Is China's construction machinery market attractive?

Recently, due to the weakness in the European debt crisis and monetary tightening policies, the demand for construction machinery foundry in China has also led to a slowdown in the profit growth momentum of the construction machinery parts foundry industry in Japan. The operating profit of Kawasaki Heavy Industries in Japan in the first half of the year is expected to increase by only 1% year-on-year, while KYB's profits have also declined. Due to the fact that the current sales revenue of construction machinery and hydraulic equipment from the above two companies exceeds 50% from the Chinese market, the external demand in the Chinese foundry market is tightening, which is an important reason for the decline in profits of Japanese companies. Therefore, some companies claim that the Japanese foundry industry will reassess its investment in China.

Another news related to Chinese manufacturing came from the United States. With the promulgation and implementation of the “US Manufacturing Industry Promotion Act,” many manufacturing companies are relocating to their home countries, and the rising cost of human resources in China is also a major factor that many companies choose to leave. According to report, in ordinary Chinese factories, workers' wages and benefits are growing at a rate of 15% to 20% per annum. If this rate continues at this rate, China’s labor cost advantage over the U.S. will be reduced from the current 55% to 2015. 39% of the year.

Does this mean that China's construction machinery market has lost its appeal? The answer is obviously negative. Because all economic activities are centered on demand. The huge market potential of China's construction machinery market is currently at an undulating stage for various reasons. However, it must be noted that China’s huge population base and urbanization progress have determined that the rigid demand for housing and infrastructure still exists. A few years of rapid economic growth and monetary stimulus policies have led to structural misalignments in certain areas and need to be slowed down to adjust. However, the adjustment has not been stagnant. Since the second quarter, good news such as interest rate cuts by the central bank, encouragement of private capital to enter the investment field, and restart of major projects have continued to spread. The "Twelfth Five-Year Plan" for water conservancy, energy conservation and environmental protection has also been promulgated successively. China The construction machinery industry is moving toward recovery. However, we will wait and see if the phenomenon of "five poor, six absolute, seven, overturned" will emerge like the stock market.