Be alert to the debt crisis in the construction machinery industry

Since the beginning of China’s accession to the WTO, construction machinery has caught up with the period of strategic development opportunities, and market conditions have soared. Even in the face of the financial turmoil, the “four trillion investment” injected by the government has topped off and made the “high-speed railway”. "With the construction of the "Subway", the construction of "nuclear power" is on the rise, the construction of "wind power" is close to epilepsy, the "real estate" is rising rapidly, and the foreign trade is also extremely fascinating. This makes the construction machinery "excited" almost out of the nose. "Winemaking "," "shipbuilding", "to be a car" ... ... and so on seems to find a new investment paradise, have a high-profile intervention, grab digging of construction machinery this "gold". In addition, the backbone enterprises of construction machinery continue to push up sales targets and expand production capacity. As a result, the production capacity of the main types of construction machinery continues to gather, leading to increasingly fierce and cruel market competition.

When the “Twelfth Five-Year Plan” arrived quietly, the financial statements of the first quarter (2011) of each company's opening year were still quite beautiful due to the inertial influence of rising market demand. However, the good times didn’t last long, and they fell significantly after entering the second quarter. The signs, especially the construction of high-speed railways that were highly hoped by the construction machinery manufacturers, followed the catastrophic epidemic of a car chasing after a thunderstorm in Wenzhou. The investment in fixed-asset assets in other fields also shrank in varying degrees, making the year 2011 The market trend of the construction machinery industry “before high and low” has become an indisputable fact. Although the government has started construction of affordable housing, it is also a waste of money for construction machinery. After entering the winter, the construction machinery market in the first quarter of 2012 followed the “winter”, and it was quite cold. Even the GDP also broke eight, and the economic downward pressure increased. Of course, the main reason for this fact is still The country's investment credits converged and tightened.

Under such circumstances, in order to release production capacity in the market and seize market share, some companies raised the banner of “low down payment” and “zero down payment” on the sales model. In the past, sales of domestic construction machinery were mainly finance leases and bank mortgages. Customers only needed to pay 20% to 30% of the down payment to withdraw equipment. In the past two years, many companies have won customers for fierce competition. Compete with zero down payment or down payment. As a result, construction machinery companies not only fell into the vicious circle of price wars, but also had serious problems with sales receipts when downstream companies tightened their funds and were unable to pay the balance.

Affected by this kind of situation, the accounts receivables of most Chinese construction machinery companies have been operating at high levels in the past two years, which has caused the cash flow to be stretched. This has led to a debt relationship between the upstream and downstream industrial chains of construction machinery: As the project owner works If the funds are not in place, the construction unit will default on the equipment cost of the main engine plant, the equipment rent of the leasing company (or self-employed), and the purchase price of construction materials. At the same time, the leasing company or the self-employed who rents the equipment cannot collect the equipment rent on time, and will not be able to repay the bank mortgage as scheduled. Credits are paid in installments or paid in time to the OEM, and the OEM’s equipment purchases are not smooth. As a result, the supplier’s (mainly domestic enterprises) and outsourcing factory’s payment and processing fees are arrears, and they are derived from the industry chain. Diversified debt chains, if not controlled, will inevitably upgrade to the industry's debt crisis.

Normal credit sales can be risky, not to mention the “over-marketing” behavior of low down payment and zero down payment, especially for some blind investors. Therefore, in the absence of a significant turnaround in the market, both supply and demand of construction machinery must maintain sensible buying and selling behavior to ensure that the credit sales risk is controllable, and the vigilance of the debt crisis is further expanded, which in turn affects the healthy development of the entire industry.