Analysis of Future Market Forecast of China Construction Machinery Industry

Optimistic analysts pointed out that if the growth rate of social fixed asset investment during the 12th Five-Year Plan period can be maintained at 20%, then in 2015, China's market demand for construction machinery will reach 900 billion yuan. The British Construction Machinery Consulting Co., Ltd. expects that the average sales volume of construction machinery in the Chinese market from 2010 to 2014 will reach 393,000 units, which is a significant increase from the 208,900 units in 2005-2009.

However, to achieve this goal, it is necessary to overcome all kinds of embarrassment. The supply capacity of China's construction machinery has been subject to greater challenges. The industry has long attached importance to host assembly, but it has not been able to form an industrial chain for the production and supply of parts and components, and is therefore subject to the core technology. The long-term market for technical ideas may need to be adjusted. Overcapacity and technology "hollow" coexistence is embarrassing. Whether or not the "nine hundred billions" can be realized will become a matter of talks after dinner.

"The 900 billion yuan", the concept of the total size of the construction machinery market in China in 2015, was originally announced by the president of the China Construction Machinery Industry Association, Jun Jun, at the Global Crane Summit held during the Shanghai Baoma Exhibition last year. On May 9th this year, at the announcement ceremony of 2011 “Top 50 Construction Machinery Manufacturers in the World”, Su Zimeng, Secretary General of China Construction Machinery Industry Association, once again stated that China has surpassed North America, Japan and Western Europe to become the world’s largest construction machinery market. In 2011, the sales volume of China's construction machinery industry is expected to exceed 500 billion yuan; in 2015, the industry's sales will reach 900 billion yuan.

The statement of "900 billions" has attracted wide attention and heated discussions from all walks of life.

Optimistic analysts pointed out that if the growth rate of social fixed asset investment during the 12th Five-Year Plan period can be maintained at 20%, then in 2015, China's market demand for construction machinery will reach 900 billion yuan.

The British Construction Machinery Consulting Co., Ltd. expects that the average sales volume of construction machinery in the Chinese market from 2010 to 2014 will reach 393,000 units, which is a significant increase from the 208,900 units in 2005-2009.

Some securities research institutions also believe that during the “12th Five-Year Plan” period, as China transitions to the two types of society, it will change the growth model that was driven by investment in the past, the rapid growth of construction machinery industry will end, and with the adjustment of national monetary policy, The growth rate of the industry may decline significantly. In addition, due to the influence of cost factors and the uncertainty of the international market, the driving effect of exports may be diminishing. However, there is no clear negative opinion on the "900 billion."

In the view of several domestic construction machinery enterprises, the target of “900 billion yuan” is obviously conservative, and even some corporate figures have proposed extreme figures of “two trillion”.

However, it is not surprising to think about it. In the previous paragraph, when the Shanghai stock market was still struggling at 2,800 points, wasn't the "Shanghai stock market" still being thrown out? The fact that the completion of the five-year plan one year ahead of schedule, even two years ahead of schedule, can often occur in experience. Perhaps only time will tell whether these are the talks after the meal or the forward-looking words of the prophet.

"900 billion yuan" is a high-probability event. The construction machinery industry is a fixed asset investment-driven industry. Its development is closely related to the economic cycle of the national economy and is a barometer of economic development. In 2009, the scale of domestic fixed asset investment reached 22.5 trillion yuan, an increase of 5.8 times from 3.2 trillion yuan in 2000. During the period, the market size of the construction machinery industry increased by 5.46 times. Therefore, to predict its future market size, it is necessary to have a clear judgment and grasp of the macro-economic long-term situation, especially the basic trend of financial and monetary policies.

When analyzing the macroeconomic situation of the “Twelfth Five-Year Plan”, the experts of the Construction Machinery Industry Association believe that the financial policies of the country are expected to continue to be active and monetary policy will be mainly stable in the current two years. Therefore, the fixed assets investment of the whole society is expected to grow at an annual rate of about 20%, of which the urban investment will still account for about 85%. The projects including railways, highway traffic, energy, urbanization and real estate are still the main investment directions. one. In addition, the rapid development of strategic emerging industries and the further implementation of the strategy for the development of the western region, the revitalization of the Northeast, the rise of the central region, and the construction of Xinjiang will provide a good market environment for the construction machinery industry. This is also the main basis for proposing "900 billion."

The cautious view is mainly on some investment institutions. Recently, most of the fund company analysts surveyed by companies believe that the second quarter of this year may become a turning point for high growth of the construction machinery sector. Their views are mainly based on the fall in the growth rate of investment in fixed assets and the subsequent impact of the country’s macroeconomic controls will be reflected in the real economy one after another, thus affecting market demand.

According to statistics, in the first two months of 2011, the total planned investment for new projects in China fell by 23.6% year-on-year, and the number of projects for fixed assets investment decreased by more than 15,000. Analysts believe that from the aggregate point of view, there is a possibility that the growth rate of investment in fixed assets will further decline in the second quarter. The recently released industry data shows that in April, the excavator sales volume of the major construction machinery companies fell by a significant 50% compared to the previous month, and the total volume of loaders and bulldozers also fell by 30% and 48.9% respectively. Analysts believe that there is a decline in the month-on-month ratio. In addition to seasonal fluctuations, the shift in macroeconomic policy is the main factor. This seems to provide some basis for the fund company's point of view.



From the author's point of view, the central government's policy of changing the mode of economic development must, to some extent, change the customary practice of simply relying on investment to stimulate economic growth. In the most recent stage, the central bank raised the deposit reserve ratio and raised interest rates several times in a row, in addition to the fact that imported inflation has caused the domestic CPI to rise steadily, and it has also established the tone of a monetary policy for economic restructuring. However, in order to prevent stagflation pressure and maintain a certain growth rate of GDP, fiscal over-tightening is believed to be a small probability. Indeed, in April last year, the state began to regulate the real estate market, and the real estate industry's operating rate has declined. This has had a certain impact on the concrete machinery and earth-moving machinery, which are the main source of demand for the real estate industry. The growth rate has slowed down. In some months, the output has even shown negative growth year-on-year. Some analysts believe that with the passage of time, the demand for real estate control measures caused by the impact of the full increase in affordable housing construction investment offset. How much control policies can continue to inhibit the enthusiasm of developers still deserves further observation. Small cycle, seasonal fluctuations in sales and ups and downs are one of the characteristics of the construction machinery market, and are not sufficient to form a basis for judging the long-term development trend of the industry. In the medium to long term, there is still a considerable gap between the level of urbanization in China and developed countries, and rapid urbanization is an important task at this stage. This determines that the construction machinery industry still has considerable room for growth for quite a long period of time. Based on China's existing infrastructure, large-scale construction of railways, highways, ports, wind power and nuclear power, and airport construction booms are expected to last for at least 10 years. I believe that as a basis for determining the development trend of construction machinery industry, it should be more objective.

In fact, the China Construction Machinery Industry Association has reduced the growth rate of the industry during the 12th Five-Year Plan period. It is estimated that, from 2010 to 2015, the total sales volume of construction machinery will increase by approximately 17% annually. In the past five years, the average annual growth rate of construction machinery industry was 33%. Analysts believe that under the premise that the growth rate of GDP will not fall sharply, the average growth rate of the construction machinery industry in the next few years will be about 20% more reasonable.

Retiring 10,000 times, there are cross-statistical "legacy leftovers" problems between construction machinery and heavy industry. Once the elevators, forklifts or other product categories are classified into statistical terms, then the "900 billion" target is indeed nothing.

Winning the share is the most important fact. Whether it is 900 billion yuan or 2 trillion yuan, for any company, how to occupy the commanding heights of the market, with the system's operational capability, the world’s largest demand and the highest intensity of competition in today’s world In the market, it is important to strive for more shares.

In a completely open context, getting and exiting the Chinese market, the consequences for any company are obvious.

Faced with a market of this size, the current situation is that there is no need to "guess who is going to eat dinner." All the world's strong engineering machinery giants have gathered here. Moreover, both regard this market as the top priority in maintaining its own livelihood and seeking development. The obvious difference in the recovery of different economic regions has made emerging markets the focus of attention.

In Europe, in the second quarter of 2010, the euro zone economy achieved a 1% sequential increase, the fastest in four years. This is mainly due to the economic development of Germany, France and other major economies. However, the huge differences in the economic competitiveness within the euro zone and the different elasticities of the labor market have increased the imbalance of the economies of the member countries in the crisis. The division of the economic recovery in the euro area has made its internal deficit and debt problems worse. This will bring great uncertainties to the long-term economic growth of the euro zone. Therefore, the European engineering machinery market sales also have instability. Obviously, European construction machinery must rely on exports to ease the pressure. The German Machinery and Equipment Manufacturers Association (VDMA) actively encouraged construction machinery and equipment manufacturers to go abroad and implement localization strategies. In particular, they continued to encourage their companies to invest in factories in China.

In the United States, information released by the U.S. Department of Commerce shows that in the first half of 2010, the construction machinery market in the United States began to rebound, and domestic equipment purchases increased. In March of last year, shipments of engineering machinery and equipment in the United States increased by 9% year-on-year; in April, it increased by 3.5%; in May, it increased by 1.3%; in July, it increased by 13.7%. In addition, in the first half of 2010, the amount of U.S. engineering machinery and equipment exported to Asia was 984 million U.S. dollars, a year-on-year increase of 5%. As Dennis Slater, president of the American Equipment Manufacturers Association, said, exports are simply the lifeblood of the US construction machinery industry.

In Japan, it is no exaggeration to say that the Chinese market has played an extremely important role in Japan’s economic recovery. China is currently Japan’s largest trading partner and the largest export target country. In December 2009, Japan’s foreign exports increased by 12.1% compared with the same month of last year, while exports to China increased by 42.8%. In June 2010, the sales volume of Japanese hydraulic excavators was 52.821 billion yen, an increase of 327.6% year-on-year. In the first half of 2010, the sales revenue of the construction machinery market in Japan totaled 81,892 million yen, a year-on-year increase of 50%. Among them, the Japanese domestic market consumed 217.02 billion yen, a year-on-year decrease of 1.5%; the foreign market sales revenue was 601.905 billion yen, an increase of 84.8% year-on-year. . At present, China surpasses Japan and becomes the largest sales market for Japan's Komatsu, accounting for about 19% of Komatsu's market share.

On April 18 this year, Dajing Machinery (Shandong) Co., Ltd., Komatsu (Shandong) Cast Steel Co., Ltd., and Xinghe (Shandong) Machinery Co., Ltd. were put into production in the Jining Hi-tech Zone. These three companies mainly supply key components for excavator OEMs, and all of them can achieve an annual sales income of over 4 billion yuan. As Japan's domestic demand continues to be weak (related effects of the Japanese earthquake still need to be observed), combined with the yen's strength on the export-oriented economy, a serious drag on the Japanese economy's recovery. In this context, can we draw the conclusion that the output of Japanese engineering machinery has accelerated the outcome of a new round of transfer output rhythm?

In fact, Caterpillar, Komatsu, Terex, Volvo, Hitachi and other international first-line construction machinery companies have all stepped up efforts to invest in China. For domestic companies, especially those leading companies in the industry, in the period when the market is still rising, real transformation and enhanced core competitiveness should be the best opportunities.

If there is sufficiently strong international competitiveness, then in the future, Chinese companies may start a total of US$2 trillion worth of highway reconstruction projects in the future. In the future, Latin American markets, especially Brazil, will host the 2014 World Cup and 2016. The nearly 100 billion euros market demand that the Olympic Games will produce is worthy of recognition. It should be something worth looking forward to.