Chen Huiren: In 2014, the industry will further stabilize

In 2013, many people described the year as one of “uncertainty,” and this was especially true for the machine tool industry. Throughout the year, the sector remained in a low operating phase, while foreign companies accelerated their localization strategies. Meanwhile, domestic firms found themselves in a position where only a few were thriving—“a few happy parties.” In such a challenging environment, the question arose: where was the machine tool industry heading in 2014? To explore this, a reporter spoke with Chen Huiren, Executive Vice President of the China Machine Tool Industry Association. **First, the Three Main Features of the Current Machine Tool Industry** Chen Huiren noted that the industry is currently undergoing “transformation and upgrading,” which is reflected in three key characteristics: 1. **The industry remains in decline** Despite small growth in some smaller sectors, overall data from January to October 2013 showed negative trends in sales, production, profits, and new orders. Although the rate of decline has slowed compared to previous years, the industry is still struggling. 2. **The development environment is changing rapidly** This includes shifts in market demand, production costs, and environmental constraints. Market demand, in particular, has seen significant changes. For example, machine tool imports dropped by 25%, while imported equipment increased by 24%. This indicates that while overall demand has fallen, there's a growing need for high-end products. Import trends also show that Germany and Italy are leading in high-end machine tools, while Japan, South Korea, and Taiwan are seeing declines—highlighting a shift toward higher-value manufacturing. 3. **The pace of transformation is accelerating** The prolonged downturn has pushed many companies to focus on upgrading. While results are not yet visible, the process is underway. Companies are moving from passive responses to active adaptation, and now they are better positioned to anticipate and respond to market changes. **Industry Companies Are Diversified** There are four main categories of companies in the industry: - Some have managed to grow despite the downturn by offering differentiated products. - Most are improving internal management and increasing market efforts. - Some are focusing on deep structural adjustments and redefining their business models. - A few remain stagnant, struggling with uncertainty. Overall, the transformation and upgrading process is gaining momentum. **Key Challenges Facing the Industry** Two major issues persist: insufficient orders and intensified homogenized competition. Orders have dropped significantly, with many companies experiencing a 4–5% decline from peak levels, and some even falling by 20%. This has led to more intense competition, with most companies offering similar products, such as triaxial machines or basic CNC lathes. Chinese companies rely mainly on price and service, making them vulnerable to market fluctuations. **Views on Transformation and Upgrading** 1. **Deepen understanding of the long-term nature of transformation** Companies should not depend on government policies or projects but rather on their own capabilities and market forces. 2. **Focus on structural adjustment and quality improvement** Learning from others is important, but companies must also develop their own unique systems and cultures. 3. **Enhance confidence and focus on solid execution** Examples like Jinan No. 2 Machine Tool show that Chinese companies can succeed in high-end markets if they stay focused and committed. **Outlook for 2014** Chen Huiren believes the machine tool industry will stabilize further in 2014. Key factors include a consistent national policy tone, continued emphasis on reducing overcapacity, and ongoing reform and innovation. Companies are also becoming more adaptable to external changes. **Interview Highlights** When asked about the highlights of enterprise transformation, Chen mentioned that some companies are shifting toward services, exploring new fields like robotics, and adjusting their resource allocations. He also praised companies like Ningjiang Machine Tool for their steady performance and solid approach. Looking ahead, the association plans to become more service-oriented, focusing on member support, advocacy, and regulation. Specific actions include recruiting talent, establishing an industry self-discipline alliance, and advising the government on market interventions. As for the upcoming CCMT event in Shanghai, the forum will feature CEO-level discussions and interactive formats, reflecting a shift from traditional lectures to more dynamic engagement. Finally, Chen advised companies to focus on design and service integration, deepen structural reforms, and specialize in specific market segments to find sustainable success.

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