Analyze the unfavorable factors in the development of the machinery industry

Saying goodbye to those tough years in 2012, China's construction machinery industry took a heavy stride to 2013. In the context of macroeconomic stabilization and recovery, urbanization ready to go, real estate bottoming out, and infrastructure construction such as rail transit entering a large-scale construction period, the future of the construction machinery industry seems to be very good. However, “people have no long-term concerns, there must be near-worry.” The following Xiaobian brings you together to discuss potential adverse factors of China's construction machinery in 2013 for readers' reference.

Overcapacity vicious competition There is a problem of overcapacity in China's construction machinery industry. Take loaders and excavators as examples. In the domestic market in 2012, the number of various types of loader manufacturers exceeded 50, and 28 major enterprises controlled more than 90%. In terms of market share, there are about 40 excavator manufacturers, 23 major companies have controlled more than 80% of the market share, and two leading product manufacturers have experienced a serious surplus.

In terms of exports, most small and medium-sized enterprises of construction machinery in China adopt a low-cost, low-price, and low-grade competition model in their exports, which will easily aggravate international trade disputes and make China more and more a target of trade protectionism and anti-dumping risks. .

On the evening of January 9, Sany Heavy Industry issued an announcement on the company's articles of incorporation, in which the column concerning company registration was changed to Sany Industrial Park, No. 8 Beiqing Road, Huilongguan Town, Changping District, Beijing. This means that the relocation of Sany Heavy Industry to Beijing finally came to an end. And this was in tandem with Sanlian and Zhonglian in November 2012. Both sides are closely related to the intense competition in the market and public opinion. The two parties are stigmatizing and attacking each other. The construction machinery industry is facing a crisis of collective confidence.

Accounts receivable surged in capital pressure The overall macroeconomic growth slowed down, and downstream demand was sluggish. In order to increase market share, major domestic machinery manufacturers launched aggressive strategies for increasing installment payments and credit sales. As a result, the current winter in the construction machinery industry is far from passing, and market demand remains weak. In the case of a decrease in revenue and a drop in net profit of construction machinery enterprises, receivables rose but did not drop, and they still maintained significant growth.

Sany Heavy Industry, Zoomlion, Xugong Machinery, Liugong, Shantui, Xiagong and Shanhe are listed companies in the construction machinery industry. The data for the third quarter of 2012 showed that the overall increase in accounts receivable was still strong. The fierce battle is raging, and industry risks are continuously accumulating. As of the first three quarters of 2012, Sany's accounts receivable reached an unprecedented RMB 20.7 billion, making it the largest number of accounts receivable in the industry; China Unicom’s accounts receivable amounted to RMB 19.679 billion. In the 33 A-share construction machinery listed companies, the total receivables amounted to RMB 112.2 billion.

Under the credit sales model, the reduction in the number of downstream projects led to an increase in the overdue rate of user repayment, corporate receivables continued to rise, the pressure on funds of various companies increased significantly, bonds payable and long-term borrowings increased significantly, and financial expenses also rose significantly. This situation will still continue in 2013, and this strategy may lead to a substantial increase in pressure on manufacturers' funds.

Lack of core technology innovation In terms of engineering machinery products, there are not many core technologies with complete independent intellectual property rights in China, and cloned products occupy a large proportion. At present, the speed of new product development and old product renewal for domestic enterprises is accelerating, but they are based on international advanced methods. There are many products that have undergone technology transfer or re-cloning. Although the models have been changed, core technologies and key components have been independently developed. It is easily constrained by international giants.

Although the improvement of processing equipment is relatively fast and obvious, the improvement of experimental conditions for R&D is relatively small and relatively slow; therefore, the processing capability is improving rapidly, and the innovation capability is being improved slowly. For example, new and relatively new production plants are relatively large and relatively modern; however, there is still a large gap between the level of scientific and technical personnel and the quality of workshop employees, and thus the level and quality of products cannot be increased simultaneously.

This has made China's machinery industry's extreme processing and manufacturing capabilities known as “super-large” and “overweight” have been the worst in the world, but the extreme processing capacity known for “super-precision”, “ultra-micro” and “special processing” is still relatively weak. There are even obvious gaps; therefore, the demand for "super-precision," "ultra-micro," and "special processing" as main requirements is often not met.

Trade protectionism is still prevalent In recent years, although domestic construction machinery giants such as Sany, China United, and Xugong have frequently appeared overseas, Chinese brands have become popular, but going global is not easy. Global trade protectionism became popular after the financial crisis, and rising Chinese manufacturing became a target. In 2012, the mergers and acquisitions of Chinese companies represented by Sany Heavy Industry were subjected to various nominal restrictions from the United States.

On September 28, 2012, U.S. President Barack Obama issued an order stating that for the sake of national security, he prevented a Chinese-funded company from acquiring 4 U.S. wind farm project companies, and demanded that he be deprived of his ownership.

In June 2012, the Brazilian government announced that the import tariff on some construction machinery products has been raised from 14% to 35%, and some of China’s export tax-related products have almost stalled in Brazil. In just two months, the Brazilian government is about to increase the import duty on loaders (above 59hp), excavators (90-450hp) and rollers (all models) from 14% to 25%. The reason why the Brazilian government introduced this policy is to strengthen competition between domestic manufacturing and imported machinery products.

It is understood that since the financial crisis occurred, the number of trade remedy measures initiated by developing countries has started to exceed that of developed countries. Trade protectionism has become an important constraint to the development of Chinese construction machinery companies in overseas markets, especially in developing countries.