On July 21, the United States asked the Chinese Consulate in Houston to close within 72 hours and evacuate all personnel.
In response, on July 24, China decided to revoke the license for the establishment and operation of the U.S. Consulate General in Chengdu and put forward specific requirements for the Consulate General to suspend all business and activities.
For a time, the topic of "China and the United States are related to each other's consulates" became a rage, causing heated discussions. In addition to applauding China's tough attitude, people from all walks of life also have concerns about future development. The construction machinery industry is most concerned about the rigid relationship between the two countries, what impact will it have on the industry?
In fact, this issue can be analyzed from the perspectives of the host and the parts, or from the two dimensions of import and export.
The sales of construction machinery mainframes in the United States are relatively low
Before, the U.S. government has repeatedly curbed the development of my country's high-end technology and equipment manufacturing industry in the U.S. by initiating trade wars and increasing tariffs. Under this circumstance, most construction machinery companies have given up their vigorous deployment in the U.S. market, and the main engine companies’ exports to the U.S. are relatively small. Their main export direction is still biased toward the “Belt and Road” initiative. The overseas export of host companies has less impact.
In 2019, Sany achieved international sales revenue of 14.167 billion yuan. Among them, sales in Indonesia, Sany America, Sany Europe, Russia, and Latin America all achieved rapid growth.
In 2019, XCMG Machinery achieved an international sales revenue of 7.445 billion yuan, with the main growth points in Africa, Asia-Pacific, and Central Asia.
In 2019, Zoomlion’s overseas business revenue reached 3.569 billion yuan, accounting for 8.24%. In overseas business, its main focus lies in Europe and countries and regions along the “Belt and Road”.
In 2019, Liugong achieved international sales revenue of 3.397 billion yuan, of which Europe, India, Poland, and Brazil were the main growth points.
Judging from the overall performance of the above four leading companies in 2019, the performance of export sales to the United States is relatively small, so the current international situation has little impact on host companies.
Imports of construction machinery parts are mainly German and Japanese
It is undeniable that due to technical limitations, some of the core components of my country’s equipment still need to be imported, such as cylinders, pump valves, engines, and so on.
In terms of parts and components, Hengli Hydraulics accounts for about 50% of the national share, and its export share is relatively small in the world. In terms of parts and components, although Hengli and Eddie have made continuous breakthroughs in domestically produced pump valves in recent years, Kawasaki and Rexroth still account for about 40% of the market, and their core components are still mainly produced in Japan and Germany. At present, my country is still highly dependent on imports. Taking Sany as an example, its engines are mainly from Japanese manufacturers such as Yanmar and Mitsubishi.
In fact, these imported parts for the construction machinery industry mainly come from Germany and Japan, and have nothing to do with the United States. So, will Germany and Japan stand in line with the United States at this time? Let's take a look at their performance against Huawei, we may be able to glimpse one or two.
After the UK announced the "blocking" of Huawei, Jochen H?rmann, the head of the German Federal Network Administration, said: "We have taken all precautions to ensure that only trusted technologies are used. We see no reason to exclude Huawei in the first place."
Because of the US ban, after American companies were not allowed to export related components to Huawei, Japanese companies immediately filled in the vacancies to provide components for Huawei's 5G equipment.
But things are changing, and we can't tell what changes will happen next. At least for now, the rigidity of Sino-US relations has little impact on the construction machinery industry.
There is no winner after the gunshot. China has been a peaceful country since ancient times. We certainly hope that the two sides can maintain friendly relations. However, the recent series of actions by the United States are really crazy, and it is really helpless to take corresponding measures. As an important part of China’s manufacturing industry, construction machinery companies have made great progress under the previous trade wars and epidemic prevention and control. Faced with a more complex and volatile international market, Chinese construction machinery companies will continue to improve. Open perspective and stronger competitiveness to face challenges and opportunities.
