China - MachineryChina - Machinery
China’s machinery industry is one of the leading pillars of the country’s economy. Its main business revenue increased about 6.05% in 2018, reaching $3.18 trillion in value. China’s manufacturing industry recovered in 2018 with greater than expected trade exports, indicating a stable development of the world’s second-largest economy. According to the data from China Customs, exports accounted for $429 billion and imports were approximately $202 billion from January to October in 2018, an increase of 12.1% and 19.1% respectively from 2017.
However, problems such as rising costs and decreasing demand still exist, putting pressure on the Chinese government to ensure the industry’s stability. In the next few years, the Chinese government aims to control capital outflow to foreign industries such as real estate, sports, and entertainment while focusing on overseas investment for high tech manufacturing technology industries.
The low-end machinery market is dominated by SMEs, mainly due to their cost-cutting structures, price-based competition, and ability to crowd out larger enterprises to some extent. Chinese machinery SMEs is mainly clustered in and around Shanghai, Shandong Province, Jiangsu Province, and Zhejiang Province. The high-end machinery market is largely composed of state-owned enterprises and international market players. These companies can differentiate their products beyond the reach and capabilities of local, smaller competitors and therefore possess significant intellectual property assets in terms of patents, licenses, and trademarks while leveraging their globally recognized brands. According to data from the China Die Mold Industry Association, there were 2,023 enterprises in the machine tools industry in China in 2013. 959 belonged to State owned enterprises, accounting for 47.4% of the industry and employing over 500,000 people.
China’s economic restructuring includes focusing on the development of advanced manufacturing and high-tech industries. Given this focus, sub-sectors that offer the most promising business opportunities are CNC machine tools, robotics, 3D printing equipment, and energy-efficient and environment protection equipment.
The majority of domestic machine tool companies have upgraded their product structure and used more innovative technology. The import market is still focusing on high-precision, intelligent high-end Computer Numerical Control (CNC) machine tool and accessories.
As the world’s largest machine tool market, the main business revenue of machine tools reached about $106 billion in 2018, with a year-on-year growth of 8.3% from the previous year. According to data from China Customs, imports valued $16.5 billion, up 8.5%, and exports valued $13.6 billion, up 16.8% from 2017. More than half of all high-end CNC machine tools and accessories were imported from Japan and Germany; fewer than 20 Chinese companies can provide medium and high-end CNC machine tools. Local industry experts expect that the demand for metal cutting, forming machine tools, and accessories will face challenges of continued growth in 2019.
According to the Robotics Industry Development Plan for 2016-2020, the Chinese government pledges to support the expansion of the nation’s industrial robotics industry, which aims to produce 500,000 China-made industrial robots annually by 2020. The plan also forecasts that sales of service robots will exceed about $4 billion by 2020.
As the world’s largest consumer market for industrial robots, China produced 148,000 units in 2018, an increase of 4.6% from 2017. The low and medium end Chinese-made industry robotics faced fierce competition, while foreign companies dominated the high-end market. Imports totaled 71,800 units and exports reached 46,800 units in 2018, a drop of 12% and an increase of 28% respectively from 2017. According to the International Federation of Robotics (IFR), 73% all robotic equipment produced went to China, Korea, Japan, the United States, and Germany. The average growth of China's robot market over the past five years period stood at 17% per year with a predicted continued growth.
Die & Mold
China’s die and mold industry is in a critical period of improving its equality and efficiency. Along with Germany, Japan, and South Korea, the United States was one of the major markets for Chinese importers. According to data from China Customs, two-way trade was $8.2 billion in 2018,with imports totaling $2.1 billion and exports totaling $6.1 billion, an increase of 9.06% and 4.3% respectively from 2017. Data also showed that exports mainly originated from Guangdong, Jiangsu, Zhejiang, and Shanghai, accounting for 83% of exports and totaled around $5 billion. Jiangsu, Guangdong, Shanghai, Jilin, and Zhejiang accounted for 68% of imports of about $1.4 billion. Based on data from the China Die and Mold Industry Association, sales were over $26.8 billion in 2016 and are expected to reach $32.6 billion by 2020.
Opportunities for U.S. Firms
Made in China 2025 is a Chinese government initiative to upgrade China’s machinery industry to be capable of manufacturing major machine goods with their own innovation and intellectual property rights, as well as meeting the country’s needs in the energy, transportation, new material and agriculture equipment sectors.
Another top priority is to adopt high-tech intensive manufacturing by making best use of foreign capital, management expertise, and advanced technology.
As China strives to improve the country’s manufacturing industry, U.S. firms, known for being innovative and producing high quality products, will be offered an unprecedented opportunity to export their high quality and endurable industrial products and components/parts to Chinese manufacturers in different sectors: die and mold, robotics, and CNC machinery sectors in particular. However, U.S. exporters will face challenges in pricing and protecting their intellectual property rights.
Market Entry & Obstacles
Entering the Chinese market often relies heavily upon personal relationships developed and maintained at all levels of distribution. Many companies utilize multiple sales channels to overcome the size and cultural diversity of the country. Chinese companies are very price-conscious, which can affect after-sales service. Labor costs have continued to increase in recent years. While the cost of maintaining service, plans is often factored into machinery sales, it is important for exporters to consider this as they determine pricing. Some regions and municipalities may have requirements to provide localized after-sales service, which would require on-site training or local manufacturer representatives be present.
In addition, a license must be obtained from the U.S. Department of Commerce before exporting or re-exporting certain items to China.
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) is responsible for implementing and enforcing the Export Administration Regulations that regulate the export and re-export of purely commercial items, items that have both commercial and military applications, and less sensitive military items.
Intellectual Property Rights (IPR): China, presents unique market entry challenges related to the protection and enforcement of intellectual property rights.
Association of Manufacturing Technology (AMT) China: https://www.amtchina.org/en/index.asp
China Machinery Industry Federation (CMIF): http://cmif.mei.net.cn/
China General Machinery Industry Association (CGMA): http://www.cgmia.org.cn/
China Heavy Machinery Industry Association (CHMIA): http://www.chmia.org/
China Machine Tool & Tool Builders’ Association: http://www.cmtba.org.cn/
China International Industry Fair
Sep 17-21, 2019
National Exhibition and Convention Center (Shanghai): www.ciif-expo.com
China International Machine Tool & Tools Exhibition
June 8-12, 2020
New China International Exhibition Center (Beijing): www.cimes.net.cn
China International Machine Tool Show
April 15-20, 2021
New China International Exhibition Center (Beijing): www.cimtshow.com
U.S. Commercial Service Contact for Machinery Sector
U.S. Embassy in Beijing
Zheng Xu, Commercial Specialist
(86 10) 8531-3000
U.S. Consulate in Chengdu
Li Fan, Commercial Specialist
(86 28) 8558 3992
U.S. Consulate in Shanghai
Ken Shen, Commercial Specialist
(86 21) 6279-7630
U.S. Consulate in Shenyang
Yang Liu, Commercial Specialist
(86 24) 2322 1198
U.S. Consulate in Guangzhou
Linda Lu, Commercial Specialist
(86 20) 3814-5718
U.S. Consulate in Wuhan
Catherine Le, Commercial Specialist
(86 27) 8555 7791
China Equipment and Machinery Trade Development and Promotion