By Liu Jin
According to the data released by the China Construction Machinery Association (CCMA), in January 2013, the eight main product production and marketing of construction machinery industry grew by 23.15 percent year on year. However, it cannot be judged as the true overall recovery of the industry, for the primary cause of the growth in production and sales lies in that the data of the same period of last year was not high. As the pulling effect of the policy has been fully spread, the construction machinery industry will continue to grow steadily this year.
From March 2011, downturn of China's construction machinery industry has continued for 24 months. Five listed enterprises of the construction machinery industry disclosed their 2012 annual reports, showing that they obtained the net profits of RMB10.186 billion Yuan in total, down 18.37 percent year-on-year; achieved the operating incomes of RMB98.032 billion Yuan, down 4.29 percent compared with the same period of last year. Data of CCMA shows that the overall sales revenue of 13 major enterprises in China is RMB369.86 billion Yuan in 2012, 3.68 percent lower than that in 2011; profits is decreased by 34.1 percent, equal to RMB22.343 billion Yuan. Meanwhile, the overall profit margin of the construction machinery industry drops to 6.04 percent in 2012 from 8.83 percent in 2011.
From the perspective of the domestic market, massive infrastructure investment a few years ago provided opportunities for the development of the construction machinery industry; however, domestic market demand shrank quickly in 2012. Although new infrastructure projects have been launched at the end of last year by the State, some lag exists in the pulling effects. While according to the international market, exports of construction machinery products are increasingly under the influence of international trade friction.
In the industry downturn, many problems accumulated in the process of rapid development in the past are emerging. Key technologies of construction machinery industry continue to be controlled by foreign enterprises, Chinese enterprises are lack of capital, human and material resources to put into the product research, most construction machinery enterprises are still weak in innovation capacity and lack of independent intellectual property rights. There are greater gaps between the products made in China and foreign products of the same kind in both durability and reliability.
Overcapacity problems of the construction machinery industry have become more serious with remarkable homogeneity. Take crawler excavators for example, the quantity demanded in the current global market is 20,000 at most, but the capacity of domestic enterprises has already surpassed that figure. For the area of Graders, there were only five or six manufacturers a few years ago, and now the number has been increased to 14. Fights between the enterprises have caused disorderly competition in the industry, some enterprises sell in ways of a zero down payment or a low down payment so as to scramble for customers; even they start a price war overseas, which has cast a shadow over the future development of the industry.
It is noteworthy that the State has increased guidance and supports in technical innovation and structural adjustment, and the industry has made achievements in laying foundations, conquering high-end and strengthening management, with a breakthrough in major equipment and key technologies; the State has provided related duty-free policy as well as supports in construction of collaborative platforms and technological transformation projects, which will be conducive to enhancing innovation capabilities of the enterprises; after the adjustment of the previous year, the industry has made progress in destocking; the momentum of fast capacity growth has been suppressed and the enterprises have slowed their capacity expansion, and some enterprises of the industry have reduced the construction plans of 3 phases prepared before into that of 1 phase or 2 phases recently. The industry enterprises are now focusing on technical innovation as well as research and development.
At the same time, the market situation is in gradual improvement, for large-scale infrastructure construction brought about by urbanization and development of strategic emerging industries will directly drive the market demands of the construction machinery. According to the recent data, the signal of the market recovery is becoming stronger, and the link relative ratio of the enterprises' orders is rising significantly.
At present, the construction machinery industry is stressed in the stage of adjustment, but it is indeed not the case of new beginnings to rebound. The enterprises should take advantage of "down times" to focus on speeding up transformation of development mode, strengthen technical innovation, and follow the sustainable development in order to meet the arrival of the market downturn.
