After the downward cycle in the second half of 2021, the trend of construction machinery industry in 2022 has been widely concerned by the market.
On February 22, China Construction Machinery Industry Association released the sales data of 11 main products in January. Among them, industrial vehicles, lifting platforms and aerial work vehicles showed an increase of 11.7%, 70.7% and 11.4% year-on-year, while other products showed a downward trend. However, it is noteworthy that these products showed a sharp increase in exports, among which, The export growth of bulldozers was the highest, reaching 88.1%.
In fact, although the construction machinery industry experienced a “cold winter” in 2021, it showed a bright spot in the export market. The 21st Century Economic Research Institute found that among various indicators and research systems, China’s construction machinery industry has made great progress in internationalization. While many products break the dependence on imports, in addition to the previous leading enterprises, industry enterprises have comprehensively accelerated to the overseas market, presented the advantages of Chinese brands in the international market and competed for the global market.
According to the Top50 global construction machinery manufacturing enterprises released by yellowtables, Chinese enterprises occupied 11 seats in 2021. Except for Xiamen Xgma Machinery Company Limited(600815) and Zhejiang Dingli Machinery Co.Ltd(603338) , the ranking of other enterprises increased, and XCMG group, Sany Heavy Industry Co.Ltd(600031) (600031. SH) and Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) (000157. SZ) ranked among the top five on the list. Among them, XCMG ranks first in China’s construction machinery manufacturing industry with us $15.159 billion, accounting for 7.9% of the global market share, followed by Sany Heavy Industry Co.Ltd(600031) and Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) , realizing US $14.418 billion and US $9.449 billion respectively, accounting for 7.5% and 4.9%.
The 21st Century Economic Research Institute believes that the export of China’s construction machinery products not only drives the overall sales growth, but also helps to smooth China’s cyclical fluctuation risk to a certain extent. In the first half of 2021, the international business of XCMG, Sany and Zoomlion, three leading Chinese enterprises, continued to grow and ranked first in the world in the sales of excavators, cranes and other complete machines. However, as a technology intensive industry, there is still some pressure on the brand and industrial chain expansion of Chinese mechanical engineering enterprises. While breaking through the core technology, It is worth considering that “service” and “product” should be implemented at the same strategic height.
international growth rate of leading enterprises
From 2015 to 2020, China’s construction machinery market concentration showed an upward trend year by year, and the leading enterprises dominated by Sany Heavy Industry Co.Ltd(600031) , XCMG group and Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) had obvious advantages. In 2020, CR3 and Cr5 of China’s construction machinery manufacturing industry reached 33.17% and 37.26% respectively.
With the improvement of product competitiveness and the continuous improvement of business layout, the overseas competitiveness of China’s leading enterprises has been continuously enhanced, and China has jumped to the country with the largest market share of global construction machinery. According to the Top50 global construction machinery manufacturing enterprises released by yellowtables, in 2020, the sales of Chinese listed enterprises totaled US $47.964 billion, accounting for 24.9% of the global market share, and the market share increased by 7.3% compared with the previous year.
The export of China’s construction machinery products not only drives the overall sales growth, but also helps to smooth the risk of cyclical fluctuations in China. The peak of equipment replacement in this round of industry is drawing to a close. On the whole, the reduction of incremental demand in the Chinese market may slow down the growth of the industry in the future, and China’s construction machinery industry will enter a downward cycle in 2021.
In the first half of 2021, the sales volume of Sany Heavy Industry Co.Ltd(600031) mining machinery and concrete machinery ranked first in the world. Among them, the sales volume of excavators was 5.036 billion yuan, a year-on-year increase of 129.04%, the sales volume of concrete machinery was 3.629 billion yuan, a year-on-year increase of 32.71%, the sales volume of hoisting machinery was 2.512 billion yuan, a year-on-year increase of 182.97%, and the sales volume of piling machinery and other products was 1.267 billion yuan, a year-on-year increase of 121. In the first half of the year, the company has established a localized distribution system in more than 100 countries around the world, with more than 300 overseas agents. According to the differences in the needs and standards of different countries, the company has developed different international products. The excavator has launched 70 products in total, and 10 products for the European and American markets in the first half of the year.
Xcmg Construction Machinery Co.Ltd(000425) (000425. SZ) has the world’s largest market share of medium wheeled cranes. It has 300 overseas dealers, 40 offices and more than 140 service spare parts centers. Its marketing network covers more than 180 countries and regions around the world. It has established subsidiaries in key countries such as Brazil, Russia, India, Indonesia, Kazakhstan, the United States, Germany and Malaysia, Carry out direct business and build a channel network with equal emphasis on dealers and direct business.
The sales scale of Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) construction hoisting machinery market ranks first in the world. Among them, the overseas sales of aerial work machinery have covered 56 countries and regions on five continents. The products have successively entered the high-end markets such as 18 countries in Europe, the United States, Canada and Australia, and have successively cooperated with large leasing companies and end customers in various regions of the world. At the same time, it won the bidding project for long-term procurement qualification of agricultural machinery of the United Nations Office for project services, obtained the long-term supplier qualification officially recognized by the United Nations, and became the first agricultural machinery manufacturer in China to obtain this qualification.
Vertical comparison, in terms of international business, Sany Heavy Industry Co.Ltd(600031) is currently in a leading position. From the overseas market revenue of the three enterprises from 2018 to 2020, Sany Heavy Industry Co.Ltd(600031) increased from 13.627 billion yuan in 2018 to 14.104 billion yuan in 2020, an increase of 3.5%; Xcmg Construction Machinery Co.Ltd(000425) from 5.894 billion yuan in 2018 to 6.109 billion yuan in 2020, an increase of 3.6%; Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) from 3.590 billion yuan in 2018 to 3.832 billion yuan in 2020, an increase of 6.74%.
Judging from the growth of international business in the first half of 2021, Sany Heavy Industry Co.Ltd(600031) achieved significant growth, and Xcmg Construction Machinery Co.Ltd(000425) and Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) also achieved high growth. During the period, Sany Heavy Industry Co.Ltd(600031) international revenue reached 12.444 billion yuan, a year-on-year increase of 94.68%, reaching 88.23% of the annual international revenue of the previous year; Xcmg Construction Machinery Co.Ltd(000425) was 4.854 billion yuan, an increase of 68.48% over the same period; Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) was 2.768 billion yuan, an increase of 52.33% over the same period.
The 21st Century Economic Research Institute believes that the first reason is that affected by the covid-19 pneumonia epidemic, the operation of global construction machinery enterprises was generally frustrated in 2020. Because China’s covid-19 pneumonia epidemic was the first to be effectively controlled in the world, Chinese construction machinery enterprises were able to return to work and production earlier, with strong guarantee in terms of production capacity, supply chain, sales and service network, etc, Compared with foreign-funded enterprises, it has obvious advantages. In the short term, the competitiveness of overseas markets has been improved, and the global market share has increased significantly.
At the same time, as the demand for construction machinery in foreign countries continues to remain high, China’s relevant leading enterprises can quickly enter the international market on the basis of certain overseas market channels, service capabilities and agent system.
brand and industrial chain expansion to be upgraded
In the process of rapid growth of international business, the 21st Century Economic Research Institute also observed that in terms of market share, the export destinations of domestic brands are still mainly developing countries, but the policies in some developed countries are changeable, and the overseas market expansion of Chinese construction machinery enterprises may face some challenges in the future.
In terms of export destinations, the top five target countries of China’s construction machinery exports in 2020 are the United States, Russia, Japan, Australia and India, but the total export amount accounts for only 30.52%. One belt, one road, one belt, one road, China’s Southeast Asian region, is still the main export place for construction machinery in China. In 2020, the export volume of China’s construction machinery enterprises to the countries along the “one belt” road was 8 billion 973 million US dollars, accounting for 42.79% of the total export volume, and the export products were mainly made of various types of machines. In the first half of 2021, the export volume of Chinese construction machinery enterprises to the above-mentioned countries was US $6.674 billion, accounting for 44.28%.
From the perspective of Sany Heavy Industry Co.Ltd(600031) market segment, the company’s current overseas market is also mainly concentrated in Asia, and the European and American markets still need to break through. In the first half of 2021, the sales volume in Asia and Australia was 5.667 billion yuan, with a year-on-year increase of 120.05%; The European region was 3.751 billion yuan, an increase of 46.85%; The Americas region was 1.961 billion yuan, an increase of 173%; African region 1.065 billion yuan, an increase of 99.72%. Xiang Wenbo, President of Sany Heavy Industry Co.Ltd(600031) said at the ceremony to celebrate that the sales of hydraulic excavators in 2020 ranked first in the world last May that the company had been committed to expanding the markets in Asia and central and South America, and would begin to expand the markets in North America and Europe in the future.
On the other hand, compared with international well-known enterprises, China’s leading enterprises still need to build competitiveness in the expansion of vertical industrial chain. At present, China’s machinery export products are mainly all kinds of complete machines. Caterpillar, which occupies the leading position in the global construction machinery industry, has laid out 13 types of complete machine production businesses such as excavators, loaders and graders in the middle of the industrial chain. In terms of upstream core components, the products of engines and power generation equipment have also been laid out.
At present, the business layout of XCMG, Sany and Zoomlion is basically based on the whole machine production business. The whole machine products among enterprises overlap to a certain extent, but they all have products with core competitiveness. Xcmg Construction Machinery Co.Ltd(000425) mainly includes five types of products: hoisting machinery, piling machinery, pavement and compaction machinery, production and transportation machinery and aerial operation machinery, Sany Heavy Industry Co.Ltd(600031) mainly includes five types of products: excavation machinery, concrete machinery, hoisting machinery, piling machinery, pavement and compaction machinery, Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) mainly includes three types of products: hoisting machinery, agricultural machinery and earth moving machinery. According to the financial report of the first half of 2021, Xcmg Construction Machinery Co.Ltd(000425) has made a breakthrough in construction machinery spare parts and other businesses, realizing a revenue of RMB 11.43 billion, accounting for 21.47% of the revenue.
The construction machinery industry is a high-tech barrier and capital and labor-intensive industry. The production and manufacturing presents the characteristics of multiple varieties, small batch, many parts and components, complex manufacturing process and so on. The entry threshold of the industry is high. Like other technology intensive industries in China, the breakthrough of core parts and components is a difficult problem for the whole industry.
The 14th five year plan for the development of construction machinery industry points out that the main problems existing in the industrial machinery industry during the 13th Five Year Plan period are, first, the gap between R & D capacity and product performance and demand, and weak links in industrial basic capacity (core basic parts (components), key basic materials, advanced basic technology, industrial technology and basic software), The level of industrial chain modernization is not high. At present, the innovation and R & D foundation of Chinese construction machinery enterprises is relatively weak, and they fail to master the core key technologies in some high-end product fields, which restricts the improvement of industry capacity and product quality and performance. The independent R & D, manufacturing and testing capabilities of key parts can not meet the needs of use, and the key parts and components required by medium and high-end hosts and major technical equipment of construction machinery depend on imports.
XCMG, Zoomlion and other leading enterprises have also repeatedly disclosed the shortcomings of market competition in imported parts in their annual reports. Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) said to speed up the domestic substitution process of imported parts and strengthen the independent research and development of key parts; Xcmg Construction Machinery Co.Ltd(000425) continues to create an ecological environment for technological innovation and accelerate the breakthrough of core technologies and key major parts. Sany Heavy Industry Co.Ltd(600031) in the 2020 annual report, there is no expression of the above-mentioned relevant contents, but it is said that the suppliers of the company’s parts are relatively concentrated and have established a long-term cooperative relationship with the suppliers. The purchase price is determined at one time when signing the purchase contract, which has a certain price advantage in the purchase of parts.
strategy: products, services and transformation
From the company’s strategy in recent 10 years, Sany Heavy Industry Co.Ltd(600031) is also different from Xcmg Construction Machinery Co.Ltd(000425) , Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) .
In 2014, Xcmg Construction Machinery Co.Ltd(000425) company put forward the development strategy of “100 billion yuan, internationalization and world-class” from the perspective of scale, focusing on the advanced and reliable product technology and grasping two markets outside China. In 2016, the company focused on “transformation and upgrading”, but the strategic focus of “technological innovation and internationalization” was similar to the strategy implemented in previous years. In 2017, the company once again proposed to adhere to the development model of high-end industry, industrial intelligence, business internationalization and service-oriented manufacturing with transformation and upgrading and high-quality development as the main line and technological innovation and internationalization strategy as the focus.
According to the 2014 annual report of Zoomlion Heavy Industry, the company has made every effort to promote the strategic transformation, and has transformed from a large construction machinery enterprise into a global high-end equipment manufacturing enterprise integrating multi sector businesses such as construction machinery, environmental industry, agricultural machinery and financial services. In 2015, the company put forward the “2 + 2 + 4” strategy, that is, based on the two markets of products and capital, promote the integration of manufacturing industry with Internet, industry and finance, strengthen the four sectors of construction machinery, environmental industry, agricultural machinery and financial services, and build a global high-end equipment manufacturing enterprise. In 2017, the company made strategic adjustment to the industry, sold 80% equity of environmental business, focused on construction machinery and cultivated agricultural machinery, and further deepened the combination of industry and finance. At the same time, it puts forward development strategies such as further promoting intelligent manufacturing and building a new customer relationship. In 2019, focusing on the main industry of equipment manufacturing, the company further promoted industrial upgrading and pushed the company into a new stage of “digital enterprise”.
In the past decade, in terms of strategy formulation, Xcmg Construction Machinery Co.Ltd(000425) , Zoomlion Heavy Industry Science And Technology Co.Ltd(000157) initially promoted the growth of enterprise scale with the breakthrough of technical products, and entered the stage of intelligent and digital development through gradual adjustment. While Sany Heavy Industry Co.Ltd(600031) entered the “transformation” strategy earlier, which raised “service” and “equipment manufacturing” to the same height, and proposed digital upgrading on this basis.
In 2013, Sany Heavy Industry Co.Ltd(600031) first proposed the “transformation” strategy, which is the transformation of core business, that is, from “single equipment manufacturing” to “equipment manufacturing + service”, followed by the transformation of major markets, that is, from “single Chinese market” to “internationalization”. In 2018, based on the transformation of “equipment manufacturing + service”, the company proposed to promote digital upgrading and realize “all business data” and “all data business”. By 2020, Sany Heavy Industry Co.Ltd(600031) will list the digital strategy as its first strategy, the other strategy is internationalization, and implement the business strategy of “focusing on ourselves, local operation and service first”.
Similarly, the three leading enterprises put forward the trend of “digital” transformation in their annual reports around 2019, and have taken “internationalization” as an important strategic goal of the company in recent ten years. The 21st Century Economic Research Institute believes that the international strategic layout of leading enterprises for many years has become the global competition of Chinese construction machinery enterprises in the international market from a single import market to the present, and shows the strength of Chinese enterprises. The international layout of Chinese construction machinery enterprises has gradually entered the harvest period.
