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<\/a><\/p>\nDespite these positive figures, the climate for many European\u00a0companies in China gets increasingly rough: Chinese competitors are gradually expanding their business scope beyond the lower segments and are furthermore catching up in terms of technology and overall quality. Adding to the situation is the fact that the Chinese government promotes the development of its machinery industry towards more high-technology.<\/p>\n
PRC’s current Five-Year-Plan specifically defines several key industries. The machinery industry is one of them and is furthermore considered to be one of the most important cornerstones of the Chinese economy. The various government measures under the Five-Year-Plan include, inter alia, increased investment in R&D, improvements in the overall quality of Chinese machine builders and promotion of environmental friendly technologies.<\/p>\n
Although apparent differences between local and international products remain existing, the gap progressively narrows. On the other hand, however, the governmental subsidies also offer European machine builders new chances and opportunities.<\/p>\n
According to VDMA (German Engineering Association), the Chinese machinery exports will also register dramatic growth rates within the coming years. A first wave of expansion is already taking place towards countries in Southeast Asia and India. From 2015 onwards, Chinese machinery exports are expected to increasingly target European nations. In the meantime, China ranks 3rd in terms of global machinery exports, just behind the United States and Germany which remains number one for the time being.<\/p>\n
The increased competition is also reflected in the growing number of takeovers by both Chinese and German companies. Industry experts from the VDMA believe that it is particularly essential for German companies to relocate their production and R&D activities to Mainland China. Going local with respect to production is becoming increasingly necessary for large companies, especially for companies with revenues of \u20ac100 million and above.<\/p>\n
Furthermore, the service sector is yet to be fully exploited by German\u00a0machinery firms. This sector particularly offers opportunities for German\u00a0companies as their maintenance and after-sale services usually represent a competitive edge over their Chinese counterparts. So far, however, much of the potential in this segment is solely left to Chinese competitors.<\/p>\n
Lastly, German machine manufacturers face another major challenge: Most Chinese customers are interested in the mid-tech segment while German machines are often regarded as too sophisticated. In the future companies should therefore consider to increasingly focus on adapting to the local customers’ needs. Local clients are often not willing to pay for premium product features which in fact are not needed. A recent example represents German machine manufacturer TRUMPF which, in order to better serve the relevant medium segment, has lately acquired a Chinese competitor.<\/p>\n
For further information on the subject, please contact us.<\/p>\n
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