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At present, Chinese tool companies have captured nearly half of the market through continuous learning and strategic planning. However, during their development process, several critical issues have emerged. If these problems are not properly addressed, they could significantly hinder the growth and progress of these enterprises.
One major challenge lies in the imbalance between high and low technology. In developed countries, cemented carbide tools now dominate the market, accounting for up to 70% of total tool usage. Meanwhile, high-speed steel tools are declining at a rate of 1% to 2% annually, with their share now below 30%. In China, cemented carbide cutting tools have become essential in industries such as automotive manufacturing, mold production, and aerospace. However, many domestic tool companies continue to focus on mass-producing high-speed steel and low-grade standard tools, without considering market saturation or actual industrial needs. As a result, the high-end, value-added segment of the tool market has been largely dominated by foreign firms.
According to recent data, China's annual knife sales amount to approximately 14.5 billion yuan. Yet, cemented carbide tools—essential for modern manufacturing—make up less than 25% of this figure. Meanwhile, the demand from domestic industries for these advanced tools exceeds 50% of total tool consumption. This mismatch has created a vacuum in the mid-to-high-end market, which has been filled by foreign competitors.
Another significant issue is the low added value of domestically produced tools. In 2007, China produced 16,500 tons of cemented carbide, of which 4,500 tons were used in cutting tools—comparable in volume to Japan’s output. However, the value of these tools was only about 800 million U.S. dollars, far below Japan’s 2.5 billion U.S. dollars. This highlights a gap in production efficiency and technological sophistication. As a result, China continues to rely heavily on imports to meet its growing demand for high-performance tools.
Statistics show that the annual growth rate of foreign tool companies in China’s mid-to-high-end market has reached 30%, outpacing the growth of domestic tool manufacturers. This trend underscores the urgent need for Chinese tool companies to improve their technological capabilities, align production with market demands, and invest in innovation to reclaim their position in the global tool industry.