Chinese local machine tool companies compete with foreign machine tool companies

Abstract In the past two decades, the development of China's manufacturing industry has been extremely rapid, and the machine tool industry has made great strides in the world's largest machine tool manufacturing countries at an incredible speed. There is a more brilliant fact behind the prosperity of this faction: in 2002, China’s machine tool consumption reached 56.9...
In the past two decades, the development of China's manufacturing industry has been extremely rapid, and the machine tool industry has made great strides in the world's largest machine tool manufacturing countries at an incredible speed. There is a more brilliant fact behind the prosperity of this faction: in 2002, China’s machine tool consumption reached 5.696 billion US dollars, ranking first in the world. Since then, China has become the world's largest machine tool consumer in 10 consecutive years.

In 2009, China's total manufacturing output value surpassed Japan and became the world's second largest manufacturing country. In 2009, China's machine tool industry's industrial output value and sales revenue surpassed Japan and Germany, and it became the world's largest machine tool manufacturing country for the first time; China ranked third in the “Top 10 Manufacturing Powers in the World” published by the Global Manufacturing White Paper. Such a huge market with unlimited development potential is like a huge magnet, attracting all machine tool companies all over the world to join in.

Finally, in recent years, we have heard the highest repetition rate of foreign machine tool companies: China is one of our most important markets.

Determining the Chinese market, localization or scale?

With the entry of a large number of multinational companies, the Chinese machine tool market has undoubtedly evolved into an invisible battlefield filled with smoke. Here, the public enterprises stand out from the competition with local competitors and other multinational competitors, fighting for technology, fighting for services, fighting for people, and fighting for strategies.

For most foreign machine tool companies, in order to avoid the phenomenon of “acclimatization” after entering the Chinese market, they are bringing advanced product technology and alternative foreign culture to the Chinese machine tool industry, and they are also trying to adapt to China’s domestic culture. The localization strategy has undoubtedly become a compulsory course for foreign machine tool companies to explore the Chinese market.

In addition, in recent years, as China's overall economy has advanced by leaps and bounds, corporate operations are gradually moving toward scale. Scale and localization should be said to be complementary. Only by developing products that are suitable for the local market can the company enter the local market and achieve a larger scale. To invest in localization, it is necessary to expand the scale to recover the investment. Of course, the localization of the Chinese market does not mean that there is only one model of scale expansion. How to balance the two is that enterprises need to pay special attention in the process of opening up the market and realizing strategic transformation.

War and seek, the key to the market

At present, there are not a few foreign-funded machine tool enterprises that are active in the Chinese market and have a high degree of localization. Among them, some enterprises that entered the Chinese market earlier have accumulated a lot of effective experience and practices. Exploring and sharing these customary localized management methods may bring some inspiration to most machine tool companies that are currently in adversity.

Tactics 1: Local factory

The factory is the birthplace of technology and products, and is the top priority of the company's entire business network. Therefore, for most foreign-funded enterprises, setting up a factory locally is a necessary and crucial step in the road to localization. In recent years, the factories built by foreign machine tool companies in China have sprung up. The high starting point of these factories from the beginning of their establishment also shows the determination of the company to deploy China.

In 1993, Swiss Baichao Laser established its first factory in China in Tianjin; in August 2011, Baichao Group continued to explore the Chinese market and continued to invest in Tianjin to establish a second factory. The plant is also the third factory outside the Swiss headquarters of the Baichao Group, and Tianjin has become the largest production base of the Baichao Group.

In 2000, Little Giant Machine Tool Co., Ltd. was established, and immediately introduced the construction concept of Mazak's latest intelligent network chemical factory, which pioneered China's intelligent network chemical factory.

In 2003, the DMG (Shanghai) plant was completed and started production. This is the first factory outside DMG Europe.

In 2005, the international grinding machine giant Schleifring production base opened in Taicang, Jiangsu. Three years later, in order to further meet the needs of the Chinese market, it moved to Shanghai.

In 2006, EMAG in Germany set up a factory in Taicang, the first factory opened by the company in Asia. At present, EMAG has set up an Asia-Pacific market manufacturing base in Jintan, Jiangsu Province, and plans to build an annual output of 3,000 high-end CNC machine tools.

In 2008, Haas Automation of the United States established its first overseas factory in Shanghai.

In 2010, the German TRUMPF Group's factory in Taicang was officially opened to better expand the Chinese market and serve Chinese customers.

The actual case is of course far more than the above. In fact, with the development of China's manufacturing industry and the rise of China's machine tool enterprises, under the pressure of accelerating the supply cycle and improving the cost performance of products, more and more multinational machine tool enterprises have chosen to set up factories in China.

When talking about this, some people may wonder whether the choice of local construction means the decline in product quality. In response, the unified answer given by foreign machine tool companies is: No. “In order to ensure the quality of our products, we select international procurement and local assembly for some key components and even most components. Our assembly personnel are also strictly trained to ensure that our products can maintain 'China Manufacturing, International Quality'" On October 18th, 2012, at the third exhibition of "High-end Manufacturing Technology for High-quality Workpieces" at EMAG, Mr. He Yuran, Director of Asia-Pacific Region of EMAG Group and General Manager of EMAG Machine Tool (Taicang) Co., Ltd. Said in an interview with the reporter.

Tactics 2: Reverse Innovation

For some companies, innovation is also part of their localization strategy. Most companies enter the Chinese market at the beginning, usually directly introducing mature technologies already available abroad, or directly selling mature products in foreign markets for local sales. This is not a wise move, but also a violation of the basic principles of the localization strategy. Nowadays, in the face of the increasingly powerful Chinese machine tool enterprises, foreign-funded enterprises have begun to redesign products for the local market, or re-innovation based on existing technologies, so that products can better meet the needs of Chinese users.

In 2008, the team of Schleifring redesigned its own KP series and launched the KP Compact simple surface grinder for the Chinese market, which made its debut at the 2008 show. Of course this is just the beginning. In 2006, Demagi launched the CTX 310 eco machine tool tailored for Chinese users. This machine has taken on the mission of cultivating Chinese users. In the following years, DMG has frequently launched a medium-price-performance in China. The end machine tool, while improving the product chain, has further expanded the scope of customers. Looking back to the near future, in December 2012, Swiss machine tool supplier Tonas presented its "TORNOS New Machine Tool Show Day" at the event, highlighting the visitors to the CNC slitting automatic lathe developed specifically for the Chinese market. Swiss ST26. This machine is developed in Switzerland and assembled in Taiwan, China. Its ultra-high performance and high cost performance have been favored by many users on the spot. In the field of numerical control systems, Siemens also launched an 802C economical numerical control system developed specifically for the Chinese market, which penetrates into the low-end market.

Redesigning some of the products is more common in German and Swiss machine tool companies that are known for their precision and high performance. Their products are at the peak of the world's machine tool industry, and in the face of Chinese users with multiple levels of demand, the contradiction between supply and demand asymmetry has begun to emerge. Reverse innovation is undoubtedly a wise choice between how to avoid "high and low" and maintain a "high-end image."
Tactics III: Service Home The term “service” is widely spread throughout the industry at an unprecedented frequency and speed. "Efficient service", "full service", "customized service", "one-stop service"... have also become the loud slogans of public enterprises. This is especially true for foreign machine tool companies.

Indeed, with the long-term efforts of Chinese local enterprises to learn foreign advanced technology and to introduce a large number of foreign talents, the technological advantages of foreign-funded enterprises compared with Chinese enterprises are no longer obvious, and the technical competition between foreign-funded enterprises is even more difficult. . In this case, customer service has become the core content of the enterprise market competition. Whether it is a "newborn" who has just entered the Chinese market, or a "successful" who has worked hard in China for many years and has obtained income, they have all shown their "service" cards.

A spare parts center is essential to achieve “quick response, efficient service”.

In 2007, DMG set up its Asian accessories center in Shanghai and vowed to carry the service to the end. Haas Automation from the United States successfully transplanted its globally operating HFO model to China. In just a few years, it has established 21 HFOs in China that integrate display, training and spare parts. "Services have subverted the service concept of the CNC industry and won praise from users. Tonas has set up spare parts warehouses in two major trading centers in Hong Kong and Shanghai. According to Tonas, the spare parts warehouse of the Shanghai Waigaoqiao Free Trade Zone, the inventory can be shipped out of the bonded area within 4 hours, thus ensuring that users in all parts of the country can be quickly met.

Advanced operational models and localized services are also represented in the establishment of application centers and technical support stations. In the past two years, GF AgieCharmilles has set up technical support stations in Changzhou, Ningbo and Chengdu, and established aerospace and home appliance application technology centers in Shunyi, Beijing to serve the application needs of different industries. Next, the company will continue to expand its technology application network in China, and the next technical support station will be located in Foshan.

The same is true for the cutting tool industry. In 2007, Sandvik Coromant Greater China Mould Application Center opened in Shanghai, which is the world's first mold application center. In the tool industry, the establishment of a non-standard design center means that products and services are closer to the local market. For this reason, multinational tool companies such as Kenner, Seco, and Iskar have set up non-standard tool research centers in China to meet the needs of Chinese users and promote the improvement of China's non-standard design capabilities.

Tactics 4: Talent Building

Talent building plays a vital role in the development of enterprises, and multinational companies that have fought in the world are more aware of this. For the cultivation of local talents in China, all major foreign-funded enterprises can spare no effort.

In 2009, Schleifring established a grinding technology laboratory with Tongji University and promised to provide opportunities for internships at its R&D centers in Germany and Switzerland as well as in Chinese factories. In January 2013, ABB sponsored Tsinghua University to participate in the “2013 International Solar Decathlon Competition” and became the sole supplier of electrical control in the solar competition team.

In the tool industry, in 2009, Sandvik Coromant and Beijing University of Aeronautics and Astronautics formed a strategic cooperation, jointly established a joint laboratory of advanced processing technology for the aerospace industry, and established scholarships. In 2010, Seco’s scholarships at Tsinghua University have been held for three times.

In the metrology industry, Hexagon Metrology cooperated with Zhejiang University Aircraft Digital Assembly Technology Innovation Research Team to create new research results in aircraft digital flexible assembly key process equipment and applications. In November 2011, Zeiss Industrial Measurement Department and Tsinghua University Fine Instrument Department conducted in-depth cooperation to establish the Precision Measurement Experimental Practice Base of Carl Zeiss, a fine instrumentation department of Tsinghua University.
In addition to continuing to pay attention to the high-end talent investment in China's manufacturing industry, the lack of advanced skills talents has always been the bottleneck of China's manufacturing industry. For the biennial National CNC Skills Competition, Sandvik Coromant, Siemens, FANUC and other companies are actively involved in it, in order to promote the cultivation of China's senior skilled talents, promote the development of China's manufacturing industry, and practice their social responsibilities. . Some companies also organize their own activities to give back to China's education.

Tactics 5: Alliance with local partners

The Chinese market is very huge. It is a good strategy for foreign-funded enterprises to win competition in China and establish good cooperative relations with some leading Chinese local enterprises to achieve a win-win situation. Among the many cooperation models, the establishment of joint ventures is adopted by most companies.

In 2003, one of the largest joint ventures in CNC machine tools in China, Beidaiyi (Beijing) Machine Tool Co., Ltd. was officially put into production. The company is jointly established by Beijing No. 1 Machine Tool Plant and Japan Otsuka Co., Ltd., with Beiyi accounting for 49% and Daxie accounting for 51%. The joint venture also effectively utilizes the technological advantages of the two companies, namely Beiyi and Daxie, and manufactures the machining centers and CNC lathes with advanced world level in strict accordance with the complete set of drawings, process technology, inspection standards, tooling equipment and process flow provided by Daxie. CNC products are supplied to users with the quality of Daxie products and the price of the domestic market.

In 2005, Kunming Daosi Machine Tool Co., Ltd. was formally established. The company was jointly invested by Shenji Group Kunming Machine Tool Co., Ltd. and Czech Dausfansdorf Machine Tool Co., Ltd. with a total investment of 5 million euros. After nearly 8 years of development, the company has become an internationally advanced supplier of planing and floor-standing milling and boring machine equipment.
In fact, in China, there are countless examples of foreign-invested companies working with local companies to form joint ventures. The joint venture has set its own advantages, including the technological advantages and management advantages of the foreign parties, as well as the geographical advantages and talent advantages of the Chinese side. Therefore, it has unique conditions to access the markets that foreign companies cannot reach.

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