Overcapacity in China's equipment manufacturing industry

In recent years, the phenomenon of increased competition in the equipment manufacturing industry due to overcapacity has been very prominent. Both the automotive industry and the construction machinery industry have experienced a lot of excessive competition, such as ultra-low-price sales and zero down payment policies, which have seriously affected the healthy and normal market order of China's machinery and equipment manufacturing industry. This kind of expansion of equipment manufacturing enterprises has neglected the connotation while consuming large amounts of resources. The situation of the lack of core competitiveness of China's equipment manufacturing enterprises has not been changed, and the industry has generally exhibited a "muscle weakness" condition. The situation of "hollowing out" remains the same.

In order to develop the industry, the industry must eliminate the disease and possess core competitiveness. The most fundamental thing is to change the growth mode of the industry. At this point, consensus has generally been formed in the industry. In a certain sense, the social ecological environment determines the basic principle for the survival of the fittest. Different growth methods are a choice for companies to deal with the external environment. What kind of development environment, most companies will choose to match the development model. If there is no major change in the external environment, companies can easily obtain production factors at a low price. Some of the environmental costs can be externalized, and profits are still growing. No matter the equipment manufacturing industry or the enterprise, no one will change the mode of economic growth for no reason at all. It will not venture to engage in technological innovation. The reason why this vitality of growth is tenacious is obviously not based on the principle of marketization.

Nowadays, as an important indicator for evaluating the performance of local governments, GDP still has very important value. It is very easy for local governments to shift their appeals for GDP growth to the expansion of enterprises' scale. The reason why the equipment manufacturing industry has a general excess of low-end production capacity is in fact directly related to the push role played by local governments. The transformation, innovation and such high-cost, high-risk, and long-term content are clearly thirsty for local governments. Based on this, tightly centering on the large-scale projects and new projects in the equipment manufacturing industry, it naturally became a favorite and preferred choice of local governments at all levels.

It should be said that the problem of institutional mechanisms is not solved and the equipment manufacturing industry has no future. Obviously, the principle of prominent benefits is the premise of industrial transformation. For those state-owned equipment manufacturing superior resources, if there is not an effective disposal method and no mechanism to continuously optimize its functions, the industrial transformation may well be empty talk.

Some time ago, I wanted to compare the selling prices of several excavators with the same tonnage of different brands. As a result, the websites of the engineering machinery OEMs and agents did not find any information on the prices of the relevant products. In the automotive industry, on the other hand, almost all brands can find manufacturers' guide prices and dealer quotes online.

For the automotive industry, the manufacturer's guide price is a guiding price given by the manufacturer in combination with the characteristics of his own product, the price of the competitor's car, and other relevant factors. The dealer's quotation refers to the price that the dealer would expect to reach by combining the original price of the car, the shipping cost, the rebate point of the manufacturer, the profit, and other relevant factors.

The user understands the manufacturer's guide price and dealer's quotation of the product, which helps the user to compare the price of similar products, so as to obtain a product with higher cost performance. Then why did the construction machinery industry not have a guide price? From the author's point of view, this is not unrelated to the types of construction machinery products, sales methods, and customer entities.

Automotive products are popular products and their configurations are relatively simple. There are a wide variety of construction machinery products, and the structure, function, and selling price of each product vary greatly, even if the configuration of the same product is not the same. Even the same model, there are different engines, work devices, electronic control systems, hydraulic systems for selection. All of these are different from the automotive industry, which has brought a lot of difficulties to the formulation and open price guidance of construction machinery products.

The sales model of construction machinery is different from that of automobiles. The automobile sales model is generally based on store operations, and the sales channels are more open and open. The sales volume of each salesperson is not wide and the sales commission is not very high. Sales of construction machinery are usually door-to-door sales, and sales channels are relatively single-occluded. The sales volume of each salesperson is very different, and the sales commission is relatively high. There is no manufacturer's guide price for construction machinery products, which is convenient for dealers to report high prices. This not only allows agents to obtain greater profits, but also enables sales staff to obtain higher commissions.

The direct sales cost of construction machinery is also different from that of automobiles. Cars are owned by store operators, customers are mostly individual, and direct marketing costs are low. The customers of construction machinery include both individuals and large construction companies. The customers of excavators, loaders, road rollers, rotary drilling rigs and other equipment are mainly individuals. The customers of crawler cranes, asphalt mixing plants and other equipment are mostly large construction companies.

The construction machinery sold to individual users does not require too much additional cost, and even many do not need to issue invoices. The direct sales cost is not very high. The sale of large-scale equipment to large-scale construction companies generally takes the form of bids. When the construction machinery manufacturer bids, it needs to pay a series of additional fees such as registration fees, bid evaluation fees, service fees, etc., resulting in an increase in the selling price of construction machinery products. In addition, due to the geographical differences of agents, the freight and service costs of the products also vary greatly.

The above factors are brought together, making the cost of the intermediate links in the sales of construction machinery products very different, and it is easy to understand the related guidance prices. Relevant experts pointed out that there are guiding prices for construction machinery products that can be found and are beneficial to both buyers and sellers. This not only makes it easier for users to purchase products with higher cost performance, but also helps the industry to form a healthy competitive environment. The introduction of guidance price for construction machinery products also requires a gradual process. The host manufacturer can start with popular products that are simple to operate, such as excavators and loaders, and gradually expand to other models.