Core components hinder the development of construction machinery

China's construction machinery involves high-tech, high-value-added key components that mainly depend on imports. The average price per ton is more than 80,000 U.S. dollars. For example, transmission components, control components, diesel engines, and key hydraulic components are in short supply. Overcapacity and structural shortage contrast. Strong, which severely restricted the development of Chinese construction machinery to high-end technology products.

Reliance on imported hydraulic components has become a "profit killer" for domestic construction machinery companies. According to the China-Taiwan Securities Research Institute, imported hydraulic components are expensive enough to "eat 70% of profits." XCMG also profoundly protects the importance of R&D investment. R&D expenditures account for more than 5% of sales revenue each year. In recent years, Xugong Group's annual research funding has exceeded 1 billion yuan. In 2011, the funds invested in scientific research reached 5.7 of sales revenue. %.

The lack of competitiveness of core parts for many years lack of domestic engineering machinery development "clamp neck"

“The key parts are controlled by people and devoured profits.” Chang Zheng, director of the International Affairs Department of the Asia Manufacturing Industry Association, said in an interview with the reporter of the China-New Zealand Finance Channel that the domestic construction machinery industry still needs a lot of imports including hydraulic components, engines, and control components. Core and key components such as powertrains.

The securities industry researcher of Anxin Securities stated that domestic companies have to bear the high pricing power of accessory suppliers and supply constraints of accessory suppliers.

Reliance on imported hydraulic components has become a "profit killer" for domestic construction machinery companies. According to the China-Taiwan Securities Research Institute, imported hydraulic components are expensive enough to "eat 70% of profits."

The hydraulic components and the engine are the two largest components of the cost of the construction machinery. The proportion of the two components in the domestic market can be as high as 30%-50%. Taking an excavator as an example, only the core components consisting of the hydraulic system and the engine account for 42% of the cost of an excavator in the various costs of composing an excavator.

Gradually losing the advantage of demographic dividend is the only way to enhance core competitiveness. The development model of China's manufacturing industry largely depends on the product price advantage brought by demographic dividend. In 2009, the emergence of “labor shortage” heralded the unlimited surplus labor force. The supply era is coming to an end. According to statistics from the Bureau of Statistics, the share of people aged over 65 in China is close to 10%, and the reduction in the proportion of the working-age population will directly adversely affect the construction machinery industry that once benefited from the demographic dividend.

If the economy has maintained a relatively rapid growth over the past decade, due to the market's large demand for construction machinery, the entire production company can also increase the price of parts through upstream tapping and partial price increase. The high costs incurred maintain a relatively stable profitability. However, with the slowdown of economic growth and declining market demand, the contradiction in the control of core and key components will become more prominent.

The industry expert Chang Zheng told the China-Singapore Finance Channel that the country’s relevant macro-policy support and increased government investment will promote affordable housing and water conservancy construction, and in the short term it will directly drive the market demand for related construction machinery.

“But this is not a long-term one.” Chang Zheng emphasized, “For the construction machinery industry itself, it is necessary to accelerate the transformation and upgrading and support independent innovation. This is the long-term strategy for domestic engineering companies seeking development. The key technology level, especially the autonomy of parts and components."