The machine building industry market

Chine: Both the best customer and the new competiton

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There are opportunities for providers from Germany where environmental protection is involved. “Urbanization with all its technical requirements needs solutions and it needs to obtain energy from hydropower or wind energy. In all these areas the German machine building industry is well-positioned for the coming decade”, says Stephanie Heydolph, the head representative of VDMA in China.

German machine exports to China are on the rise again

The current development in the business with China is encouraging After two weak years 2012 and 2013, the exports of the German capital goods industry in the first half of 2014 increased in comparison to the previous year, reports VDMA. The success story of Germany’s machine building industry is long: When VDMA opened its liaison office in the summer of 2004 in Beijing, the bilateral trade in machine building industry totalled to about 70 billion Renminbi Yuan (RMB), in 2013 it was 166 billion RMB. Currently over 600 VDMA-member companies are active in China under their own names:

However, export is just one side of the business in China of the German machine building industry. From 2004 to 2012 the direct investments of the German machine building and plant construction industry increased from 5.7 billion RMB to almost 40 billion RMB. “Thus after USA, China is the second most important foreign location in the world today”, explains VDMA president Reinhold Festge.

In the medium market segment the machine building market in China is crucial

Nevertheless, the Chinese competition never sleeps. A study by the impulse foundation of VDMA has found out that the manufacturers are catching up especially in the medium market segment. Therefore the Chinese realistically assessed the technical gap to the German machine building industry. However in the growing middle market segment and in service they have a stronger position and that too not just in China. This is the core of their internationalization strategy. For the German machine building industry the findings mean that despite the existing technological and quality advantages the individual creation strategies in the China concept must be reviewed. The investigation revealed that the biggest potential for the German machine building industry lies in the middle segment in China. “German companies must intensively direct their offers to this segment. It will take courage to be “Good enough”, explains Festge.

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