Concrete machinery industry is difficult to suppress the expansion of impulse, excess capacity left sequelae

This season was originally the most heated day for construction sites. But today, real estate developers are reluctant to start construction, and manufacturing companies have no intention of creating new factories. The news of restarting railways and nuclear power construction is also difficult to achieve.

In July, the country’s statistics for the use of crane cranes was 75%. From April to June, this figure is 83.3%, 77% and 79%.

In addition to cranes, there are concrete mixers, loaders, and excavators. The huge construction machinery industry in China is focused on construction sites: Originally, people estimated that their output value will reach 500 billion yuan in 2012, but in July, China’s Sales of paver, roller, excavator and bulldozer decreased by 36% to 47% year-on-year.

Even the "Wall Street Journal" also published an article devoted to "China's construction equipment manufacturers' life and death bet." It quoted Liang Linhe, vice president of Sany Heavy Industry, saying: Concrete equipment is competing to the final madness.

Changes in the economic situation at home and abroad are one of the reasons why China Construction Machinery has ended its “golden decade” since April 2011 and has seen a major reversal. For the industry, the crisis seems to be predictable. For example, Zhan Chunxin, another chairman of Zoomlion, the giant of the engineering machinery industry, predicted in 2009 that the overcapacity is coming.

He told Oriental Outlook Weekly that even if China's economic growth rate reaches around 8%, the overcapacity of construction machinery will still be serious.

In the past 10 years, the average annual growth rate of construction machinery industry was above 30%. This is only the corner of China's huge equipment manufacturing industry and even its overall economy. Since the Chinese economy entered the fast lane in the 1990s, especially in the last four years, many companies have been expanding production at high speed.

In order to ensure market share, companies still have to maintain high production capacity in the face of tightening demand. What seems to solve these "super-industry" dilemmas now seems to be only higher-level policy initiatives. The development path of China's manufacturing industry has also reached a moment of profound thinking.

Dilation impulse

Taking the concrete machinery industry as an example, the Chinese construction machinery cake has grown since the end of 2008. Shantui shares, which used to be bulldozers, and Liugong Group, which used to be an excavator, have all made great strides in the concrete field. XCMG and others strengthened it. Full business layout.

“The difficult situation today has a lot to do with the capacity expansion in recent years.” Long Guojian, director of the National Concrete Machinery Standardization Committee, told this correspondent that concrete machinery is not alone. The annual increase in demand for global excavators is less than 400,000, and China's current capacity under construction has reached this figure.

A deputy chief of the Liugong Group once complained at the industry conference: “Some companies originally engaged in real estate or other industries and felt that the excavator’s investment returns are good. Digging people, buying drawings, expropriating land, and building a factory can be a good idea. An excavator brand."

Entrepreneurial impulses come from predictable building peaks. Of the 4 trillion yuan investment policy announced at the end of 2008, 45% was used for infrastructure construction. According to the statistics of the Ministry of Transport and the Ministry of Railways, in the first nine months of 2009, only one trillion yuan was invested in infrastructure construction for highways and railways.

Even international companies have expressed concern about the capacity of emerging market countries. At the end of 2011, the global president of Doosan Infracore, the leading global excavator market, stated that the overcapacity in China's construction machinery has put great pressure on Doosan. “The Chinese market should pay more attention to integration rather than expansion.”

Since the second half of 2011, there have been fewer and fewer sites in China, and competition for construction machinery companies has become increasingly fierce. For example, the down payment ratio began to decline.

According to the data from the China Construction Machinery Industry Association, in the first half of 2012, the operating income of key contact enterprise groups fell by 3.36% year-on-year, and profit decreased by 19.85%.

On the other hand, financial expenses and interest expenses rose sharply: an increase of 126.47% and 147.62% year-on-year. At the same time, inventory increased 12.19% year-on-year.

The Wall Street Journal said that companies all over China are now dealing with the problem of high inventory, coal and iron ore are piled up in various ports in China, electronic products retailers are plunged into a price war for customers, and photovoltaic companies are Supply exceeds demand, prices are depressed and they struggle.

Sequelae effect

Although some regulatory measures have been introduced, Lu Ying, director of the Statistical Information Department of the China Construction Machinery Industry Association, believes that it cannot be too optimistic about the second half of the year.

He analyzed the publication that the regulation may only stabilize the economic growth rate in the second half of the year from 7.5% to 8%, and it is difficult to quickly promote the economic growth rebound. "We also don't want large-scale stimulatory control, because it will bring some sequelae."

The current situation is that the construction machinery products have large inventories, including social stocks and corporate stocks. “There are still a large number of sold equipment that are idle, and these factors will offset some of the demands brought about by the new economic adjustment measures”.

Lu Ying said that because of the rapid expansion, many companies cannot even keep up with training for talents. "Companies need to have a period of time to digest."

According to the semi-annual report just released, Zoomlion has achieved positive growth in profits among the industry's best seven companies. In the best two companies, Zoomlion is relatively balanced, with an increase of 19.78% in domestic territory and an increase of 27.31% in overseas sales. Sany Heavy Industry’s foreign sales increased by 176.71% year-on-year, while its domestic revenue dropped by 3.89%.

Customs statistics show that in the first six months of 2012, China’s construction machinery exports increased by 35.94% year-on-year, and export prices increased by 15.6% year-on-year. With the rapid growth of overseas markets, Zoomlion also achieved good returns. “From the perspective of our export situation, we have high-end products that are relatively strong,” said Chen Xiaofei, vice president of Zoomlion and general manager of Concrete Machinery.

He told the reporter that after Zoomlion acquired CIFA Italy, the world’s third-largest concrete machinery company, the 80-meter carbon fiber boom pump truck independently developed with the latest European technology is currently the world’s most workable and marketable state. Long boom pump truck.

“Before this kind of technology has been monopolized by foreign companies. Leading domestic companies have also tried and failed. This has finally come true,” he said.

“The technical bottleneck in the past was gradually broken down by leading companies.” When talking about export issues, Lu Ying said that Zoomlion and other companies have carried out many large overseas mergers and acquisitions in recent years. “Using technology to defeat foreign companies, exports Naturally there are advantages."

Business question

"China's construction machinery companies must go out, this is the industry's overall trend." Zhan Chunxin said, "With excess capacity, only 'going out' can break through the bottleneck and complete the international transformation under the premise of effectively integrating global resources. He said that with the help of technological advantages, Zoomlion plans to increase the proportion of its overseas business from less than 10% to 30% in 2015.

However, when the report of the China Construction Machinery Industry Association talked about the challenges of the industry, the first thing that was mentioned was the lack of innovation ability and homogenization of the enterprises. The outstanding performance was that their respective companies did not develop products that the company did not: loader manufacturers developed excavators. Instead of innovating on the basis of existing products, excavator manufacturers develop roller.

At the time when construction sites were thriving, concrete machinery had seen this happen: The actual output of many mixing plants was less than 50% of the designed output. Despite the low production rate, the industry's low threshold for access and development prospects continues to attract investors.

Since the end of 2008, in addition to the expansion of downstream industries, equipment manufacturing industry has also been included in the top ten industry revitalization plans. Long Guojian said that at that time, he hoped that the industry associations and the competent departments would take the lead in R&D, provide financial support, and solve some high-end accessory parts.

At present, approximately 70% of China's construction machinery companies' profits are "eaten" by imported components. For example, the hydraulic parts used by excavators over 20 tons have been mastered by a company in Kawasaki, Japan.

The domestic component manufacturers are mainly small and medium-sized enterprises, and lack enterprise groups with independent intellectual property rights, prominent main businesses, and strong core competitiveness.

As the former Vice Chairman of the Hunan Provincial People's Political Consultative Conference, Long Guojian has been proposing to resolve corporate innovation issues at the two National Conferences. In particular, after the transition from the planned economic system to the market economy, “the most important thing is to use the enterprise as the main body of technological innovation. But to make the enterprise become the main body of technological innovation, I think there is still a long way to go and there are still There are many problems."

In fact, since China’s first reform of the scientific research system in 1985, it has been a difficult problem for the technicians to successfully enter the company from the institute. “Domestic companies are unable to retain technical staff and technical staff prefer to go to foreign companies because of low pay. Institutions and institutions such as graduates or civil servants are selected, "said Long Guojian.

How to create a better environment, promote enterprise innovation, and change the status of scientific research institutes into enterprises requires a higher level of impetus.