“In the construction machinery industry, we are new entrants and are 'little brothers'. However, as ethnic enterprises and local companies, we should have a sufficient share in the corresponding market, and we must have our own right to speak. Revitalize China's construction machinery manufacturing. Industry is our due responsibility.†On June 23rd, Yu Zheng, Chairman of Rongsheng Machinery Co., Ltd. (hereinafter referred to as Rongsheng Machinery), gave a generous speech at the “2011 China Construction Machinery Industry Strategic Development Forumâ€. His speech was also regarded as a clarion call made by Jiangsu Rongsheng Heavy Industry Group Holdings Co., Ltd. (hereinafter referred to as Rongsheng Heavy Industry), known for its shipbuilding, to enter the construction machinery industry. Just a few days later on June 28, Rongsheng Heavy Industry announced that the new engineering machinery factory in the Economic and Technological Development Zone of Hefei was formally put into production. The first excavator was also successfully rolled out the same day.
In today's construction machinery industry, events such as Rong Sheng's "landing" are not cases. Just a few days ago, Foton Motor also adopted the heavy machinery business as one of the five key industries for the company's future development at the annual economic work conference. Previously, Yutong and Chery entered the construction machinery industry even more widely known. It is also reported that Geely has this intention. Even the Wuliangye Group, known for its liquor, plans to build a medium and small excavator project with a capacity of 10,000 units.
What is the charm of China's construction machinery market and can attract so many capital inflows?
What is the scenery in the "city"?
Di Xiangdong, Executive Director of Liaoning Fuduo Heavy Industry Holdings Co., Ltd., said in an interview with this reporter that the reason why these companies are keen to get involved in the construction machinery industry is because they see the high rate of return on investment brought about by the high growth of China's construction machinery industry.
During the “Eleventh Five-Year Plan†period, the construction machinery industry in China has been advancing rapidly. Some major construction machinery companies have achieved significant growth in recent years. From 2005 to 2010, the market value of Sany Heavy Industry has increased 34-fold, compounding annual growth. The rate is as high as 80%.
"Listed companies have a lot of cash in hand and they must give an account to their shareholders." Di Xiangdong said, "The funds must have a popular industry to invest, and they can't be speculative like SMEs. ."
It is precisely in this situation that listed companies have focused their attention on the construction machinery industry, and Rongsheng Heavy Industry is not limited to this. However, the construction machinery industry's money is really so good to earn it?
The long-cherished landscape should focus on the "rational return", which is a word mentioned by Secretary-General Su Zimeng of the China Construction Machinery Association at the "2011 China Strategic Forum on Construction Machinery Industry Development." He believes that during the "Twelfth Five-Year Plan" period, the average annual growth rate of China's construction machinery industry will be 17%. This year, China's construction machinery industry growth rate will fall from last year's 38% to about 17%.
The reasons, apart from the macroeconomic development in China, are also related to the structure of China's entire construction machinery industry. Although many people in the industry think that Secretary Su’s proposal that “China’s construction machinery industry’s revenue reached 900 billion yuan in 2015†is somewhat conservative, the fact that the sales volume of construction machinery market has declined in recent months has caused people to believe that the construction machinery industry is making rapid progress. The scenery is disappearing.
Di Xiangdong told reporters: “These listed companies only saw the local engineering and machinery industries in China, and they lacked long-term understanding. Construction machinery is an industry with strong development cycle, and the future will never be like the past 5 It is developing so fast.†He said that enterprises must enter into a new field and must consider various potential risks. The current mode of growth of China's construction machinery industry is mainly an extensive capacity expansion model, which will inevitably lead to industry profits. The rate is getting lower and lower, and it is impossible to change the mode of growth.
If there is progress, there will be a slowdown in market growth, and the production capacity will continue to increase. The contradiction between production and sales will inevitably emerge gradually. In the case of oversupply, the construction machinery market in China is like an "iron-plated camp plate." Construction machinery companies are "water soldiers," and if there is "advancement," there will naturally be "out." Behind the “siege†in the construction machinery industry is the increasing reshuffling.
Su Zimeng said: “Taking the excavator industry with huge domestic demand as an example, from the perspective of the expansion plans obtained by major companies, this year's excavator production capacity will reach 300,000 units, and the market demand for excavators this year is probably 250,000. Around Taiwan, this will inevitably lead to excess capacity."
The chairman of the construction machinery agent Henan Trimax Group Dai Canyong also expressed his concern: “The excavator production capacity will be amplified and the market competition will become more intense in the future. If the industry growth rate is only 5% or less, everyone will “fight the knifeâ€. Foreign brands will also be involved, and the situation will be more severe."
As the leader of Rongsheng Machinery, Yu Zheng also saw these situations. He said that although the current entry into the construction machinery industry is facing excess production capacity, excessive competition, and key core technologies that are subject to human and other business risks, it is not enough to move Rongsheng Machinery's determination to strengthen and expand national brands. In his words, "not only to speed up, but also to run faster than others." Perhaps, Rongsheng Machinery has enough strength to fight a few tough battles, and it can also give some clues on the cooperation with Everbright Bank and the acquisition of Quanchai Group.
Market economy, the law of the jungle. It is in the process of “sieging the city†and shuffling that the Chinese construction machinery industry continues to draw fresh blood and move forward step by step.
In today's construction machinery industry, events such as Rong Sheng's "landing" are not cases. Just a few days ago, Foton Motor also adopted the heavy machinery business as one of the five key industries for the company's future development at the annual economic work conference. Previously, Yutong and Chery entered the construction machinery industry even more widely known. It is also reported that Geely has this intention. Even the Wuliangye Group, known for its liquor, plans to build a medium and small excavator project with a capacity of 10,000 units.
What is the charm of China's construction machinery market and can attract so many capital inflows?
What is the scenery in the "city"?
Di Xiangdong, Executive Director of Liaoning Fuduo Heavy Industry Holdings Co., Ltd., said in an interview with this reporter that the reason why these companies are keen to get involved in the construction machinery industry is because they see the high rate of return on investment brought about by the high growth of China's construction machinery industry.
During the “Eleventh Five-Year Plan†period, the construction machinery industry in China has been advancing rapidly. Some major construction machinery companies have achieved significant growth in recent years. From 2005 to 2010, the market value of Sany Heavy Industry has increased 34-fold, compounding annual growth. The rate is as high as 80%.
"Listed companies have a lot of cash in hand and they must give an account to their shareholders." Di Xiangdong said, "The funds must have a popular industry to invest, and they can't be speculative like SMEs. ."
It is precisely in this situation that listed companies have focused their attention on the construction machinery industry, and Rongsheng Heavy Industry is not limited to this. However, the construction machinery industry's money is really so good to earn it?
The long-cherished landscape should focus on the "rational return", which is a word mentioned by Secretary-General Su Zimeng of the China Construction Machinery Association at the "2011 China Strategic Forum on Construction Machinery Industry Development." He believes that during the "Twelfth Five-Year Plan" period, the average annual growth rate of China's construction machinery industry will be 17%. This year, China's construction machinery industry growth rate will fall from last year's 38% to about 17%.
The reasons, apart from the macroeconomic development in China, are also related to the structure of China's entire construction machinery industry. Although many people in the industry think that Secretary Su’s proposal that “China’s construction machinery industry’s revenue reached 900 billion yuan in 2015†is somewhat conservative, the fact that the sales volume of construction machinery market has declined in recent months has caused people to believe that the construction machinery industry is making rapid progress. The scenery is disappearing.
Di Xiangdong told reporters: “These listed companies only saw the local engineering and machinery industries in China, and they lacked long-term understanding. Construction machinery is an industry with strong development cycle, and the future will never be like the past 5 It is developing so fast.†He said that enterprises must enter into a new field and must consider various potential risks. The current mode of growth of China's construction machinery industry is mainly an extensive capacity expansion model, which will inevitably lead to industry profits. The rate is getting lower and lower, and it is impossible to change the mode of growth.
If there is progress, there will be a slowdown in market growth, and the production capacity will continue to increase. The contradiction between production and sales will inevitably emerge gradually. In the case of oversupply, the construction machinery market in China is like an "iron-plated camp plate." Construction machinery companies are "water soldiers," and if there is "advancement," there will naturally be "out." Behind the “siege†in the construction machinery industry is the increasing reshuffling.
Su Zimeng said: “Taking the excavator industry with huge domestic demand as an example, from the perspective of the expansion plans obtained by major companies, this year's excavator production capacity will reach 300,000 units, and the market demand for excavators this year is probably 250,000. Around Taiwan, this will inevitably lead to excess capacity."
The chairman of the construction machinery agent Henan Trimax Group Dai Canyong also expressed his concern: “The excavator production capacity will be amplified and the market competition will become more intense in the future. If the industry growth rate is only 5% or less, everyone will “fight the knifeâ€. Foreign brands will also be involved, and the situation will be more severe."
As the leader of Rongsheng Machinery, Yu Zheng also saw these situations. He said that although the current entry into the construction machinery industry is facing excess production capacity, excessive competition, and key core technologies that are subject to human and other business risks, it is not enough to move Rongsheng Machinery's determination to strengthen and expand national brands. In his words, "not only to speed up, but also to run faster than others." Perhaps, Rongsheng Machinery has enough strength to fight a few tough battles, and it can also give some clues on the cooperation with Everbright Bank and the acquisition of Quanchai Group.
Market economy, the law of the jungle. It is in the process of “sieging the city†and shuffling that the Chinese construction machinery industry continues to draw fresh blood and move forward step by step.
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