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          Your current position is: Home >>Latest news >>Industry news >>China's machinery industry is facing great difficulties under the new normal

          China's machinery industry is facing great difficulties under the new normal


          "Since the beginning of this year, the economic operation of the machinery industry has faced great difficulties, and the growth rate of major economic indicators has hit a record low since the international financial crisis." Vice President Chen Bin pointed out that from January to November 2015, the growth rate of the added value of the machinery industry was lower than the national industrial average, and the profit growth rate was lower than that of the main business income. Under the new normal, the operation of the machinery industry was facing a new severe situation.

          At the end of October 2015, in accordance with the instructions of the leaders of the State Council, the Machinery Industry Federation conducted a survey of 10 companies recommended by professional associations. The overall survey results can be summarized as follows: parts companies are better than mainframe companies, and private companies are better than state-owned companies. Chen Bin said that the existing difficulties and problems are mainly reflected in overcapacity, insufficient demand, heavier burden, and unfair competitive environment.

          Production dropped by more than 70%

          The downward pressure on my country's domestic economic operation is still relatively high. According to statistics from the National Bureau of Statistics, from January to November 2015, the cumulative growth rate of the added value of the machinery industry increased by 5.3% year-on-year, which was 0.8 percentage points lower than the national industry and 1.7 percentage points lower than the national manufacturing industry. The growth rate in November increased significantly, with a year-on-year increase of 6.7%, an increase of 1.4 percentage points from October. Among them, the automobile manufacturing industry increased by 13% year-on-year in November, an increase of 5.7 percentage points from October.

           "If the automobile industry is excluded, the cumulative growth of other machinery industries from January to November 2015 was 4.9%, and the growth rate in November was 0.4 percentage points lower than that in October." Chen Bin said bluntly, this is a rare low growth rate in the machinery industry in recent years. The phenomenon is lower than that of the manufacturing industry in the country.

          In the 49 medium-sized industries according to the statistics of the machinery industry, 14 medium-sized industries increased in value-added growth year-on-year, and 35 medium-sized industries saw a year-on-year decline in value-added growth. The cumulative number of products with a year-on-year decline is still more than half. Among the 119 major products monitored, there were 44 products with a year-on-year increase in November, an increase of 5 from October.

          Among the 119 major products under key monitoring, only 35 products had a year-on-year increase in cumulative output from January to November, accounting for 29.41%; 84 products had a year-on-year decrease, accounting for 70.59%. Chen Bin said that the cumulative year-on-year growth of output in the past few years generally accounted for about 70%.

          Products with a large decline in output are mainly concentrated in construction machinery, trucks, heavy machinery, other special equipment, metallurgical mining machinery, petrochemical equipment, conventional power generation equipment, basic components, etc.; second, ordinary machinery products with serious excess capacity. Such as ordinary machine tools, AC motors, electric welding machines, wires and cables and low-voltage electrical appliances, transformers, small and medium-sized ordinary agricultural machinery products, cameras, etc.

          Products whose output is still increasing are a minority. It mainly focuses on some products that are closely related to consumption, people's livelihood, energy saving and emission reduction, and industrial upgrading, such as high-horsepower tractors in the agricultural machinery industry, corn combine harvesters with more than 4 rows, large self-propelled plant protection machinery, green fodder machinery, drying Machinery and other products; post-harvest processing equipment and agricultural products preliminary processing equipment; industrial automation and control systems, electrical meters, optical instruments, environmental protection equipment and environmental protection equipment in the instrument and meter industry, wind turbines, optical cables, and rows below 1.6 liters in the electrical and electrical industry A large number of passenger cars and sports multi-purpose passenger cars.

          Chen Bin said that due to the lack of demand, the market for machinery products is fiercely competitive, and the overall price level has continued a downturn for many years. From January to November last year, the cumulative price of machinery products fell by 1.3% year-on-year, which has been a year-on-year decline for 47 consecutive months.

          From January to November, among the 142 kinds of major mechanical product prices in statistics, 102 kinds of products have a year-on-year decline in cumulative prices, accounting for 71.83%; while the number of products with cumulative year-on-year price increases is 32, and 8 kinds are the same.

          Since 2015, the main benefit indicators of the machinery industry have continued the downward trend since 2014. Chen Bin said that from January to October, the machinery industry's main business income was 18.41 trillion yuan, an increase of 3% year-on-year, and a drop of 7.31 percentage points from the 10.31% growth rate in the same period last year. The growth rate is at a relatively low level since 2008.

          Data shows that from January to October 2015, the machinery industry achieved a total profit of 1,210.235 billion yuan, a year-on-year increase of 1.18%, and the growth rate was 12.07 percentage points lower than the same period last year (13.25%). Among them, the decline in profits in the automotive industry has a greater impact on the entire industry. From January to October, the profit of the automobile manufacturing industry fell by 10.44% year-on-year, and the profit of auto parts increased by 9.16% year-on-year.

          Increased industry differentiation

          Since the machinery industry has entered the stage of transformation and upgrading, the industry has clearly differentiated. Economic restructuring has a greater impact on industries dominated by investment products.

          Chen Bin said that 80% of the machinery industry belongs to investment products, and the gap in the growth rate of main business income and profit of different industries is increasing; the difference in output growth of different types of products is becoming more and more obvious; the prosperity of different enterprises is obviously different.

          Under the new normal, the contribution of consumption to economic growth has increased significantly, while the contribution rate of investment has gradually decreased.

          In January-October 2015, the main business income and realized profit of the construction machinery industry closely related to investment decreased by 7.3% and 32.63% year-on-year respectively. The heavy machinery industry serves the field of metallurgy and mining. Affected by insufficient demand in the metallurgical and mining industry, the production, sales, and profits of the heavy machinery industry have declined month by month. From January to October, the main business revenue and realized profit increased slightly by 0.98% and 4.01% year-on-year respectively. Affected by the drop in oil prices, the petrochemical general machinery industry weakened investment willingness, and profits fell by 5.77% year-on-year.

          The consumption-related food packaging machinery industry has grown rapidly in recent years. From January to October, the main business income and realized profit increased by 7.94% and 5.05% respectively. Although the agricultural machinery industry is an investment product, in recent years, with the continuous increase of farmers' income and the support of national policies, it has continued to operate smoothly. From January to October, the main business income and realized profit increased by 7.32% and 9.88% respectively.

          The growth rate of the auto industry in 2015 has declined month by month. From January to October, revenue from main operations increased by 2.86% year-on-year, and profits fell by 2.6% year-on-year. Affected by this, the growth rate of the supporting internal combustion engine industry has also dropped significantly, with main business income and realized profits falling by 5.02% and 17.34% year-on-year respectively.

          Since the electrical appliances industry entered the second half of 2015, driven by the country’s steady growth policy, the country has successively approved nuclear power, power transmission and transformation projects, and the electrical appliances industry has shown a slight upward trend month by month. From January to October, the main business income of the electrical appliances industry increased by 5.37% year-on-year, 2.37 percentage points higher than the industry average, and realized a profit growth of 13.13%, which was 11.95 percentage points higher than the industry average, and the growth rate was the first in each sub-industry.

          The continued decline in fixed asset investment has improved. From January to November 2015, the machinery industry completed a total of 4503.302 billion yuan in fixed asset investment, a year-on-year increase of 9.75%, an increase of 0.48 percentage points from January to October; but still 0.45 percentage points lower than the entire society (10.2%) in the same period, compared with the previous year Compared with the growth rate of investment in the machinery industry (12.4%) during the same period, a drop of 2.65 percentage points.

          There are bright spots in structural adjustment

          "After years of rapid growth in the auto industry, the growth rate of domestic auto production and sales has entered a relatively stable growth stage." Chen Bin said frankly that the auto growth rate dropped in 2015, but the structure is changing.

          Significant growth in passenger cars of 1.6 liters and below. Since the State Council issued this year the policy of halving the purchase tax on passenger vehicles of 1.6 liters and below, it has effectively promoted the sales of passenger cars of 1.6 liters and below. In November, sales of passenger vehicles of 1.6 liters and below were 1.5566 million units, an increase of 16.6% over the previous month and an increase of 29% over the same period of the previous year, becoming the month with the fastest year-on-year growth for this model since the beginning of this year.

          The market share of Chinese brand passenger vehicles increased year-on-year. From January to November, Chinese brand passenger vehicles sold 7,768,300 units, an increase of 14.1% over the same period last year, accounting for 41.1% of total passenger vehicle sales, and their market share increased by 3 percentage points over the same period last year.

          Chen Bin introduced that new energy vehicles have maintained rapid growth this year. From January to November, 238,700 new energy vehicles were produced and 226,000 were sold, an increase of 3.2 times and 3.4 times respectively year-on-year.

          Benefiting from the support of relevant policies and the promotion of the transformation and upgrading of traditional industries, the domestic industrial robot market has achieved steady growth this year. The latest statistics from the China Robot Industry Alliance (CRIA) show that in the first half of 2015, a total of 11,275 industrial robots were sold, an increase of 76.8% year-on-year, and the sales volume increased by 27% on a comparable basis, which was 66.5% of the total sales volume last year. It is expected that the total sales of domestic industrial robots this year will exceed 22,000 units, a year-on-year increase of about 30%.

          "Under the severe environment and market pressure, companies pay more attention to improving their competitiveness by improving product quality." Chen Bin said that so far more than 400 companies in the machinery industry have established a brand cultivation management system. Under the pressure of fierce market competition in the heavy machinery industry, large enterprises have generally begun to pay attention to the quality qualification rate of castings and forgings, and significantly improve the inherent quality of castings and forgings. At present, the qualified rate of large castings and forgings has reached about 98%.

          There are still deep-seated contradictions

          At the end of October 2015, in accordance with the spirit of the leadership of the State Council, the Machinery Industry Federation conducted a survey on 10 companies recommended by professional associations. According to Chen Bin, 6 of these 10 enterprises are main engine or complete equipment enterprises, 4 are mechanical basic parts enterprises, 6 are local state-owned enterprises, and 4 are private enterprises, covering machine tools, heavy machinery, petrochemical general, electric power Equipment, bearings, hydraulics and other fields.

          "This survey focuses on understanding the current economic operation of enterprises, the existing difficulties and problems, and the ideological trends of some state-owned enterprise leaders." Chen Bin pointed out that through the investigation of 10 enterprises, 3 enterprises have increased year-on-year in terms of economic operation. , 7 companies dropped year-on-year. The overall survey situation can be summarized as: parts companies are better than mainframe companies, and private companies are better than state-owned companies.

          "The existing difficulties and problems are mainly reflected in the problems of overcapacity, insufficient demand, heavier burden, and unfair competitive environment." Chen Bin said frankly that from the perspective of the industry as a whole, the production and operation of enterprises are facing greater downward pressure, and the industry is showing obvious signs of downward pressure. Outstanding features of differentiation.

          The survey results show that the difficulties and main problems of enterprises in the machinery industry are mainly manifested in four aspects. First, traditional products have a large production capacity, a large proportion, and low efficiency. New products have insufficient production capacity and have not yet formed effective support. The main business income has been greatly reduced. The company's product adaptability adjustment is not in place, and it still participates in market competition by means of price and cost.

          Second, market demand is sluggish, and enterprises generally lack orders. For example, Chen Bin said that some of the companies surveyed have seen a significant decline in market demand in the past three years. Since 2013, orders have fallen by half. Among them, orders for coal-related equipment have fallen by 87%, and cement orders have fallen by more than 50% in 2015. There are basically no orders for coal and metallurgical mining equipment.

          "Other companies reported that orders dropped by 26% this year on the basis of a relatively large decline in orders last year. Some small companies had 80 million orders in hand in previous years, but only 50 million orders this year." Chen Bin told reporters upstream The industry also has overcapacity, and investment in the entire petrochemical industry is drastically reduced.

          The third is overcapacity and low equipment utilization. The research team found through investigation that there is also an overcapacity of high-end products at this stage. The annual demand for domestic shield machines will not exceed 100 units, but the total annual production capacity has reached more than 500 units, and there are more than 30 manufacturers.

          Fourth is that the pull of new projects on the market is diluted by social inventories. The utilization rate of construction machinery equipment in the industry is less than 30%, and the utilization rate of construction equipment in construction units is less than 30%. A large amount of infrastructure investment has not played a role in driving the growth of construction machinery investment.

          Chen Bin mentioned that product prices continue to fall and vicious competition in the machinery industry is spreading. First, due to weak demand and insufficient orders, it is common for user companies to lower prices and low prices for production companies. The products involved include both small basic parts and large-scale complete sets of equipment. The second is to grab orders. During the bidding process of some companies, malicious low-price competition, false promises, and dishonest operations are more prominent. "The result of vicious competition is to lower the level of industrial development and hinder industrial transformation and upgrading." Chen Bin said.

          The survey results show that the cost of products has generally risen and the pressure on business operations is greater; product inventories have increased, and accounts receivable are severely owed; high-end equipment is difficult to upgrade, and the investment is huge but the benefits are not obvious; the historical burden of state-owned enterprises is heavy and the dominant position has not been reflected.

          Chen Bin said that companies generally report that the difficulty in collecting payment this year is generally greater than that of last year. Seven of the 10 companies surveyed reached 24.6 billion yuan in accounts receivable from January to September 2015. In addition, he said frankly that the researched companies also reflected the bottlenecks and pressures encountered by companies in upgrading to high-end products. Parts and components companies reported that they have invested heavily in research and development to replace imported domestic parts that are not accepted by OEMs.

          Take multiple measures to help companies get out of the predicament

          While reflecting on the difficulties and problems of the enterprise, Chen Bin also put forward nine countermeasures and suggestions based on the development of the industry.

          First, it is necessary to give full play to the role of the country's series of measures to stabilize growth in effectively driving domestic demand. The undertaking units of major national construction projects and key industry projects should take the lead in purchasing equipment or products that domestic enterprises meet the requirements of economic and technical indicators, and play a demonstrative role for the country’s steady growth and structural adjustment. In addition, take the lead in supporting local state-owned enterprises or local enterprises as far as possible not to default on payment for goods, construction and progress payments, so as to solve the financial cost pressure of enterprises.

          Secondly, support the project undertaking to purchase the first (set) set of major technical equipment in major national construction projects and key industry projects.

          Third, it is recommended to implement the policy of deepening the reform of state-owned enterprises as soon as possible in accordance with the spirit of Zhongfa [2015] No. 22 Document, and sort out the content of conflicts between relevant national, provincial, and municipal policies.

          Fourth, it is recommended to select some state-owned enterprises, adopt a bottom-up approach, put forward a comprehensive plan for state-owned enterprise reform, and try first. "State-owned enterprises can put forward reform plans by themselves, and relevant state departments can allow state-owned enterprises to conduct trials on their own as long as they do not violate the state's principles and regulations when reviewing them." Chen Bin said.

          Fifth, enterprises should improve product manufacturing technology and standards to reduce vicious competition. Formulate and revise industry standards, improve the level of domestic equipment manufacturing, and gradually guide competition from price competition to competition with comprehensive strength in quality, performance, and service.

          Sixth, the state has increased its support for R&D investment in special equipment. Formulate special equipment plans, and through major special support, encourage enterprises to invest more in key technology and equipment of new products, so as to fundamentally improve the level of domestic equipment manufacturing.

          Seventh, it is recommended that the state provide policy support for the development of service-oriented manufacturing, and promote the structural adjustment, transformation and upgrading of the manufacturing industry.

          Eighth, in order to promote "going out" Strategy, it is recommended that the state support a number of institutions and departments to provide targeted guidance for overseas investment enterprises in foreign policies, laws, and regulations.

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