Machinery exports The Chinese market has its own challenges

Author Stéphane Itasse

China has long been one of the most important export markets for German machine manufacturers. However, the country's rapid change is creating new challenges for exporting companies.

Die Übernahmen von Yadon war für Schuler der Weg, um sich das mittlere Marktsegment in China und weltweit zu erschließen.
Die Übernahmen von Yadon war für Schuler der Weg, um sich das mittlere Marktsegment in China und weltweit zu erschließen.
(Bild: Schuler)

The successful model of the German mechanical engineering industry is coming under pressure”, says Stefan Klebert, CEO of press manufacturer Schuler Schuler, at the WBK Autumn Conference in Karlsruhe. According to him, success has so far been based on three pillars: a high export share, a high domestic value-added and a premium orientation. This model would now be threatened from two sides: on the one hand by the US government with its motto "America first" and on the other hand by a catching up Chinese mechanical engineering industry.


“China is so dynamic that it is necessary to deal with everything", Klebert explained further. For example, the machine manufacturers in the Republic would have managed to increase their share of worldwide machine exports to 13.3% in 2015 (more recent figures are not yet available), bringing them close to 15.4% for Germany. In terms of sales, too, China's companies have meanwhile significantly outperformed their German competitors - in 2016, they generated a total of around 964 billion euros, while the mechanical engineering companies from the Federal Republic of Germany generated only 262 billion euros. China no longer wants to be a workbench for international corporations", Klebert said, but its own added value. "As a result, companies will experience growing domestic competition in the Chinese market. The air for German mechanical engineering is getting thinner", concluded the CEO of Schuler.

Schuler opens up new markets through acquisition in China

According to him, German machine manufacturers therefore need a new growth strategy: "In China and many other countries, the market segment of medium-quality machines is growing much more strongly than the premium segment - that is what German machine manufacturers have to tap into and at the same time maintain their premium claim. “The question is: How do you get into the mid-range segment?“, Klebert continued.

Schuler himself answered this question in 2015 with the majority takeover of the Chinese press manufacturer Yadon- after several attempts by Schuler to develop machines for the mid-market segment himself failed, Klebert admitted. About two and a half years after the purchase, he took a positive stock at the meeting. “With Yadon, we have not only gained access to more than 1000 Chinese customers and their suppliers, but also to a new supply chain”, explained the Schuler CEO. Among these were new suppliers, but Schuler was also able to agree on more favourable Yadon conditions with existing suppliers. Together, Yadon and Schuler also developed new products, such as a new press range for the mid-market segment in the USA.

China's government wants to reduce dependence on manufacturing industry

Dr. Albert Heuser, former Chairman Greater China of BASF, gave a detailed account of the situation in China. The Chinese leadership sees it as rather negative that China is heavily dependent on the manufacturing industry, but does not have much added value in it. The quality of Chinese products also needed to be improved and an increase in research and development efforts was necessary. The answers to this question included the initiatives "China Manufacturing 2025" and 'New Silk Road', as well as the establishment of own global corporations and the acquisition of foreign companies.

One example of how China wants to take the lead in defined industries is the approach in the automotive industry. The Chinese have understood that they will not catch up with the industrialised countries' lead in the combustion engine. That's why they are relying on alternative drives to reach the top of the automotive industry”, explained the former BASF Chairman.

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