Since the beginning of this year, under the multiple impacts of unfavorable factors such as the new crown pneumonia epidemic and international market fluctuations, the domestic construction machinery industry has shown a good momentum of growth against the trend. According to data released by the China Construction Machinery Industry Association, in the first half of 2020, the sales volume of the 12 major construction machinery products included in the statistics increased by 14.4% year-on-year, and the export sales volume increased by 2.06% year-on-year. The output of construction machinery products such as excavators, loaders, compaction machinery and concrete machinery increased across the board, and the output of excavators and concrete machinery increased by more than 20%.
A number of interviewed experts said that there are several important logical support behind construction machinery's boom in adverse market conditions.
On the one hand, the construction machinery industry is in the period of the industry's upward cycle after experiencing the "great slip" from 2011 to 2015. And unlike the previous round of recovery, which is mainly driven by investment, this round of recovery is dominated by product upgrading, superimposed on multiple factors such as better real estate investment, faster labor replacement, and stricter environmental protection. According to the research report of AVIC Securities, taking the excavator as an example, there are currently about 1.5 million units in the market, and there are more than 500,000 units of China's second and lower equipment. With the improvement of emission standards, the demand for replacement is expected to be the sales of new machines for construction machinery companies. Inject extra pulling power.
On the other hand, under the influence of the country's continuous promotion of counter-cyclical adjustments in recent years, infrastructure investment has not decreased. The relevant analysis of Xugong Group shows that as of the end of June this year, a total of 28 provinces and municipalities across the country have announced major project investment plans for 2020, with a total investment of approximately 63 trillion yuan, an increase of approximately 2.7 trillion yuan year-on-year; each region plans to complete approximately 97,000 in 2020 In a rough calculation, the year-on-year growth rate can reach 6.7%, driving the demand for construction machinery market. The "new infrastructure" vigorously promoted this year has also brought new opportunities to the construction machinery industry. For example, high-speed rail, 5G communications, UHV power grids and other fields where "new infrastructure" is concentrated often require machinery that can adapt to specific working conditions to carry out construction. "In the past, we talked about infrastructure underpinning, but the'new infrastructure' not only brought orders to the construction machinery industry, but also entrusted the intelligent transformation and upgrading of the industry." said Chen Jiayuan, deputy general manager of Sany Heavy Machinery.
At the same time, as labor costs continue to rise and the general trend of consumption upgrades remains unchanged, it is becoming more and more obvious that rural, municipal and other infrastructure construction uses machines to replace people, which promotes the sales of construction machinery. In fact, since the first half of this year, there have been news that excavators, pump trucks, mixer trucks and other products are out of stock from time to time. A person in charge of Xugong Group stated that, taking cranes as an example, most of the company's products are out of stock, and orders have been placed in the second half of the year.
Under the stimulus of the general market situation, leading companies with advantages in scale, channels and capital have performed particularly well. According to the research report of Huaan Securities, in the first half of 2020, the cumulative sales of Sany and XCMG excavators were 43,476 and 27,537, respectively, with year-on-year growth rates of 24.23% and 43.73%, both exceeding the industry growth rate of 24.21%, and their market shares were respectively 25.51%, 16.16%.
However, many industry insiders in the survey also expressed concerns about the future.
One is the import problem of core components. Although the domestic construction machinery industry has made great progress, and "first set" products are constantly being launched, some key components are still highly dependent on imports. According to data from China Construction Machinery Industry Association, the import value of construction machinery parts in the first half of the year was US$925 million, a year-on-year decrease of 14.7% and accounting for 50.1% of total imports. A person in charge of an enterprise told reporters that due to factors such as the epidemic, some key foreign parts and components are "expensive to transport" and cannot be imported, and it is difficult to find alternative products in a short period of time, which will eventually affect the output of the company's products.
The second is the risk of excessive competition in the domestic market. For example, the current excavator production and sales have achieved higher-than-expected growth, but price competition has also followed, especially in the small excavator market with low product thresholds, the "price war" is particularly fierce. If foreign trade orders for construction machinery are difficult to pick up in a short period of time, this kind of irrational competitive behavior and means may be further transmitted to the medium and large mining markets with higher thresholds, which will have a negative impact on the entire industry. At the same time, if the construction machinery industry has recovered from the second half of 2016, it has been 4 years. Even if the impact of the epidemic is included, it is expected that it will enter the downward range again in 2023 and 2024, and we need to prepare as soon as possible.
Industry insiders said that in the face of uncertainty, the two major directions have investment potential.
One is to grasp internationalization and not relax. "If you want to become a world-class enterprise, you cannot rely solely on the Chinese market. You must serve global customers." said Wang Min, chairman of XCMG Construction Machinery Co., Ltd. The high standards and high market competitiveness of the European and American markets are important factors that force the growth of enterprises. “Adhere to the open policy and build a healthy competitive market will help build a viable enterprise.”
Not only through international competition to climb the industrial chain, with the increase in the demand for infrastructure renovation in developed countries such as Europe and the United States, the international market is expected to usher in a rapid growth trend. Market Competitiveness.
In fact, many Chinese companies are already planning ahead. In recent years, Sany has accelerated the establishment of factories in India, the United States and other places, established localized teams, and carried out global procurement. This has not only reduced the adverse effects of trade frictions, but also promoted the company to accelerate the development of international markets. In the first half of this year, Sany achieved 100% growth in Thailand and Indonesia, and even the US market achieved positive growth. "We are already preparing production capacity, not only to sell products, but also to promote the upgrade of the entire industry through internationalization." Chen Jiayuan said.
The second is import substitution of key components. Huaan Securities Research Report shows that since 2017, the market share of domestic brands has gradually exceeded that of foreign brands. The market share of domestic brands in the first half of this year reached 68.84%, a year-on-year increase of 7.05%. Among them, the role of domestically-made key parts and components in enhancing the competitiveness cannot be underestimated.
"The epidemic has given us an opportunity for import substitution." Wang Bin, deputy general manager of Hengli Hydraulic Technology, an important domestic supplier of hydraulic components, said that the company currently has a market share of more than 50% in excavator special cylinder products. The new multi-way valve product has doubled its sales year-on-year due to its internationally advanced performance and quality.
Chen Jiayuan and other industry insiders have stated that in the current situation of increasing uncertainty in external economic development, it is still necessary to continue to strengthen international cooperation to promote the research and development of key technologies, and strengthen the intelligent transformation of enterprises to reduce costs and increase efficiency, which is beneficial to the industry's upward trend. Grasping the market in the middle is also conducive to defending against the downturn in the industry.
