Is the Pattern of China's Concrete Machinery Industry Changing?
Posted by Bruce Tang on June 20th, 2019
In the past 10 years, the heat wave of the city-building movement has been on the land of China, and millions of high-rise buildings have risen overnight. China's amazing and unprecedented urbanization process, in addition to creating China's speed and new urban landscapes in China, also quickly lifted the development of China's concrete equipment industry.
In just a decade or so, China has not only jumped into a country with the largest annual sales volume and number of equipt concrete, but also produced the world's leading concrete equipment manufacturer. At present, Xugong, Zoomlion and SANY three companies account for more than 90% of the global equipt concrete market. In 2012, the most prosperous concrete equipment market in China, the annual sales of various types of equipt concrete exceeded 70,000 units, and the sales revenue was about 100 billion yuan. In 2013, sales of concrete mixing plants remained the same as in 2012, when sales of concrete pump trucks fell sharply.
Long-term and huge market traction has brought an average annual growth rate of 50% to China's two concrete equipment manufacturers, Zoomlion and SANY Heavy Industry, and an average profit margin of over 30%.
However, this scale, income, and profit are very attractive business sectors, and in the past two years, they have been under continuous downward pressure. In 2014, the sales volume of concrete pump trucks in China fell by more than 50% from the highest. Some insiders predict that in the future, the annual sales volume of concrete pump trucks in China may be stable at 4,000-5,000 units, and the total demand for concrete equipment including various types of traditional products such as concrete mixer trucks and tow pumps is only 30 billion yuan. Although this figure is still considerable compared to the market size of RMB 12 billion outside China, from the perspective of the Chinese market, this can be a cliff-like decline, and the impact on enterprises is undoubtedly huge. It is important to know that in 2014, only the sales of equipt concrete of Zoomlion and SANY Heavy Industry will be close to 27 billion yuan.
The rapidly shrinking market demand has made the competition between Zoomlion and SANY Heavy Industry, which are still highly dependent on the equipt concrete business, increasingly fierce. If the forecast of "China's equipt concrete market is capped at 30 billion yuan" is putative, both manufacturers in the "topping global construction machinery industry" will undoubtedly face enormous challenges in the future development.