Dangers and Opportunities in Machinery Manufacturing under the Epidemic

Dangers and Opportunities in Machinery Manufacturing under the Epidemic

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In 2020, the new crown pneumonia epidemic swept the world. Under the impact of the epidemic, all countries in the world have been severely hit. The economies of the United States, Japan, India, Germany and other countries, without exception, have experienced different degrees of regression. The economic impact of the epidemic can be said to be the worst since the Great Depression in the 1930s, no less than a war without gunpowder smoke. However, while the epidemic has hit the global economy indiscriminately, it has also changed the national system and economic model, changed the industrial chain, and accelerated the changes in the world structure. But despite this, the epidemic is still doing more harm than good to the world.

The same is true for machinery manufacturing. The epidemic has restricted the transportation of raw materials, workers have been unable to work, and factories have been unable to manufacture products, which has caused supply chain disruptions. According to VDMA report data, the total global machinery trade in 2020 is about 1.05 trillion euros. That total was down nearly 10 percent from a year ago.

In fact, any manufacturing industry in the world is more or less affected by the epidemic. Blocking the industrial chain and supply chain is a global problem, but the supply chain problem in the machinery manufacturing industry is particularly serious. why? Because the machinery manufacturing industry is a typical international division of labor system, each link of the supply chain may be provided by other countries. Especially in some countries where the machinery manufacturing industry is not developed, because of the lack of cutting-edge technology in the industry and the lack of basic equipment, the country’s machinery manufacturing industry is highly dependent on foreign countries. When international trade is not possible, companies can only be allowed to stop. , factory shutdown, so that the problem of supply chain disruption has never been solved.

For example, China’s machinery and equipment exports in 2020 will be about 165 billion euros, corresponding to a global market share of about 15.8%, ranking first in the world. However, in the early stage of the epidemic, China’s machinery manufacturing industry also faced the dilemma of weakening overseas supply capacity and forcing the domestic self-sufficiency rate to increase. The more typical fields are hydraulic parts, reducers and other links.

In addition, Germany’s machinery and equipment exports in 2020 are about 162 billion euros, corresponding to a market share of 15.5%. In the field of machinery and equipment manufacturing, this is the first time that China’s exports have led Germany. In 2019, Germany’s exports were still about 1.4 percentage points ahead of China.

China’s ability to catch up and have such a big gap with Germany is mainly because China took the lead in handing over a full score in the fight against the epidemic, quickly stabilizing the domestic machinery manufacturing industry. The VDMA report also showed that the share of other major machinery exporters in global machinery trade was on a downward trend compared to China, although the rankings did not change. For example, the United States continues to be in third place with a market share of 9.1%, followed by Japan with less than 8.6%, and Italy with a market share of about 6.7%.

With the support of a relatively complete and mature industry chain, in 2020, China’s total sales of machinery and equipment will reach 924 billion euros, almost equal to the sum of the United States, Germany, Japan and Italy. China has also become the only country in the world’s major economies to achieve positive growth in 2020. The annual GDP exceeded one trillion yuan, an increase of 2.3% over last year.

At the same time, the machinery manufacturing industries in other countries around the world are also actively seeking ways to break through the predicament. Governments of various countries have successively issued various policies to control the epidemic, and have started to build a more independent, complete and secure industrial chain, and the shadow of anti-globalization has shrouded the world.

“Industrial chain transfer” has become the focus of discussion in the entire manufacturing industry, but in the short term, it is difficult for each country to construct an independent industrial chain and industrial system. This is especially true of the limited machinery manufacturing industry and its dependence on external technologies. However, it is difficult for the global industrial chain to undergo a reversal change in the short term, but the transfer of some industrial chains has become a fact, and the possibility of breaking through technical restrictions in the machinery manufacturing industry of various countries has begun to increase.

Now, in 2021, the epidemic has coexisted with mankind for nearly two years, and the world has officially entered the post-epidemic era. Due to the repeated epidemics, the road to global economic recovery is still very difficult. But the pace of world development will not stop. In the new international pattern, what opportunities and risks does the machinery manufacturing industry face?

The first is of course the improvement of the industrial chain. Governments all over the world have realized the importance of supply chain issues and are expected to receive national attention in the future, reducing countries’ dependence on foreign technology and strengthening the internal circulation of domestic industrial chains. For you who are engaged in the machinery manufacturing industry, it may be possible to gain unexpected benefits by developing some extension products that are closely related to your products.

The second is the growth of import and export business. Although the epidemic situation is still repeated, as countries are trying to build a more independent, complete and safe industrial chain, the global machinery demand naturally begins to gradually increase.

However, the transfer of the industrial chain also means new investment and high costs. Now that the epidemic has not completely receded, most companies will still choose a cautious attitude and try to avoid excessive investment. In today’s machinery manufacturing, low cost has become a top priority. In the short term, cross-border procurement of low-cost raw materials or parts is still a good choice.

When it comes to cross-border low-cost procurement, it may be difficult for the global industrial chain to have a role that can replace China. As a country with the most comprehensive and complete industrial chain in the world, China has also demonstrated its excellent management capabilities and strong public mobilization in the fight against the epidemic, further enhancing the competitiveness of China’s machinery manufacturing industry on a global scale.

In general, we have come to a new historical background, and the machinery manufacturing industry has also ushered in new challenges and opportunities. The future situation is still unclear, but I believe that the epidemic will eventually disappear, and the world will enter a new course of development.

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