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 state, with foreign companies accelerating their efforts to localize and expand their presence. Meanwhile, local firms were only a few that managed to thrive. In such a challenging environment, where did the machine tool industry stand in 2014? Recently, a reporter had the opportunity to speak with Chen Huiren, Executive Vice President of the China Machine Tool Industry Association. **First, the three main characteristics of the current machine tool industry** Chen Huiren explained that the industry is currently undergoing "transformation and upgrading," which is evident through three key features: 1. **The industry remains in a downturn** According to data from key enterprises of the association, from January to October 2013, although some small sectors showed slight growth, overall performance—measured by sales, production, profits, and new orders—showed negative growth. While the decline has slowed compared to the previous year, the industry still faces significant challenges. 2. **The development environment continues to change** The market demand environment, production factors (such as labor costs and logistics), and natural constraints are all evolving. Looking at import data, machine tool imports fell by 25% in the first three quarters, while imported machine tools increased by 24%. This suggests that while total demand has dropped, demand for high-end products is rising. Import trends also reveal regional shifts: Germany and Italy saw an increase of 10%, while Taiwan and South Korea experienced drops of 20%, and Japan fell by 50%. These trends highlight a shift toward high-end manufacturing, particularly in regions like Shanghai, where demand for advanced equipment is growing. 3. **The pace of transformation and upgrading is accelerating** Despite years of decline, the pressure has become a driving force for change. Many companies are now actively pursuing transformation, though results are not yet fully visible. The industry has shifted from passive response to proactive adaptation, showing signs of progress. **Industry companies can be categorized into four types:** - Some companies have risen against the trend by offering differentiated products. - Most are strengthening internal management and increasing market efforts. - A few are focusing on structural adjustment and fundamental transformation. - A small number remain stagnant, struggling with uncertainty. **Second, the most pressing issues in the industry** Two major problems persist: insufficient order volumes and intensified homogenization competition. Orders have fallen significantly, with many companies seeing a drop of 4–5% compared to peak levels, and some even slipping to 20%. With limited differentiation, price competition has become fierce. For example, 85% of domestic processing centers offer triaxial machines, and 90% of CNC lathes are two-axis models, indicating a lack of innovation. **Third, perspectives on the transformation and upgrading** 1. Companies must understand that transformation is a long-term and difficult process. It should rely on self-driven strategies, market forces, and expertise rather than government support. 2. Focusing on structural adjustments and improving company quality is essential. Learning from others means not just copying techniques but understanding their core systems and culture. 3. Building confidence is crucial. Examples like Jinan No. 2 Machine Tool show that Chinese companies can succeed in high-end markets if they focus on solid execution and user needs. **Fourth, the outlook for 2014** Chen Huiren believes the industry will stabilize further in 2014 without major changes. National policy will remain focused on GDP growth, overcapacity reduction, and reform. Companies are gradually adapting to these changes, and the industry is moving toward more sustainable development. **Interview with Chen Huiren** When asked about the highlights of enterprise transformation, Chen mentioned that some companies are shifting toward services, exploring new fields like robotics, and adjusting resource allocations. He also praised companies like Ningjiang Machine Tool, which show strong potential and steady growth. Looking ahead, the association plans to evolve into a modern organization, focusing on service, representation, and regulation. Specific actions include recruiting talent, addressing unfair competition through self-regulation, and advising the government on targeted support for high-end industries. As the CCMT exhibition approaches, the forum will emphasize “new changes and a new future,” featuring CEO-led discussions and interactive formats to foster deeper engagement. Finally, Chen advised companies to pay more attention to service integration from the design stage and to deepen structural adjustments—not just in product or market areas, but also in organizational structures. Specializing in specific segments, rather than trying to be everything, could lead to long-term success.

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