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Home - News - Construction machinery industry: no winners from excessive competition

Construction machinery industry: no winners from excessive competition

May 1, 2021

 

Since the beginning of this year, construction machinery represented by excavators has achieved a "good start", and some products have

 

even sold out. According to statistics from the China Construction Machinery Industry Association (hereinafter referred to as the "Association"),

 

from January to February 2021, the average year-on-year growth rate of the main products of the construction machinery industry represented

 

by excavators reached 117%, and the year-on-year growth rate of excavators reached 149. %.

 

However, under the rapid growth of data, construction machinery also has "unspeakable concealment". Take the excavator as an example.

 

Although sales continue to rise, profits are not optimistic. According to survey data, the average gross profit margin of China's construction

 

machinery agent group in 2020 is only 8.7%, and the average net profit margin is as low as 0.7%. There has been no significant improvement

 

this year, and the survival status is worrying.

 

Qi Jun, Honorary President of the China Construction Machinery Industry Association, told reporters that since the steady recovery in August

 

2016, the construction machinery industry has benefited from the country's increased investment in infrastructure construction. As of the first

 

quarter of 2021, it has maintained growth for five consecutive years. But at the same time of rapid development, some companies in the

 

industry did not work hard on product quality, innovation, and user service, but blindly pursued market share, and took disorderly price

 

competition as the only means of market competition, which seriously affected the health and sustainability of the industry. development of.

 

"We are both opposed to price alliances and resolutely opposed to disorderly price competition in the industry." Qi Jun analyzed that disorderly

 

competition will eventually lead to users not being able to get good products and high-quality services. He reminded host companies that they

 

must learn the painful lessons of the market environment from 2013 to 2015. The result of excessive competition is "no winner." The systemic

 

risks or debt crises formed by the short-term "carnival" take a long time to digest, and existing companies have paid a heavy price for this.

 

 

In fact, the market development situation of the construction machinery industry continues to improve this year. This year, my country

 

continues to increase investment in infrastructure construction. A series of measures such as the development of the western region, the

 

construction of the Yangtze River Economic Belt, the construction of Guangdong and Hong Kong Bay, as well as the construction of new

 

infrastructure such as 5G big data centers, urban rail transit, and people’s livelihood security projects all require construction machinery.

 

Participation of manufacturers.

 

 

In addition, in the context of the country's continuous increase in environmental protection, the fourth phase of non-road diesel mobile

 

machinery and the diesel engine pollutant emission control technical requirements, that is, the "National Fourth" emission standard will be

 

officially launched on December 1, 2022 Implement. Under the increasingly stringent environmental protection requirements, the scale of the

 

renewal of construction machinery inventory is considerable. It is understood that there are currently about 10 million construction machinery

 

in use on the market, and many of them still meet the National I and National II emission standards. In the future, these equipment that does

 

not meet environmental protection standards will gradually enter the phase of elimination.

 

 

Driven by a number of favorable factors, it is expected that the construction machinery market is still on the rise. Qi Jun judges that under the

 

dual drive of inventory update and incremental demand, the overall growth of the construction machinery industry is expected to be more than

 

7% this year.

 

 

"The market is vast, and it depends on how the company grasps it." Qi Jun called on host companies and agents to abide by the industry

 

enterprise self-discipline conventions, and strive to cultivate their core competitiveness, steadily improve product performance, quality and

 

service levels, and stay within a reasonable profit margin in the market. Formulate marketing strategies and business policies to compete in an

 

orderly manner. At the same time, host companies and agents must strictly abide by the bottom line, strictly control risks, coexist and win-win,

 

and cherish the hard-won development of the industry.