Interview The increase of machine tool consumption in China
XingBin Li, International Director – Asia Pacific, Association for Manufacturing Technology shares his views on the machine tool business in Asia along with interesting insights about the Indian market.
The Association for Manufacturing Technology (AMT) represents and promotes U.S.-based manufacturing technology and its members – those who design, build, sell, and service the continuously evolving technology that lies at the heart of manufacturing.
How does AMT view the Asian market for its business?
XingBin Li: In the Asian region, China is the focus market for US machine tool technologies as it is the largest machine tool consumption nation in the world. China also consumes about 40 % of the total global machine tool production and according to recent statistics by CMTBA (China Machine Tool Builders Association) the machine tool consumption in China was 29.8 billion dollars in 2017 (increase of 7.5 % from the previous year).
Japan and South Korea have a very strong machine tool industry and hence their domestic buyers will buy from them. Taiwan has numerous machine tool companies but they are an export oriented and limited market.
India on the other hand is a big potential market for us as the Indian machine tool industry is relatively weak as compared to the other markets. Currently, the country imports about 56 % of machine tools from other countries. Also, the country has been witnessing a growth of 6-8 % for almost a decade now and therefore, India offers a good environment for investment.
As you have mentioned that India is an important market for US machine tool technologies, how many US companies have already invested in India?
Around 10-12 US machine tool companies have invested in the Indian market and have established or are in the process of establishing manufacturing facilities in Bengaluru and Pune. The major industries that we are focussing on are automobiles, aerospace, defence, and the electronics industry. Karnataka is the largest automobile manufacturing state in the country and Chennai is the second largest. About 60 % or above of the total machine tools in the country go towards the automobile industry.
What are your views on the future of the Indian market?
In the future, we believe that India has great potential for the US manufacturing industry owing to this we have also set up a Tech Centre in Chennai, India. The Modi Government has announced the ‘Make in India’ initiative as the national strategy and also aims of increasing the manufactures contribution towards the GDP from 15 % to 26 % in the next five years. This is going to be difficult but we see a change as more and more Indian industries such as automobiles, aerospace and defence are growing, the demand from the Indian market is picking up. At the moment, it’s low but we can witness the trend and are waiting for the big momentum.
- In 2017, the GDP growth of the USA was about 2.3 % and the US machine tool industry is predicted to grow by 3-5 % in the next two years.
- In terms of machine tool consumption in the Asian market, China leads the way followed by Japan, South Korea, India and Taiwan.
The Chinese market has its own challenges
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