Market report China: The development of the tool industry
China - Since the sales scale of tool enterprises in China reached the peak in 2011, the changes of the sales situations are quite huge. The development has been complicated and changeable, and the uncertainties has increased.
The data from the monthly small sample statistical bulletin of the branch shows that the average sales revenue in January – April reduced by 12% compared with the same period last year. The large sample data of the first quarter shows that it has reduced by 9%. It has not bottomed-out and the situation is still very severe.
The sales information feedback by the tool enterprises shows that since the fourth quarter of 2014 the pressure on overcapacity in production accumulated by the manufacturing industry had increased rapidly, and the effect of measures for steady growth taken by the government – previous incentives – reduced rapidly. For 2015, the situation worsened and the sales situation of tools deteriorated significantly.
The number of enterprises that achieved growth of sales (based on member enterprises) has been reduced to less than 1/3 compared with more than 2/3 in 2014 (according to quarterly statistical data of the branch). The overall consumption scale of the tool market reduced by 9.6% to 31.2 billion Yuan (RMB, the same as below), including the market share of tools in China with 19.6 billion Yuan, that has reduced by 11.3% on a year-to-year comparison. The imported tools of 11.6 billion Yuan was reduced by 6.5% and exported tools of 7.6 billion Yuan has also reduced by 2.6%.
The “12th Five-year Plan – achievement and gap of structural reform of tool enterprises in China
Looking back on the development of the tool industry during the “12th Five-year Plan”, compared to the continuous rapid development during the previous several five-year plans, it has its ups and downs. It was complicated and changeable and the uncertainties have increased greatly. This kind of development formation was marked deeply by the continuous impact of the global financial crisis on the manufacturing industry – the recovery was slow and went up and down. For the tool market in China another shock wave was the so-called “four trillion strong stimulation” increase in security measures announced by the government, and this strong stimulation contributed to the manufacturing industry in China to form the rapid V-shaped bounce immediately that reached the peak in 2011. Under this influence, the domestic cutting tool market scale made a historical record of RMB 40 billion Yuan.
According to the exchange rate at that time, it had exceeded 6 billion dollars, which was an increase of 50%, and thus became the strongest manufacturing industry in the whole world and was ranked first in the world. In the situation of the slow recovery of the manufacturing industry market of developed countries, the tool market in China had rebounded quickly, became a bright spot and attracted substantial investment of cross-border tool enterprises from Europe, America, Japan and so on, including the construction of production facilities, increase of sales outlets, setting-up the technical demonstration center, etc. And it claimed that the double sales in China would be achieved within three to five years. This kind of new development trend was foreshadowing the current economic downturn and fierce competition in the domestic tool market. It is now clear that the artificial strong stimulation has caused the very serious negative impact on the domestic tool market. So far, the tool enterprises in China still pay the price for the after-effects caused by this kind of strong stimulation.
It can be seen from the charts that driven by the strong stimulation, the sales revenue of tool market in China reached the peak in 2011, subsequently the double-digit negative increase appeared and the market situation was reversed completely due to the too hot economy, high inflation, and the implementation of tight monetary policies by the state. Since the domestic tool market scale reached the peak of RMB 40 billion Yuan in 2011, until this year, the overall trend has been decreasing, although the modest rebound during 2013 – 2014 appeared under the “directional micro-stimulation” of the government. However, this kind of short-lived rebound did not resist on the great impact of rapid decline of overall economic demand of China. It should be noted that this runs counter to the gradually recovered general trend of the global manufacturing industry.
This article appeared in www.maschinenmarkt.international.