How do local machine tool companies break through in the predicament?

Abstract Over the past 30 years of reform and opening up, China's economy has continued to grow rapidly. We are used to being fast and can't tolerate slowness. We often hear 'Bai Qigong in a battle'' success or failure in this move. Enterprises are more willing to pass...
Over 30 years of reform and opening up, China's economy has continued to grow at a high speed. We are used to being fast and can't tolerate slowness. We often hear 'Bai Qigong in a battle'' success or failure in this move. Enterprises are more willing to overtake through corners, and innovations in this accelerated mentality are often not fast. Enterprises must change their mindsets, overcome impetuous emotions, and do basic work on the ground.

President of the Japan Machine Tool Manufacturers Association, Shimaru Yuji:

Japan's machine tool industry has the second largest production value in the world, with 70% of its exports. With the globalization of the market, users have different requirements in terms of function, performance and cost. In order to respond to diverse user needs and better develop our own users, we must continue to provide quality machine tools. To do so, we must understand our position in the global market and clarify our future development goals.

Yuan Li, Chief Engineer of Shenyang Aircraft Industry (Group) Co., Ltd.:

The cross-generation development of aircraft and the rapid increase in demand have brought enormous challenges to aircraft manufacturing. A large number of new materials, new structures and new processes have emerged. Traditional manufacturing equipment can no longer meet the needs of new machine development and production, so it is urgent to face aircraft manufacturing. Advanced equipment to solve the manufacturing bottleneck of key components of the aircraft.

Liu Shulin, Director of the Center for Technology Innovation and Strategic Management, University of Chinese Academy of Sciences:

In the past 20 years, China's economy has been growing rapidly, but the mainstream innovation model of Chinese enterprises is asymptotic innovation, secondary innovation, and many core technologies have not been resolved. To achieve breakthrough innovation, Chinese manufacturing companies need to strengthen basic research, have sufficient innovation and patience, build a solid innovation platform, create an organizational environment that encourages innovation, break through ideas, make full use of breakthrough innovation opportunities, and reshape Chinese talents. Eight aspects, such as the education system and the ecosystem of creating breakthrough innovations, have truly achieved industrial upgrading and spawned emerging industries.

Enrico Anacondia, consultant of the Italian Machine Tool, Robotics and Automation Manufacturers Association:

At present, the design of machine tool products and their application in production systems are moving towards different sustainable directions, which are increasingly demanding machine performance. As end-users and requirements from standards/legal aspects continue to increase, machine tools are becoming more important in terms of safety, reliability, repeatability, and feasibility. The Italian machine tool industry is producing and developing new technology solutions with the aim of seeing companies in the industry achieve sustainable development in different directions.
——Excerpted from the experts of the high-level international forum “Innovation·Sustainable Development”

The decline in the total industrial output value, the decline in the sales value of industrial products, and the decline in total profit, many of the downward curves outline the overall picture of China's machine tool industry in 2012. This year, this downturn has not stopped. The reporter was informed at the 13th China International Machine Tool Show that by March of this year, China Machine Tool Industry Association's key contact enterprises had increased their orders for 22 consecutive months.

Faced with the current development of the industry, many domestic exhibitors admit that the reduction in market demand has brought unprecedented pressure on enterprises.

Why foreign machine tool products are expanding against the trend

Comparing the two sets of data, perhaps we can find out what the market is "shrinking". In 2012, the total sales of metal cutting machine tools in China decreased by 17.9% year-on-year, while the import value increased by 6.03%. The domestic market share of domestic metal processing machine tools decreased by 1.8 percentage points, and the market share of CNC machine tools decreased by 1 percentage point.

Why is the Chinese market more popular with foreign brands?

Wu Bolin, executive vice president of China Machine Tool Industry Association, told reporters that in recent years, China has accelerated economic restructuring, and industrial upgrading in various industries has driven the upgrading of machine tool consumption. However, the low-end production capacity of China's machine tool industry is excessive, and the high-end is insufficient. The upgrading of machine tool products cannot keep up with the changes in market demand.

Taking the automobile industry as an example, the processing of parts and components with a total value of about 70% of the entire vehicle is completed by machine tools. In the current trend of energy conservation, emission reduction, and pleasant car development, higher quality requirements are imposed on automobile design, parts production, and assembly. "With the original middle and low-end machine tools, there is no way to create high-end cars. Business users have to buy high-end foreign machine tools," Wu Bolin said.

"China also has 'high-end' machine tools." An industry insider who asked not to be named told reporters that compared with foreign brands, some high-end CNC machine tools in China have no difference in appearance, and the various indicators of the sample are also the same. "However, these machine tools don't work, and the difference in machine quality is immediately apparent." He said that some machine tools work inefficiently; some machine tools often have small problems; and some machine tools have poor stability. High precision and low scrap rate. After two years of operation, the processing accuracy decreases rapidly, and the number of unqualified products produced increases significantly. “National machine tool products are not like God. Domestic companies are certainly more willing to buy foreign products.”

It is imperative to improve the competitiveness of high-end products

In an interview with reporters, Wu Bolin pointed out: "This situation shows that China's machine tool industry is not fully transformed and upgraded. Compared with advanced enterprises in developed countries, it is still at the low end of the industry."

China is a big market. The market gap once provided a survival and development soil for different grades of local machine tool products. From 2001 to 2012, the total output value of China's machine tool industry grew at an average annual rate of 26%, and the output value of CNC gold-cut machine tools grew at an average annual rate of 31%. Continuous high-speed growth has made China the world's largest machine tool manufacturer. “At that time, machine tool products were in short supply. As long as they entered the machine tool industry, they could make money by producing anything.” Guan Xiyou, chairman of Shenyang Machine Tool Group, said.

In a relaxed market environment, many companies have not placed technological innovation at the top of the sustainable development of enterprises.

"Currently, China's machine tool industry has entered a difficult transition period. Transformation and upgrading will become the main feature of the development of China's machine tool industry in the next stage, and the industrial development momentum will also undergo major changes. This has become the consensus of the industry." China Machine Tool Industry Chen Huiren, deputy secretary general of the association, pointed out that the continued strong market demand, institutional mechanism reform, labor cost advantage and sustained support of national industrial policies were the four driving forces for the rapid growth of China's machine tool industry. Now, the market demand level has increased, the labor cost advantage is not so obvious, and the space for institutional reform and industrial policy is more limited. Future industrial development must rely more on technological advancement, management upgrades, and the quality of workers.

Wu Bolin said: Transformation and upgrading is to improve industrial competitiveness, and its core is to enhance product competitiveness. The biggest reduction in the domestic market is the low-end machine tool products that China is best at. The most urgent task is to improve the competitiveness of China's high-end machine tool products.

Several domestic companies participating in the exhibition indicated that they have made major adjustments to the product structure this year, compressing low-end products of ordinary machine tools and increasing the mass production scale of comprehensive medium and high-end machine tools.

Whether it is to reduce production costs, improve product utilization, enhance the quality of hardware equipment, and improve the quality of software package technology services, every aspect involved in the competitiveness of medium and high-end machine tool products needs the support of technological innovation. Wu Bolin pointed out that to "do a good job" in machine tool products, it is necessary to fully tap the potential of existing scientific and technological achievements. For example, some of the new results developed in previous years have not been transformed in time. If there is still room for market development, it is necessary to carry out secondary development of medium and high-end products.

Innovation in the fast-paced mentality is often not fast

“The external form of industry backwardness is the lack of market competitiveness of products, and the inherent essence is the gap of comprehensive quality of enterprises.” Wang Bin, deputy general manager of China General Technology (Group) Holding Co., Ltd. pointed out that in business management, Chinese enterprises lack Market-oriented business philosophy; lack of market-oriented innovation mechanism and organizational capabilities to drive technological advancement, new product development and product structure adjustment; lack of market-driven operational management; lack of internal management innovation mechanism targeting market demand. In terms of quality control, there is still a huge room for improvement in the stability and reliability of our products. Many companies lack the ability to provide customers with personalized services and resource allocation.

Domestic companies do not shy away from these problems. “No matter the market demand, low-end innovation, this makes the whole industry develop a detour.” Guan Xiyou said that Shenyang machine tools are being transformed from traditional machine tool manufacturers to industrial service providers, providing full-product cycle services to customer needs, and the entire enterprise form will be Breaking the reconstruction.

At this exhibition, Shenyang Machine Tool Co., Ltd. and Germany's Siemens Company, with the acquisition of the earlier research and development platform of Heath, focused on the introduction of three series of internationally-advanced CNC machine tools, I5, BRIO and SMART. These products use Internet intelligence. Technology and advanced service process concepts are better able to meet the needs of customers.

"Technical innovation is also good, business management philosophy is worth mentioning, all of which must be implemented on people." The view of a business executive is very representative. He said that many family-owned companies in Germany have focused on a certain product, made the product to the extreme, and established many hundred-year brands. Japanese companies continue to improve product quality and strive to become the foundation of Japanese brands based on the world. "The key for Chinese companies to compete with foreign companies is to ask people to do it bit by bit."

"In the past 30 years of reform and opening up, China's economy has continued to grow at a high speed. We have become accustomed to being fast and can't tolerate slowness. We often hear 'Bai Qigong's one battle'' success or failure in this move. Enterprises are more willing to overtake through corners, this quick mentality The innovations are often not fast. Enterprises must change their mindsets, overcome impetuous emotions, and do their basic work on the ground." Chen Huiren said.

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