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During the exhibition, in the face of an industry downturn that many companies are experiencing, the author identified three main factors contributing to this challenge.
First, the entire global manufacturing industry has been in decline, and domestic manufacturers are not immune. Gao Wei, General Manager of Tianjin Zhongma Robotics Co., Ltd., explained that China's manufacturing sector is heavily influenced by the global market, and recent growth has been stagnant or even negative. The primary issue is a lack of demand, as key industries like automobiles and steel face difficulties, which directly affects the demand for related equipment. This has had a clear impact on production equipment manufacturers.
Some experts pointed out that foreign equipment manufacturing has a long history, and domestic companies have largely followed their lead in terms of production, technology, and sales. For a long time, the main advantage of Chinese manufacturers was cost, driven by low labor costs and abundant raw materials. However, this advantage is not sustainable. As the domestic economy develops and foreign demand slows, these advantages are being overshadowed by the technological superiority of foreign firms, especially during global economic downturns.
Second, low profit margins in the industry have led to capital outflows. Many enterprises are pessimistic about the future of domestic equipment manufacturing. One reason is the high cost of raw materials, and because they are positioned in the middle of the supply chain, the added value is uneven. Some companies are barely breaking even, making it difficult to generate profits.
An exhibitor emphasized that the equipment manufacturing industry should be the foundation of the national economy. Even if profits are low, it shouldn't be handed over to foreign companies, as this could lead to dependency. "The government should support this foundational industry rather than let it fend for itself," he said.
Ren Lianxiong, General Manager of Tianjin Shenchuang Machinery Trading Co., Ltd., shared an example: his company sells machine tools priced at around 3 million yuan, but most of the core systems come from Japan. Each system costs tens of thousands of dollars, leaving very little profit. Faced with such challenges, some manufacturers have turned to real estate and tourism, where returns are higher. At recent investment meetings, foreign investors were more interested in biomedicine, tourism, and finance, showing little interest in equipment manufacturing.
Third, domestic technology still needs improvement. At the exhibition, several companies highlighted the limitations of local technology. Zhang Lei from Shenzhen Dazu Laser Technology explained that their processing capabilities are limited by material performance. Many important parts must be imported, leading to high costs and external dependence.
Financing also remains a major obstacle. Companies often struggle with liquidity, expansion, and R&D. Hubei Sanhuan Forging Equipment Co., Ltd., an old factory with over 50 years of experience, faced difficulties expanding due to financing issues. Despite using the old factory as collateral and selling some production lines, a 50% funding gap remained, slowing down the new plant construction.
Zhang Yueguang from Shandong Yixin Heavy Machinery Manufacturing Co., Ltd. also mentioned similar challenges. With export orders declining due to the European debt crisis, the company needed over 80 million yuan in financing to expand its plant, but struggled to secure loans.
To address these issues, some companies called for greater government support. They suggested establishing a national-level manufacturing technology center to facilitate research and development. Others urged stronger intellectual property protection and better industry planning to avoid redundant construction.
In addition, they advocated for more flexible financing channels, including lowering thresholds for small and medium-sized enterprises and focusing on those with strong core competencies. Policies should not just be introduced, but also implemented effectively.
Overall, the equipment manufacturing industry faces multiple challenges, but with proper support and strategic planning, it can overcome these obstacles and play a vital role in the national economy.
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