid to low end competition and price competition, and turn to mid to high end competition. In the transformation and upgrading of China's construction machinery industry, low price competition will not only be ineffective, but also harm participating enterprises and the future development space of the entire industry; Enterprises that hold a speculative mentality and hope to impact sales and market share through price competition must promptly stop selling and cut losses.

How to develop the aftermarket for construction machinery enterprises has become a focus of attention for many companies. In the opinion of the editor, the development of the aftermarket for construction machinery must revolve around five major parts: services (maintenance and repair), accessories, leasing, second-hand phones, and remanufacturing.

In terms of service, construction machinery enterprises should improve service quality and increase repeat purchase rates. With the fierce competition in the industry, many products tend to be homogenized, and the advantages of enterprises at the product level become less obvious, so the importance of services gradually becomes prominent. The technical aspect of the construction machinery industry is particularly strong, and as construction machinery service personnel, it is necessary to have a certain level of technical and operational knowledge. This requires specialized training for enterprises and guidance for relevant personnel, from complex control skills to daily maintenance of products, to solving unexpected problems during construction, and so on.

In terms of accessories, maintenance drives accessory sales. To operate the aftermarket, professional maintenance services and parts sales are indispensable. Enterprises can set up certain maintenance points as needed to provide convenient services for users. However, it must be noted that enterprises must be cautious in their maintenance, service, and parts in the aftermarket. It is recommended to use original parts, as any disputes that cannot be resolved properly can have adverse effects on the enterprise and agents.

In terms of leasing, reduce equipment stagnation and ensure operating rates. The leasing of construction machinery and equipment in China has gradually developed with the establishment of the market economy system and the deepening of reform and opening up. It emerged in the early 1990s and gradually became standardized. According to statistics, rental equipment accounts for 20% to 40% of machinery usage in general construction projects, with some companies reaching over 70%. The development space of the construction machinery leasing market is broad and the prospects are optimistic. By carrying out leasing business in a standardized and regulated direction, construction machinery enterprises will be able to obtain good benefits in this segmented aftermarket.

In terms of second-hand equipment, it is a hot topic of concern for people. As a supplement to the market, second-hand machinery can align the construction machinery and equipment market with the capital market, reduce the investment cost of construction units, shorten the return time, improve the return rate, and fully meet customer needs. In the past two years, the Yiji Auction and Lishi Brothers Auction have been seeking business models that are closer to the market and professional customers through auctions, while providing new development space for second-hand machinery.

In terms of remanufacturing, many enterprises have established specialized remanufacturing business departments to engage in research and development of the remanufacturing industry, and have achieved certain results, but the results are not ideal. At present, remanufactured products are still difficult for the public to accept in China, which requires enterprises to increase investment in the remanufacturing industry, so that more people can understand and accept remanufactured products.

In short, the Chinese construction machinery industry will fully enter the post market era, and the income from post market services will account for a large part of the income of construction machinery enterprises. In the future, with the popularization of the construction machinery industry in people's daily lives, working conditions will become more diverse, and customer needs will also have their own advantages. For example, mines and docks also require loaders, but the requirements are different. Similarly, the requirements for excavators to plant trees and flowers in one's own garden and construction sites are far apart. Customized services for segmented markets are still in their infancy in China, and the future development prospects are promising.