Survey of Machinery Industry Development 2008

 Published：2009-05-25      Origin：China Industry News

In 2008, the machinery industry suffered the snow disaster at the beginning of the year, the price rise of raw materials in the first half of the year and Wenchuan earthquake and economic crisis resulted from the global financial tsunami at the second half of the year. Confronting challenges and tests, though the growth rate was lowered down, the machinery industry still kept the speed of growth by 20% in 6 consecutive years and realized stable growth.

When the machinery industry kept high growth rate for consecutive years in 2008, its main economic indicators reached record highs. From Jan. to Nov., the machinery industry realized the gross industrial output value of RMB8.2660.95tn, up by 25.11% year-on-year, and the sales value of RMB8.050817tn, up by 25.23% year-on-year. Both output and sales hit a record high. The machinery industry also realized the output value of new products of RMB1.519125tn, up by 17.73% year-on-year, and the export delivery value of RMB1.232411tn, up by 18.24% year-on-year.

Since the second half of 2008, the production growth rate of the machinery industry began to fall and shown a trend of quickening fall. Particularly, the growth rate of profits decreased to a larger extent. Those are due to the causes of accumulative increase of the basic figure and the inherent fall in the process of industrial development and the impacts of the financial crisis.

From Jan. to Nov., 2008, the growth rate of the gross industrial output value of the machinery industry fell by 6.75% compared with that of the same period in 2007; and that of the sales value by 6.43% year-on-year. The profits of the machinery industry rose by 16.42% year-on-year with the growth rate felling by 31.37% year-on-year. In aspects of outputs, sales, profits and export, the growth rate showed the trend of increasing fall.

From the aspect of import and export, China’s machinery industry realized USD403.485bn gross import and export, in which, export amounted to USD224.078bn and import USD179.407bn with favorable trade balance of USD44.671bn. The profits totaled RMB460.532bn, up by 16.42% year-on-year.

The machinery industry also saw the obvious differentiation of growth of its sectors in 2008. When the production growth rates of most of its 13 sectors shown the trend of fall, the production growth rate of the agricultural machinery sector speeded up.

From Jan. to Nov. 2008, the growth rate of the agricultural machinery sector grew by 4.51% year-on-year, mainly due to the impacts of national agricultural preferential policies since 2008. The sector kept the growth rate of over 30% for consecutive six months and hit a new record of the year in Nov. to 35.62%. The growth rates of output and sales of heavy mining equipment sector stood at 35%. Following the inertia of fast increase in the first half of the year, the sector continued to keep a high-speed growth. Meanwhile, due to comparatively long production cycle of heavy equipment which delays the impacts of outside economy on the sector for a certain period, the affects of the economic crisis on the growth rate of the output and sales of the sector have not been totally shown on the output and sales. The growth rates of output and sales of engineering machinery exceeded 40%, while the growth of the sales value fell by 10% compared with that at the beginning of the year and the growth of profits plummeted. The output and sales growth rates of the sectors of culture and office equipment, instruments and meters, food packaging and automobile were obviously lower than the industrial level. In particular, the output growth rate of the culture and office equipment sector rose at a single-digit growth in every month of 2008, down by 10.98% year-on-year.

From Jan. to Nov., 2008, in the machinery industry, 209,100 large and middle-sized tractors were produced, equivalent to 102.95% of that in 2007, which exceeded the level of the whole year of 2007. The produced power generating equipment reached 121mnkw, up by 1.01% year-on-year. Though the growth rate fell by 8.04% year-on-year, the absolute amount was equipment to the level in 2007. There were 579,200 machine tools produced, up by 0.24% year-on-year, equivalent to 95.15% of that in 2007. Among them, there were 113,200 numerically-controlled machine tools, down by 0.75% year-on-year. In the general petrochemical sector, the output of oil-refining chemical equipment, valves and special equipment for environmental protection maintained a fast growth with the growth rate above 22%, especially that of the equipment for air pollution control among the equipment for environmental protection, which kept a rapid growth, up by 50.48% year-on-year. In the instruments and meters sector, the output of automatic instruments and meters and the instruments and meters for environmental monitoring increased rapidly, up by 23.63% and 45.43% year-on-year respectively. The rise of demands for instruments is due to emphasis on environmental protection, energy conservation and reduction of emission. While the output of auto instruments and meters was affected by the decrease of output of automobiles, down by 6.84% year-on-year. There were 8.9392mn automobiles produced, up by 9.71% year-on-year, yet with link relation ratio down by 2.65%.

The major problems confronted by the machinery industry in 2008 were as follow: outstanding demand-supply contradiction; insufficiency of subsequent orders; increase of the number of enterprises that stopped or half stopped production; continuous fall of the output growth rate reflected by some provinces and municipalities directly under the Central Government; difficulty in capital flow and collection of payment; increase of accounts receivable; and considerable fall of profits recently resulting in increase of enterprises with deficits and fast growth of the amounts of loss.

The Survey of Foreign Investment in China's Machinery Industry in 2007

 Published：2009-03-12

　　According to the statistics of MOFCOM, 3048 foreign investment projects in Machinery industry (Machinery Industry (Code C35,C36) hereinafter is in accordance with the National Economic Industrial Classification (GB/T4754-2202）.) were newly set up in 2007, 643 less than that of the same period in the last year, and the amount of the actual utilized foreign capital reached. USD 4465360,000, up by 16.28％ year-on-year. The number of newly established foreign invested enterprises and the amount of the actual utilized foreign capital accounted for 8.05％and 5.97％ of the national total number or amount of foreign capital absorption in the Machinery industry during the same period.

　　According to the source of foreign capital, calculated by the amount of the actual utilized foreign capital, in 2007, countries or regions: Hong Kong, Br. Virgin Is, Japan, United States, Korea Rep ranked No.1 to No. 5 in the Machinery industry regarding the amount of FDI, accounting for 27.66%, 18.54%, 7.79%, 6.4%, 5.31% of the total amount of the actual utilized foreign capital of the industry separately.

 

Figure 1 Main Source of FDI of the Machinery Industry 2007

 

　　In Machinery industry in 2007, ten Asian countries/regions (Hong Kong, Macau, Taiwan, Japan, Philippines, Thailand, Malaysia, Singapore, Indonesia and Korea) newly set up 2072 enterprises in China, with the actual utilized foreign capital of USD 2276590,000, down by 15.87％ and up by 10.85％ separately year-on-year. The number of the newly established enterprises and the actual utilized foreign capital accounted for 67.98％ and 50.98％ of the national total number or amount of foreign capital absorption in the same period.

 

　　The EU newly set up 333 enterprises in China, 333 more than that of the same period last year; the actual utilized foreign capital reached USD 447120,000, down by 7.69％ year-on-year. The number of the newly established enterprises and the amount of the actual utilized capital accounted for 10.93％ and 10.01％ of the national total number or amount of foreign capital absorption in the same period.

 

　　The US newly set up 251 enterprises in China, down by 25.07％ year-on-year; the actual utilized foreign capital reached USD 285900,000, down by 4.39％ year-on-year. The number of the newly established enterprises and the amount of the actual utilized capital accounted for 8.23％ and 6.4％ of the national total number or amount of foreign capital absorption in the same period.

 

According to regional foreign capital absorption, 2742 foreign-invested Machinery enterprises were newly set up in the Eastern area, with actual utilized foreign capital of USD 4186330,000, In the Eastern area, Jiangsu Province, Zhejiang Province and Guangdong Province ranked among the tops with respect to actual utilized foreign capital, had 1008, 389 and 388 newly established foreign-invested enterprises separately, with the actual utilized foreign capital of USD 1666770,000, USD 592720,000 and USD 584440,000.

 

　　232 foreign-invested Machinery enterprises were newly set up in the Central region, with actual utilized foreign capital of USD 206280,000, In the Central region, Jiangxi Province, Anhui Province and Hunan Province ranked among the tops with respect to actual utilized foreign capital, had 38, 45 and 70 newly established foreign-invested enterprises separately, with the actual utilized foreign capital of USD 91620,000, USD 37490,000 and USD 20060,000.

 

　　74 foreign-invested Machinery enterprises were newly set up in the Western area, with actual utilized foreign capital of USD 72750,000, Guangxi Zhuang Autonomous Region, Sichuan Province and Shaanxi Province ranked among the tops with respect to actual utilized foreign capital, had 7, 29 and 15 newly established foreign-invested enterprises separately, with the actual utilized foreign capital of USD 29330,000, USD 16300,000 and USD 11880,000.

 

　　According to utilizing manners of the foreign capital, in 2007, there were 818 Chinese-foreign equity joint venture projects, 2204 wholly foreign-invested projects, 21 Chinese-foreign contractual joint venture projects, which newly established in the Machinery industry. in 2007, in the Machinery industry, the amount of the actual utilized foreign capital in the Chinese-foreign equity joint venture projects reached USD931040,000; in the wholly foreign-invested projects reached USD3467510,000; in the Chinese-foreign contractual joint venture projects reached USD23310,000.

The Commitments to the WTO and the International Practice of the Machinery Industry

 Published：2002-11-17      Origin：MOFTEC

In line with commitments, with respect to tariffs, the average tariff rate for industrial products in 2002 declined to 11.7% and that for mechanical products declined to 9.6%. With respect to non-tariffs, all quotas and other measures of quantitative restrictions for mechanical products will have been eliminated by 2005. During that transitional period, quotas will continue to be used by a few imported mechanical products, represented by automobiles, at a certain growth rate per year until removed completely.
 
 China will gradually open the fields of domestic distribution and grant foreigners the right to business in China and the right to foreign trade within three years after accession. China will also open the distribution services related to mechanical products, including commission agents' services, wholesale trade services, retailing services and franchising services, and after sales services. On the other hand, the restrictions on regions, quantities and equity interests for foreign investors to set distribution enterprises will be eliminated gradually and the tendering requirements on non-government procurement will be removed.
 
 In addition, the supports that the Government could provide after accession will be limited in the scope of only adjusting foreign exchange rate and export rebate, etc. The patents belonging to the west developed countries, when used by China's machinery industry, must be paid the fees for the license of patent. The Government should promptly issue laws, regulations, judicial decision and administrative ruling for general recourses related to imports and exports so as to enhance the transparency of trade policies.

2006 Global Machinery Industry Survey

 Published：2007-06-22        Origin：By Expert

1. Developing features of mechanical industry

In the 21 century, global mechanical industry enters into the unprecedented rapid development. The followings are the unique features of its development.

Developed countries intensify industry displacement, putting low value-added mechanical products to developing countries with potential market demands. In order to meet markets changes, all producers take specialization production, which make “single breed, large volume” to be a new feature for most of the top 50 enterprises. Meanwhile, the produce method is transformed from producer-oriented to customer oriented. In a word, the individual service turns into a key factor in the competition.

Modern acquisition doesn't stress on counter and competition any more, while Strong-Strong Union becomes the main method to take advantage of fierce competition. Alliance turns to be a distinctive feature in the survival fight of grand enterprises during the globalization process of mechanical manufacture industry. The saturating market, bitter competition, increasing risk of investing enterprises, all of those factors drive more and more enterprises to adopt allied acquisition. As to those high-tech enterprises, threats from technology innovation also impel them to ask for alliance to produce powerful technology innovation capacity. The strategic acquisitions among great enterprises lead to relocation of mechanical resources, and result in a cooperative competition pattern of global mechanical industry.

The modern scientific technology development represented by information technology brings forward higher and more updated requirements for mechanical manufacture. All countries and regions around the world, especially the developed countries attaching more importance to mechanical development, realize that mechanical manufacture, as high-tech technology industrialization, will place an irreplaceable fundamental role in advancing social technology and upgrading industry. Such as information equipment technology, industry automatization technology, numerical control process technology, robot technology, advanced electricity generation, transmit technology, electrical electron technology, new material technology and new biology, environmental protection equipment technology, are applied to mechanical industry broadly. The high-tech already becomes the key in wining the market competition.

2． Brief introductions of main countries and regions

As the latest data from German mechanical equipment manufacturing association shows, the total production value of mechanical equipment manufacturing in 2006 is up to 158.4 billion euros with 7.4% annual growth, hitting the biggest growth increment since the 60s in last century, and the sale totals up 167 billion euros. During 2004 and 2006, the production value is increased by 18.4%. In the end of 2006, the equipment utilization ratio averages as high as 91.9%. And the new added fixed employers were 20000 in last year. As the association restate, the production value will grow up 4% this year.

Dieter Brucklacher, the president of German mechanical equipment league, also surprised at the blooming demands for mechanical equipment in the domestic market, since some local enterprises start to invest mechanical equipment after long-time holdup. German domestic trade of mechanical equipment has got back to the level of 1990, with strong overseas demands as well. 7 devices in 10 will be sold to overseas. From 2004 to 2006, the mechanical manufacturing is increased by 18%.

The utilization ratio of German mechanical equipment is up to 91%. About 1/3 enterprises cancel the order or put off the delivery date because of limited produce capacity. And 1/10 enterprises complain they can not find professionals. The order is even higher than that of 2000 in which year a record was made. Currently, the most popular equipments are mining machine, metallurgy and rolling machine, and air compression.

As reported in the Spanish semimonthly 21 century (Issue 508, Mar, 15th, 2007), Japanese machine tool output remains the No. 1 around the world in 2006; the total production value is 13.522 billion US dollars with 2.5% annual growth, accounting for 23% of global total production value. As data from Japan Society of Industrial Machinery Manufacturers (JSIM) shows, the mechanical order amount is increased by 3.2% in 2006, as much as 6.0185 trillion yen. It is the first time for it to break through 6 trillion yen after 1997. As to chemical equipment, thought order amount dropped after the large scale order in the end of 2005, it still maintains a high level.

In 2006, the output of Japanese plastic process machine is 19670 with 3.6% annual growth. Among it, the production value of Granulated Machine is 205 billion yen with 7.1% annual growth; the output of it is 17040 with 6.1% annual growth. The production value of Extrusion Machine is 34 billion yen with 9% annual growth; the output is 2120 with 14% annual decline. The production value of Plastic Blowing Molding Machine is 13.6 billion yen with 8% annual growth; the output is 513 with 10% annual decline.

2006 is the five year in which American market maintains its continual development. The domestic demands for packing machine are increased from 5.69 billion US dollars in 2005 to 5.85 billion US dollars in 2006 with 3% annual growth. This will be the fifth year's continual growth of America domestic order US dollars amount of packing machine after the recession in 2001. Such continual strong growth should attribute to the sustainable economic growth, strong current supply, increasing production utilization. Moreover, it also benefits from decreasing cost and improving labor productivity resulted from the improved automatization by new and high technology equipment.

As calculated by “Industrial Technology Research Institute, IEK, Electronic Transportation team” of Taiwan, China, its mechanical industry maintains the climbing momentum of 2005 in 2006. Though the growth is not as high as 10% like 10 years before, it will surge after timely cushion. The production value is 280.2 billion Taiwan Dollar with 2% growth in the first half year of 2006. However, it is up to 307.5 billion Taiwan Dollar with 7% growth in the second half year. As a whole, the total production value is 587.7 billion Taiwan Dollar with only 4% annual growth.

The top 3 machines exported to mainland of China from Taiwan of China in 2006 are Metal cutting machine with 17.7 billion Taiwan Dollar, electron and semiconductor manufacture equipment with 11 billion Taiwan Dollar, plastic and rubber machine with 9.8 billion Taiwan Dollar. The exported machines total 27.1 billions Taiwan Dollar. Meanwhile, the exported machines are 10.3 billion Taiwan Dollar to America, 4.8 billion Taiwan Dollar to Turkey, and 2.6 billion Taiwan Dollar to Korea.

In 2006, the production value of Italian machine tools and automatization industry is 4.992 billion euros with 15.9% annual growth. Italy also performances well in exportation, achieving 2.787 billion euros export amount with 17.7% annual growth. At the same time, the strong demands in domestic market comes back, with 3.537 billion euros total consumption including 2.205 euros of local manufacturers with respectively 13.7% and 13.6% year-on-year growth.

   As estimated by UCIMU, the production value of Italian machine tools, robots and automatization industry in 2007 will grow 11.6% up to 5.57 billion euros. And its export amount will climb to 3.08 billion euros with 10.5% annual growth. The domestic market will scale at 3.935 billion euros including 2.49 of local manufacturers with respectively 11.3% and 12.9% year-on-year growth.