Market Report What will be expected from the Chinese domestic and foreign machine-tool industry in 2017?
China - The economy of China is undergoing a throes period of structural adjustments and the overall market condition of the machine-tool industry is beyond optimistic, being influenced by the slowdown of economy and investment, and the upgrade of the demand structure.
In 2016, the operating market trend of the entire machine-tool industry remained downward. As to how has the market development made specific progress in 2016, detailed data and charts were given by Chen Huiren, deputy chairman and secretary general of the Machine Tool Association, in the annual industrial assembly of Chinese machine-tool industry – “Sodality of Overseas Enterprises and Organisations in China, 2017”, which analysed relevant conditions of the markets of metal-cutting machine tools, forming machine tools and measuring tools.
Great potential for further development
As observed from the charts, the overall trend of the machine-tool industry in 2016 is downward. Nevertheless, there were a few of changes imports and exports.
Since the fourth quarter of 2016, the PMI of Chinese manufacturing industry has been rapidly recovering to over 51%. Announced on 3 January 2017, the Caixin service-industry index in December 2016 also performed better than expected, and the Standard Chartered SME (small and middle enterprise) confidence index, which is aimed to track the state of Chinese SMEs, also rapidly recovered from 55.0 in November 2016 to 56.1 in December. All these indicate that the Chinese economy is upturning, which strongly encourages domestic enterprises. At the same time, many foreign-owned enterprises are also giving their credits to the promising Chinese economy, and are expanding their investments in China.
China has the largest scale of manufacturing in the world and has established a complete industrial system that employs a huge number of highly-trained staff. These advantages will help the Chinese manufacturing industry to serve both the domestic and foreign markets in the future. As far as the degree of industrialisation of China is concerned, it's not completed yet and many fundamental links and facility conditions are still vulnerable that in turn would be a great potential for further development and to attract more domestic and foreign enterprises to take advantage of the market in China.
For example, Schwabian Werkzeugmaschinen GmbH, a Germany-based high-end manufacturing company, has established a new plant in the industrial park in Suzhou; the German Emag Group also has announced that it has established the Chongqing Machinery Co. Ltd., which is the second market and technology-service company of the Emag Group in China. Initiatives of these enterprises all demonstrate their involvement in the Chinese market and determination to succeed in this market.
Development of foreign companies
In 2016, a number of foreign enterprises such as Hurco, Mazak, Hardinge, Doo San, etc. have realised at least two-digit growth, some of which have even reached 40-50%, including Starrag, THK and Fanuc. Chen also noted that the development of foreign enterprises was relatively better in China in 2016, though several companies registered almost equal growth or a slight decline compared to 2015. However, most foreign companies say they are confident about the market prospects in 2017.
1. The market close to bottoming or bottoming out; investment in infrastructure continues to play a supporting role in the market;
2. Consumption is increasingly becoming the primary driver of the market;
3. Aerospace, aviation, navigation, aero-engine, marine gas turbine will become the principal market for high-end demand.
Chen also proposed that new adverse factors will occur in 2017, such as the short-term impact on the market caused by the real-estate control, the abnormally rising prices of bulk commodities or the significant increase of uncertainties of international trade.
In recent years, the demands of domestic user companies are changing and they have been undergoing structural adjustments and upgrading, and consequently the machine-tool industry will be directly or indirectly influenced. Enterprises need to adapt to the new market on the basis of continuous changes of the market demand, which will be the new challenge exposed to the Chinese machine-tool consumption market.