Construction machinery companies must jump out of the "over-promotion" cycle

“Sitting in China’s office, we will never know the actual needs of US customers.” At a press conference held recently in Beijing on the “XUgong Crane Value Improvement Project”, Xumin Chairman Wang Min particularly emphasized the “going out” of companies and The key role of technological innovation. “In the past, China's construction machinery industry surprised the world with its huge market; now, we are surprised that the world is no longer the scale, but our understanding of the industry, especially in product and technology innovation and Creativity," he said.

Wang Min outlined the Xugong Group's scientific and technological innovation at this press conference. First, companies independently research and develop. In the bottleneck development of the core components and parts of the construction machinery industry, XCMG has independently developed, and has made significant breakthroughs in key links such as high-end hydraulic cylinders and new gearboxes. Secondly, it has entered into joint ventures with multinational companies such as Germany, the United States, and South Korea. Through joint innovation and collaborative innovation, it has achieved leaps and bounds in key links such as slewing bearings, drive axles, and engines. Thirdly, XCMG has accelerated its comprehensive improvement in the core technologies of hydraulic components such as pumps, valves, and motors by using two companies acquired from Europe and the XCMG European Research Branch under construction as a platform. According to reports, since 2010, XCMG has launched a large number of high-tech products and has continuously filled the gaps in the Chinese construction machinery industry.

According to data provided by Wang Min, Xugong Group once again led Chinese companies in the Top 50 list of global engineering machinery manufacturers in 2011, ranking among the top 10 in the world. The ranking rose from No. 9 in the previous session to No. 7. Wang Min disclosed that XCMG Group strives to realize operating revenue of RMB 100 billion in 2012 and enter the top 5 of global engineering machinery manufacturers; in 2015, it achieved operating revenue of RMB 300 billion and entered the top 3 of global engineering machinery manufacturers.

According to Jun Jun, president of the China Construction Machinery Industry Association, there are 10 Chinese construction machinery companies listed in the top 50 in the Top 50 list in 2011. This shows that the overall strength of China's construction machinery industry has been enhanced and in the global industry. The status continues to increase.

Wang Min stated that in the future, XCMG must push “to enhance user value” to a higher level. Sun Jianzhong, general manager of Xugong Heavy Industry, expressed his commitment to more honour the maximization of user value. XCMG put forward a brand-new concept of “inside cast quality and exterior image” and fully promoted the four value improvement projects – product quality improvement project and profitability. Model improvement project, industrial technology upgrade project, market system construction project.

Jun Jun said that with the entry of more and more foreign companies and the rise of local companies, the competition in China's construction machinery industry has become more intense. In order to seize more shares, many companies have focused their attention on the market.

Jun Jun said that in the fierce competition, in order to ensure the continued growth of sales volume, companies began to make a major issue in marketing, especially in sales promotion. Especially in subdivision areas represented by cranes, excavators, etc., since 2010, price competition has become increasingly fierce, and "zero down payment" and "disguised price reduction" have been frequently used. He criticized these industry phenomena. He said that in the short term, these measures can drive sales and allow enterprises to achieve scale growth. However, in the long run, this vicious competition will damage and overdraw the long-term development of enterprises, and it will also lower the threshold for users to enter and disrupt the order in the construction market. Influencing user groups' benefits and value realization. "This is something that the entire industry does not want to see. It is also something we must avoid."

Jun Jun said that in order to maintain the sound and healthy development of the construction machinery industry in China, and to ensure the value of enterprises and users, enterprises must jump out of the "over-promotion" cycle, and must realize the transition in terms of development mode and development momentum.

It is understood that in recent years, China's construction machinery industry has developed rapidly and the industry has rapidly expanded. In 2010, China has become the world's largest market for construction machinery. Yan Jun said that at present, China's construction machinery market is in a high-speed growth period, although there may be some market fluctuations during the period, but the next 10 years or even longer, this high-speed development momentum will not change.