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Machine tool manufacturers raise their game

(China Daily)
Updated: 2008-06-18 14:39

The Chinese machine tool industry is coming of age, with companies pursuing a larger presence internationally since China became a net exporter last June.

The industry, with a total output of 274.77 billion yuan in 2007, up 35.5 percent from 2006, is aggressively expanding into overseas markets through acquisitions and is increasing spending on research and development.

China's machine tool exports topped 5 billion yuan in 2007, an increase of 36.2 percent over 2006.

Dalian Machine Tool Group Corp, a leading player in the industry, was the first to make overseas acquisitions. It has purchased two American machine tool factories and bought total property rights for them, underlying domestic companies' global ambitions.

"We use the overseas factories as a base to expand our products in the global market," said Jiang Huaisheng, the company's vice-president, adding the company's products are being exported to over 100 countries.

The company has also formed five joint ventures with world-leading machine tool makers.

Besides mergers and acquisitions, domestic companies are spending heavily on research and development, trying to improve their competitiveness in the global market.

"Ninety-nine percent of our products are independently developed machine tools," said Jiang. "Our output value was about 11 billion yuan in 2007 and computerized numerically controlled (CNC) machine tool products accounted for approximately 45 percent of it. We put about 400 million yuan into researching CNC machine tools. The investment will increase next year."

China's machine tool output value ranked third in the world and first in terms of consumption over the last four years. In 2007, the country manufactured 600,000 machine tools but only around 20 percent of them were CNC machine tools, according to Liang Xunxuan, founder and honorary chairman of China Machine Tool & Tool Builders Association.

"So it's time for Chinese companies to develop and research their own high-level machine tools," he added.

The number of CNC machine tool companies, with an annual production capacity of over 1,000 machine tools, has reached 28, and those with an annual capacity of more than 100 machine tools reached 130 in China by the end of last year.

Many Chinese machine tool manufactures are vigorously developing the medium- and high-grade CNC machine tools to make their products more competitive in the global market.

According to Liang, State-owned enterprises represent 30 percent of China's machine tool and manufacturing industry, while the private sector has a more considerable 60 percent share.

"There are numerous Chinese machine tool companies that have good products and could do well in the international market. But they do not know how to market them. I think our enterprises should enhance their marketing and international market analysis capabilities, and create their own methods of putting their products in the global market," said Liang.

While Chinese machine tool producers are looking to gain international presence, leading global groups are also seeking business opportunities in China.

Deckel Maho Gildemeister (DMG), the world's largest machine tool producer, has a strong relationship with Chinese enterprises, especially in the aerospace and aviation industry. DMG provides machining centers and CNC machine tools to Chinese aerospace and aviation manufacturers such as Xi'an Aircraft and Chengdu Aircraft.

"We opened our first office in China in 1985 in Beijing, and then opened our Shanghai production plant, which was our first plant outside Europe," said Hanno Elbrachter, DMG president of China. "Now we have 360 staff in China and our sales revenue on the Chinese mainland reached 120 million euros in 2007."