China’s Machine Tool Market

Despite being influenced by the financial crisis of world economy in 2012 and its subsequent impact, China machine tool industry has witnessed an overall growth since 2011 due to government policies aiming to advance new technology and expand mechanical industries, resulting in a high demand and revenue for China machine tool market. According to Research, the market size of China machine tool industry by revenue and sales volume reached approximately CNY 284.1 billion and 1,797,100 units, respectively in 2016, demonstrating a CAGR of approximately 1.9% and 1.6% in terms of both revenue and sales volume from 2011 to 2016, and are expected to reach approximately CNY 317.3 billion and 1,961,000 units, respectively in 2021, representing a CAGR of approximately 2.2% and 1.8%, respectively from 2016 to 2021.

Overview of CHINA CNC high precision machine tool industry

The market size of China CNC high precision machine tool industry by revenue and sales volume reached approximately CNY118.5 billion and 431,300 units, respectively in 2016, representing a CAGR of approximately 4.3% and 6.0%, respectively from 2011 to 2016. At a comparison, the market size of China conventional machine tool industry by revenue and sales volume reached approximately CNY165.6 billion and 1,365,800 units, respectively in 2016, representing only a CAGR of approximately 0.3% and 0.4%, respectively from 2011 to 2016. due to the development of CNC technology and favorable government policies, the sales ratio of CNC high precision machine tools within China, being the ratio of the total sales volume of China CNC high precision machine tools divided by the total sales volume of China machine tools, is expected to further increase to approximately 30.7% in 2021, much higher than the sales ratio of approximately 19.4% in 2011.

According to Research, the sales ratio of CNC high precision machine tools in China reached approximately 24.0% in 2016, where such ratio in Japan, Germany, USA, South Korea and Taiwan in 2016 reached approximately 67.1%, 65.8%, 55.3%, 46.2% and 29.8% respectively. The sales ratio of CNC high precision machine tools demonstrates the overall technical capability and the technology advancement of a country. As such, although there is a growth in China CNC high precision machine tool industry, China CNC high precision machine tool industry is behind in terms of maturity of the CNC technology compared to the other developed countries, in particular, Germany and Japan. In other words, there are potentials for the expansion of China CNC high precision machine tool industry.

Key drivers

There are five key drivers of growth in China CNC high precision machine tool market: (i) sustained growth of macro economy and industrial output value; (ii) rising and shifting demand from downstream industry on CNC high precision machine tools; (iii) evolutionary sales channel of CNC high precision machine tools; (iv) rising adoption of CNC system; and (v) adequate regulations support for CNC high precision machine tool industry. According to Research, China’s nominal GDP is expected to sustain a long-term growth with a CAGR of approximately 7.3% from 2016 to 2021 and reach approximately CNY105.7 trillion in 2021. Given the high correlation between China CNC high precision machine tool market and the macro economy, China CNC high precision machine tool industry is likely to be further strengthened. Secondly, as the CNC high precision machine tools continue to be applied to different industries including the electronic device, automobile and healthcare industries, the further development of these industries will stimulate the CNC high precision machine tools demand of end users. Thirdly, in order to lower the risk of default payment by selling through distributors, the manufacturers will expand the regional coverage of their business, thereby facilitating the development of the CNC high precision machine tools. Considering the sales ratio of CNC high precision machine tools is expected to exceed 30% by the end of 2021, there is a positive outlook for the development of the CNC high precision machine tool industry in China. Finally, as China government continues to adopt favorable policies that support and boost the development of the CNC high precision machine tool industry, such as encouraging the development of the manufacturing technology of machines tools and strengthening the competitiveness and demand of machine tools in China, more business opportunities will be generated for the CNC high precision machine tool industry in China.

Industry development

China CNC high precision machine tool market is full of opportunities. Import of CNC high precision machine tools from Japan and Germany currently exceeds 60.0% of the total consumption of CNC high precision machine tools in China in terms of sales volume, according to Research, indicating the increasing demands for CNC high precision machine tools in China. China’s economic restructure also drives the development of many downstream industries, such as civil industry and national defense industry, which in turn offers new opportunities for the development of CNC high precision machine tool market.

Meanwhile, China CNC high precision machine tool manufacturers also face the following challenges: (i) technological gap in numerical system between China and some developed countries such as Japan and Germany; and (ii) China’s limited ability in research and development of some crucial components and parts in manufacturing CNC high precision machine tools, which results in overseas suppliers’ restrictive measures over China’s procurement of crucial components and parts.

The five main trends for the development of China CNC high precision machine tool market are: (i) high speed; (ii) intelligentalization; (iii) high precision oriented; (iv) technology integration; and (v) product diversification. Firstly, CHINA CNC high precision machine tool market has entered into a high-speed era. Manufacturers need to shorten their delivery time by upgrading their automation level, while improving product quality. Further, the overall performance of CNC high precision machine tools can be improved by, among others, manufacturers’ innovation in CNC systems, neural network and evolutionary computation in the era of artificial intelligence technology advancements. Thirdly, production system for manufacturing industries shall be transformed from labor incentive to technology intensive in order to cope with the rising labor costs and the industry trend of energy saving and emission reduction, and as a result, the demand for high precision CNC high precision machine tools will be increased. Fourthly, the increasing application of CNC high precision machine tools with high technologies integrated can reduce the production time and increase productivity in mass production. Finally, CNC high precision machine tools are widely utilized in different downstream industries. With the rapid development of some downstream industries, such as IT and electronic products, automobile and medical apparatus, there will be an increase in demand for the CNC high precision machine tools from such downstream industries.