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At present, Chinese tool companies have captured nearly half of the market through continuous learning and strategic planning. However, as they grow, several critical challenges have emerged during their development. If these issues are not properly addressed, they could significantly hinder the long-term growth and progress of these enterprises.
One key issue is the imbalance between high-tech and low-tech production. In developed countries, cemented carbide tools now dominate the market, accounting for up to 70% of all cutting tools. 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, mold manufacturing, and aerospace. However, many domestic tool companies continue to focus on mass-producing high-speed steel and basic standard tools, without considering market saturation or real industry 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, the total annual sales of cutting tools in China amount to approximately 14.5 billion yuan. Yet, cemented carbide tools account for less than 25% of this volume. Despite this, more than 50% of the cutting tools required by the domestic manufacturing sector are actually cemented carbide. This mismatch has created a vacuum in the mid-to-high-end market, which has been filled by foreign competitors.
Another major problem is the low value added to Chinese products. In 2007, China produced 16,500 tons of cemented carbide, with 4,500 tons used for cutting tools — a quantity comparable to Japan’s. However, the value of these tools was only around 800 million U.S. dollars, far below Japan’s 2.5 billion U.S. dollars. This highlights a significant gap in production efficiency and technological sophistication between domestic and international manufacturers. As a result, China continues to rely heavily on imported high-end tools to meet industrial demand.
Statistics show that the annual growth rate of foreign tool suppliers in China’s mid-to-high-end market has reached as high as 30%, far outpacing the growth of domestically produced tools. This trend underscores the urgent need for Chinese tool companies to improve their technology, focus on high-value products, and better align with the evolving needs of the manufacturing sector. Only then can they truly compete on a global scale and reclaim the market they have lost.