China's construction machinery industry has a long way to go

Earlier this year, the Excavator Branch of the China Construction Machinery Industry Association issued a warning letter on the inappropriate competition in the Chinese excavation machinery industry market. The letter states: "Some leading manufacturers have adopted price reductions, extended warranty periods, and low down payments. The sales policy has a tendency of excessive competition, which has severely disturbed the market order, increased the overall business risks of the industry, and affected the stable, rational and orderly development of the Chinese mining machinery industry.” Although this is only a warning letter issued by the excavator branch, For the entire domestic construction machinery market, it is very representative. This reflects from one side the fierce competition and disorder in the entire industry.

According to authoritative statistics, from January to June this year, 29 excavator manufacturers on the Chinese construction machinery market sold a total of 58,056 crawler excavators and 840 wheeled excavators. Among them, 43,214 hydraulic excavators were sold, which represented a decrease of 12.3% compared with the same period of 2013; 14,842 units of mini excavators were sold, a decrease of 3.6% compared with the same period of 2013, and the decrease was smaller. Analysts believe that the domestic brand's market share in the hydraulic excavator has decreased, from 41.1% in 2013 to 38.6%, while the foreign brand market share has increased from 58.9% in the same period in 2013 to 61.4%; mini excavator The market share of foreign brands is 56.7%, and that of domestic brands is 43.2%, which is basically unchanged from the same period of last year.

In May of this year, the sales volume of the loader was 15,348 units, an increase of 4 percentage points from the 15% decline in April, reaching a year-on-year decrease of 19%. Sales from January to May were 78,034 units, down 6% year-on-year, the lowest level since February 2013.

The newly released data on loaders and bulldozers in June added even more pressure to the industry. The sales volume of loaders in June was 14,553 units, down 14% year-on-year, down 19% year-on-year in May and down 8% year-on-year in the first half of the year. Goldman Sachs forecast for the full year of 2014 to decline by 18%. Bulldozer sales decreased by 31% year-on-year in June, down 25% year-on-year in May, year-on-year sales fell 12% year-on-year, and Goldman Sachs forecast for the full year 2014 to decline by 14%.

Affected by the downturn in the market, some companies have adopted irrational sales and marketing methods in order to survive. This has brought more shocks to the market and has caused the industry to stabilize and pick up more resistance.

It is understood that at present, some companies continue to decline last year's income, rising costs, receivables increase, capital turnover difficulties, profit decline. Some of the major companies are not suited to the state of operation and scale, and all costs are high. Together with the current increase in costs, the company's operating costs and operating income are falling out of sync.

The growth rate of accounts receivable of enterprises has remained high and is still increasing, indicating that the end-user operating conditions of construction machinery may not be improved, resulting in the failure of some agents to make payment collection. The continuous increase in export pressure of the construction machinery industry also requires the government and the company to work together to promote the brand and service.