Market Report China: What will be expected from the domestic and foreign industry of machine tool in 2017?

| Editor: Susanne Hertenberger

As it is known, the economy of China is undergoing a throes period of structural adjustment, and the overall market condition of the machine tool industry in China is beyond optimistic as influenced by the slowdown of economy and investment and the upgrade of demand structure.

Consumption market conditions of metal cutting machine tool in China
Consumption market conditions of metal cutting machine tool in China
(Source: Machinery & Electronics Business)

For the past year of 2016, the operating market trend of the entire machine tool industry remains downward. As to how has the market development made specific progress in 2016, detailed data and charts were given by Chen Huiren, the deputy chairman and the secretary general of the permanent institution of the machine tool association, in the annual industrial assembly of Chinese machine tool industry "Sodality of Overseas Enterprises and Organizations in China, 2017", which analyzed relevant conditions of the markets of metal cutting machine tools, forming machine tools and measuring tools.

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Great potential of further development

As observed from the charts, the overall trend of the machine tool industry in 2016 is downward. Nevertheless, there are a few of changes in the import and export.

Since the fourth quarter of 2016, the PMI of Chinese manufacturing industry has rapidly recovered to over 51%. The Caixin service industry index in December 2016 also performed better than expectation, and the Standard Chartered SME (small and middle enterprise) confidence index announced on January 3, 2017 which is aimed to track the state of Chinese SME also rapidly recovered from 55.0 in November 2016 to 56.1 in December. All these indicate that Chinese economy is upturning, which strongly encourages domestic enterprises. At the same time, many foreign-owned enterprises also give their credits to the promising Chinese economy, and expand their investment in China.

China has the largest scale of manufacturing in the world, and has established a complete industrial system and employed enormous high-quality laborers. These advantages will help Chinese manufacturing industry to serve both the domestic and foreign markets in the future. As far as the degree of industrialization of China, it's yet not completed, and many fundamental links and facility conditions are still vulnerable, which is of great potential of further development and attracts more domestic and foreign enterprises to take advantage of the market in China.

For instance, Schwäbische Werkzeugmaschinen GmbH - a German high-end manufacturing enterprise, is positively engaging in the market of China, and has established a new plant in the industrial park in Suzhou; German EMAG Group also has announced to establish Chongqing Machinery Co., Ltd., which is the second market and technology service company of EMAG Group in China. Initiatives of these enterprises all demonstrate their emphasis on the Chinese market and determination to success in the market.

Development of foreign enterprises

In 2016, a number of foreign enterprises such as Hurco, Mazak, Hardinge, DooSan, etc. have realized at least two-digit growth, some of which even have reached 40-50%, including Starrag, THK, Fanuc, etc. Chen Huiren also indicated that, the development of foreign enterprises was relatively better in China in 2016, though several enterprises in 2016 with almost equal growth or slightly decline compared with 2015, most of foreign enterprises are confident about the market prospects in 2017.

1. The market close to bottoming or bottoming out; investment in infrastructure continues to play the 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” becomes the principal market of high-end demand.

Besides, Chen Huiren also proposed that, new adverse factors will occur in 2017, such as the short-term impact on the market caused by real estate control, abnormality rising price of bulk commodities, significant increase of uncertainties of international trade, etc.

In recent years, the demands of domestic user enterprises are changing and they have been undergoing structural adjustment and upgrade, 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 is the new challenge exposed to Chinese machine tool consumption market.

(ID:44537335)