4 trillion pulling domestic demand for construction machinery industry harvest geometry

The world financial crisis has become increasingly severe. The impact of this crisis on the Chinese economy has become more pronounced. The construction machinery industry is not the earliest industry that was hit by the financial crisis. However, as the upstream and downstream industries are affected, the impact on the construction machinery industry has become apparent.
On November 5, the State Council convened a meeting to study the measures for further expanding domestic demand and promoting stable and rapid economic growth. Six of the ten measures identified by the meeting involve infrastructure construction, and two items will help improve corporate capital flows.
At present, many people in the economic community predict that these policies will benefit the construction machinery industry. However, according to the reporter's contact with the industry and some business leaders, they generally believe that the construction machinery industry benefit from it is inevitable, but the amount of benefit can not be optimistic.
Expanding domestic demand and stimulating industry demand
Of the ten measures identified by the State Council Executive Meeting, the main ones related to infrastructure construction include: accelerating the construction of affordable housing projects, accelerating the construction of rural infrastructure, accelerating the construction of major infrastructure such as railways and highways and airports, and accelerating the reconstruction of earthquake-affected areas; Among the measures to accelerate the development of medical and health care, cultural education, and environmental protection, there are also requirements for the construction of comprehensive cultural sites for schools and townships, as well as the construction of conservation projects for key shelter forests and natural forest resources.
The construction of these projects will require a considerable number of construction machinery products such as lifting machinery, piling machinery, earth and stone machinery, concrete machinery, and road surface machinery. For the construction machinery industry facing the test of the financial crisis, there will undoubtedly be a certain pulling effect.
According to the preliminary calculations, the implementation of the ten measures determined by the executive meeting will require an investment of 4 trillion yuan by the end of 2010. At the same time, in order to speed up the construction progress, in the fourth quarter of this year, the central government will increase investment by 100 billion yuan, and the post-earthquake reconstruction fund will arrange 20 billion yuan in advance to drive local and social investment, with a total scale of 400 billion yuan.
The person in charge of construction machinery companies put forward a not optimistic view that although the implementation of these projects will greatly stimulate domestic demand and have a boycott effect on the financial crisis, the direct counterpart of this fund is the implementation of infrastructure construction projects, not Directly pay engineering machinery companies. Taking into account all aspects of the project, in essence, the proportion of funds used for procurement of construction machinery and equipment in each project is not significant. The impact of this fund on the construction machinery industry will be very limited.
The person in charge of the company also said that for the enterprise, the financial crisis is not fleeting, and all companies must prepare for the “long-term winter”, first of all to ensure that the company survives, and then seek development. Faced with the severe sales situation, we must give full play to the initiative of enterprises and agents, thoroughly study the relevant policies of the country, pay close attention to relevant projects, and start an active marketing strategy. Only by fully grasping the opportunities can we obtain good development opportunities.
Problems with cash flow that are difficult to solve
Due to the financial crisis, the capital flow of some construction machinery manufacturing companies has also been affected. On the one hand, enterprises purchased large quantities of raw materials at high prices at the beginning of the year. At this time, cost pressures began to show up. On the other hand, market demand shrank. Coupled with the increase in labor costs, the situation of “multi-pronged attack” made enterprises inevitably suffer financial difficulties. Obstruction.
Two of the relevant policies will have a positive impact on the company's capital chain. These two are: Implement VAT transformation reform in all regions and all industries in the country, encourage technological transformation of enterprises, reduce the company’s burden of 120 billion yuan, increase financial support for economic growth, and cancel credit limits on commercial banks. We will rationally expand the scale of credit, increase credit support for key projects, “three rural issues”, technological transformation of small and medium-sized enterprises, and mergers and acquisitions, and cultivate and consolidate growth points for consumer credit in a targeted manner.
The introduction of these two policies will improve the capital flow of construction machinery companies and users, and promote the smooth operation of the industrial chain. However, according to some business executives, among the users of construction machinery companies, individual users and small-scale agents have a large share. At present, these users rarely involve VAT. To some extent, the impact of VAT reform on some engineering machinery companies is very limited.
In addition, the bank’s understanding of the financial crisis is not completely consistent with that of the company. For the sake of risk consideration, bank loan strength will shrink. At present, the Central Bank has sent a number of working groups to all parts of the country, urging local banks to issue loans in a timely manner, but the effect cannot yet be assessed. Since many enterprises in our country have weak anti-risk capabilities, whether or not they can obtain bank support at this time is crucial for enterprises to overcome difficulties.
Several pressures will be shared by companies
In order to meet the rapid development of the industry, in recent years, China's construction machinery industry has done a lot of useful attempts.
However, because it was just starting, when the financial crisis swept through, these attempts that were already risky also added some pressure to the company.
First, regarding financial leasing. In recent years, the construction machinery industry has made many attempts to effectively speed up the flow of capital and expand market share, of which financial leasing is the most important measure. However, a problem facing companies engaged in financial leasing is that if a user fails to pay a loan to the bank in a timely manner, the company will bear the responsibility of repurchasing the product. The actual risk of this measure is still borne by the company.
At present, in the construction machinery industry, there is a “2048” model for the development of financial leasing business. This was first proposed by Caterpillar Inc., which means that the company pays 20% down payment first, and users can purchase products. The remaining 80% of the payment will be paid off in 48 months.
Caterpillar's financing model has been under way for a long time, and due to sufficient financial strength and product quality assurance, this model has responded well. However, these businesses have had a relatively short period of time in China's enterprises. However, most of the companies in China still do not have strong financial strength. They also face financial crises. The risk of financial leasing has increased sharply, and the capital flow of enterprises is likely to be seriously affected. .
Second, the introduction of the "Labor Law." Previously, there were indeed many unreasonable places in the enterprise employment system in China, and the interests of enterprise employees were not fully guaranteed. The promulgation of the "Labor Law" at the beginning of this year has enabled the interests of workers to comply with laws and regulations, and allows enterprises to clarify their obligations. Due to the economic crisis, business pressure has become prominent. In this regard, the state should further improve the social security system, which is also considered to help enterprises overcome difficulties through another aspect.

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