China construction machinery industry cheers strong 2020 sales but outlook uncertain

China’s strong construction machinery sales are expected to continue until at least early next year but could be hobbled by any slowdown in Beijing’s recent infrastructure investment drive, industry executives told Reuters news agency (Reuters).
Loading, Hauling & Excavation / November 27, 2020
By Reuters news agency
XCMG's stand at bauma CHINA 2020 pic: PRNewsfoto/XCMG

Construction equipment makers have experienced unexpectedly robust sales in China this year, especially for excavators, after the country embarked on a fresh building spree to bolster the economy following the emergence of the COVID-19 pandemic.

XCMG Construction Machinery told Reuters its sales in China had jumped by over 20% this year versus 2019, although overseas sales have been hit by the global spread of the virus.

Rivals such as Japan’s Komatsu have similarly said they have seen a recovery in demand from China.

“Our original forecasts were not for such high-speed growth especially since it’s the last year of China’s 13th five-year plan,” said XCMG’s Chairman Wang Min in an interview on the sidelines of the biennial bauma CHINA exhibition, showcasing new and proven premium machinery for the international construction, quarrying and mining sectors. The industry traditionally sees fewer new construction projects starting in such a year.

China’s 14th five-year economic plan will be revealed at the annual parliament meeting in early 2021, with a focus on technology and domestic demand.

Overall, the industry is expected to see a 15% or more year-on-year jump in China sales this year, according to the Off-Highway Research consultancy, which had previously forecast sales to fall 8% prior to the COVID-19 outbreak.

“We will definitely see growth in the first half of next year, but the second half, whether expectations will change, we have to see what policy decisions the National People’s Congress make,” said Off-Highway’s director of Research Shi Yang, referring to the country’s parliament. The consultancy is currently forecasting a 10% sales decline for 2021.

Rosy sales in China have not necessarily translated to profit jumps for equipment manufacturers, as more players join a lingering price war, he added.

U.S.-based Caterpillar, the world’s largest equipment maker, unveiled a new range of cheaper, 20-ton ‘GX’ hydraulic excavators for the Chinese market at the fair, which attendees said were being advertised by dealers for as low as 666,000 yuan (US$101,000). Generally, Caterpillar’s excavators sell for about 1 million yuan, they said.

A Caterpillar spokeswoman said the new series enabled it to offer equipment at a lower low price point and cost per hour.

“Competition in China is very fierce, the prices for some standard products have fallen to levels where they can’t really go any lower anymore,” XCMG’s Wang said.

XCMG launched the XCMG-Global Service System (X-GSS) on the opening day of this year's bauma CHINA show (24-27 November).

To improve spare parts services, XCMG has developed the full life-cycle service information system to provide accurate, value-added and satisfactory maintenance support for global customers.

"The construction machinery industry has been presented with new challenges and opportunities since the onset of the digital age. To better serve our customers and embrace these changes, XCMG looked to develop a 'digital service' providing more value to global customers," said Wang.

Nearly 150,000 XCMG machinery products currently have related digital products ensuring accurate and prompt maintenance services.

The opening day of bauma CHINA 2020 also saw XCMG release its first 5G intelligent cabin for road machinery, which enables operators to gain real-time information through VR glasses. This was demonstrated via the remote operation of a road roller in Xuzhou, Jiangsu Province. 







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