China’s Industrial Machinery Market: Insights & Opportunities

July 3, 2024
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For many years, China has been infamous for being a cheap, low-quality production powerhouse. But this is long gone. Over the last decade, China has abandoned its old reputation and re-emerged as a thriving, high-end industrial and manufacturing hub. This extraordinary transformation has positioned China as a formidable force in the global industrial machinery market.

What does China’s industrial machinery landscape look like today, and more importantly, what opportunities does it offer for foreign manufacturers and suppliers interested in entering the Chinese market?

This comprehensive article delves into the dynamics of this burgeoning market, shedding light on the following aspects:

  • A Bird’s Eye View of China’s Industrial Machinery Market – The Stats
  • Primary Growth Drivers & Trends
  • China’s Industrial Machinery Sub-Markets
  • Supportive Government Measures
  • Opportunities for International Manufacturers & Tech Leaders

A Bird’s Eye View of China’s Industrial Machinery Market – The Stats

Why don’t we let the numbers speak first:

  • China is the world’s largest industrial machinery market, boasting an almost US$30 billion market value.
  • China’s industrial sector is responsible for nearly a third of the local GDP, with industrial output growing by over 6% YoY in the first quarter of 2024 (surpassing the 5.3% general GDP growth).
  • The number of local employees in the machinery and equipment industry is projected to reach almost 5 million individuals by the end of 2024.
  • China’s industrial machinery consumption constitutes about a third of the global consumption, solidifying its position as the largest market worldwide.
  • In 2021, machine tools exported from China averaged around US$300 per unit, contrasting with an average import price of US$76,700 per unit.

These figures unveil several insights into China’s industrial machinery landscape. First, China’s dominance in the global industrial machinery market is not to be mistaken or underestimated. Second, the industrial sector is a primary driver of China’s economy, which is why it wins significant attention and preferential treatment from the government. Third, despite its lucrative status, China still heavily relies on foreign imports, presenting ample opportunities for international manufacturers to grab their share in this vast market.

Primary Growth Drivers & Trends

As it turns out, the Chinese industrial machinery market is presenting a steady growth not only in scale, but even more so, in sophistication. Several factors explain this growth:

  • Increased Labor Costs: The rise in labor costs in China has prompted manufacturers to invest in automated solutions and robotics to reduce dependency on manual labor and improve efficiency. This shift towards automation is fueling demand for advanced industrial machinery capable of streamlining production processes and minimizing operational costs, ultimately resulting in constant market development and productivity.
  • Customer Demand for Top Quality Products: Customer expectations for top-quality products have led manufacturers to focus on innovation and technological advancements in industrial machinery. To cater to market demands, modern industrial machinery prioritizes precision, reliability, and high performance in operation, ensuring flawless goods and optimal user experience.
  • Tangible & Intangible Industrial Equipment: The integration of tangible and intangible industrial equipment is revolutionizing manufacturing processes in China. Advanced robotics and other automation systems represent the tangible aspect, alongside intangible “equipment” like software and AI solutions. This combination allows for specialized, highly efficient production, boosting China’s manufacturing sector status.
  • Government Agenda: The Chinese government has made industrial modernization a key priority as part of its broader vision of emerging as an innovation leader. To achieve its goal, China has rolled out initiatives like “Made in China 2025” and a host of corresponding supportive policies as incentives for local and international manufacturers. This proactive government approach has created a conducive environment for technological advancements and the adoption of cutting-edge machinery in China’s industrial base.

China’s Industrial Machinery Sub-Markets

Amid this landscape, it’s worth focusing on three key sub-markets within China’s industrial machinery market – all three areas reflect China’s ambition to modernize and digitize its industrial system and are part of what has re-defined China’s image:

  1. Industrial Automation

Industrial automation mechanisms are paving the way for future industrial upgrades, so much so that automation has become an inevitable component in the manufacturing industry in China. Given this significance, it is unsurprising that the local factory automation and industrial control market is continuously growing. The market size is estimated at US$147.90 billion in 2024 and is expected to reach us$255.60 billion by 2029, growing at a CAGR of 11.22% during the forecast period.

A remarkable element in China’s industrial automation market is industrial robots. Those have been booming in China for the last few years, with widespread adoption across 52 industrial divisions and 143 industrial groups, including automobile, electronics, metallurgy, light engineering, etc. The International Federation of Robotics’ 2022 report reinforces China’s leadership in industrial robot installations, accounting for more than half of new robot installations that year.

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  1. Industrial Internet

Although possibly unfamiliar to many, the Industrial Internet represents a worthwhile area of industrial machinery, with its market reaching nearly US$170 billion in 2023. The sector’s growth is underscored by the substantial added value it brings to China’s economy, featuring an impressive 8.7% YoY increase in 2022, constituting 3.64% of the GDP.

Industrial Internet brings advanced computing, data analytics, AI-powered software, and IT capabilities into industrial systems, facilitating enhanced productivity, efficiency, and reliability in manufacturing processes. China is a global pioneer on this front, with over 100 Industrial Internet platforms seamlessly connected with a vast network of 76 million machines and over 1,500 “5G + Industrial Internet” projects.

Within the Industrial Internet, the Industrial Internet of Things (IIoT) is a smaller niche focusing on the connectivity between physical industrial machinery and big data and software to enable optimized and upgraded manufacturing processes. In a global outlook, China is expected to lead in revenue generation, with a forecasted amount of US$135.50 billion in 2024.

  1. Computer Numerical Control (CNC)

CNC tools and machines are a core component of modern manufacturing, and therefore, they are significantly sought after in China. Evidently, the CNC machine tool industry has shown a trend of rapid development over the years, featuring an average CAGR of 5.75% and with predictions for the market size to reach almost US$61 billion by the end of 2024.

The push for automated and advanced manufacturing capabilities drives significant demand for CNC machine tools across China’s industrial sectors. As Chinese manufacturers strive to enhance competitiveness, they are integrating CNC machines into production lines to boost efficiency and precision, and minimize human error. The adoption of CNC machinery is particularly pronounced in fields like automotive, aerospace, electronics, and mold-making, where there are stringent requirements for high-precision and high-efficiency equipment.

Supporting Government Measures

China’s regulatory system and government support for the industrial machinery market have undergone significant evolution and enhancement in recent years. Notably, there has been a fundamental shift from broad directives to targeted measures aimed at bolstering core technological capabilities.

Initiatives outlined in the 14th Five-Year Plan for Intelligent Manufacturing, such as support for intelligent machining centers and high-precision CNC grinding machines, exemplify this trend and highlight the government’s commitment to the sector. Also, in August 2023, the Chinese government implemented comprehensive policies to improve the quality of foreign investment utilization, ensure fair treatment for foreign-invested enterprises, strengthen investment protection, and offer increased financial and tax support.

Local governments also take part in promoting advanced manufacturing and industrial facilities within their jurisdictions. For example, in June 2022, Shenzhen announced an action plan to cultivate intelligent robotics industry clusters, and in June 2023, Beijing launched its robotics industry development plan for 2023-2025.

Opportunities for International Manufacturers & Technology Leaders

China’s relentless pursuit of upgrading its industrial ecosystem and the strong reliance on imports open up ample opportunities for international companies across relevant sectors to capitalize on.

Clearly, foreign companies specializing in smart manufacturing technologies will find a promising market to tap into. A positive outlook is also extended to international companies capable of providing customized solutions tailored to specific market niches and evolving requirements within China’s manufacturing sector. Additionally, the surge in demand for high-precision, intelligent CNC machines is an invitation for international suppliers to deliver critical components and accessories. Another significant opportunity is through software development, as China will require advanced industrial software solutions to enable connectivity, data integration, monitoring, and analytics across its vast manufacturing base. International software firms with expertise in manufacturing environments can potentially capture a sizeable market by partnering with local firms or directly serving Chinese manufacturers.

Establishing a physical presence within the country is a worth-considering strategy that can significantly enhance international manufacturers’ prospects in China. Despite the prevailing global discourse (largely driven by political considerations) advocating for decoupling from China, the reality is that manufacturing in China offers substantial advantages that can’t be achieved otherwise. Examples include improved and expedited access to China’s vast pool of potential industrial customers, a shorter supply chain that helps mitigate time-related challenges and shortages, and additional financial incentives specifically designed for manufacturing in China for China.

So, What Does the Chinese Industrial Machinery Market Have to Offer?

International companies with relevant, innovative solutions in the field can benefit from advantageous market conditions:

• Immense size
• Access to a vast consumer base
• Optimistic market and sub-market growth forecast
• Favorable government policies
• Additional benefits for companies who relocate their manufacturing to China

Considering it all, the Chinese industrial machinery market offers abundant business opportunities and the potential to thrive in its profitable markets. Whether by leveraging import and trade in China or by taking a more hands-on approach with setting up manufacturing operations in China, international companies can select the business model that suits them best. At the end of the day, any operational approach can serve as a pathway to significant growth and success in this dynamic industry.

At PTL Group, we are here to help. With over 20 years of experience assisting global firms in establishing presence in China, and empowered by professional global and China-based teams, we have the resources to support your business endeavors in the country. Get in touch today to explore how we can facilitate your entry and growth in the prospering Chinese industrial machinery market.

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