Bleak outlook for China's domestic machine tool component market - opportunities for Western suppliers
Domestic component makers remain focused on the lower-end market segment, and face difficulties satisfying more demanding machine tool OEMs, as well as competing with the many foreign competitors who import to China or have local operations.
As InterChina Consulting argues in detail in this white paper, despite some progress, it will take another couple of decades for the Chinese machine tool components industry to become competitive in higher-end market segments, mainly because it lacks a solid industrial foundation and suffers from the industry’s outdated structure, and inadequate values and work attitudes. Therefore, advanced western suppliers (both OEMs and key components manufacturers) will continue to dominate the high-end market segment for the foreseeable future.
This sobering reality brings important implications for Chinese and international companies active in this sector: The necessity of focusing on services (including spare parts), customer requirements and support, product adaptation etc., rather than on local production, and only consider gradual transfer to China of product development capacity and production adaptation to the local market, while keeping the core of R&D in the home country. Local production should be considered with prudence as it might be very difficult to achieve international quality and there might be limited or no sustainable cost advantages, unless product design (and quality) is adapted to component choices which are available in China.