Machinery / Industrial Parts & Tools

In the context of repeated global epidemics, China's electrical machinery industry has shown resilience and vitality.

At present, despite factors such as raw material prices, shipping bottlenecks, exchange rate fluctuations and other factors plagued companies, the international market demand in the motor industry has generally increased, and the manufacturing industries of various countries have clearly recovered, supporting the continued growth of China's motor exports and the good performance of import and export data.

According to Zhang Sen, secretary general of the Electrical Products Branch of the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, predicts that in 2021, China's electrical machinery imports and exports will both increase by more than double digits year-on-year.

According to customs statistics, in the first half of 2021, China's export of electrical machinery products was approximately US$9.89 billion, a significant year-on-year increase of 40.6%; imports were approximately US$2.7 billion, a year-on-year increase of 31%. Among them, the United States, Vietnam, Germany, and Japan are the main export destinations of China's motors. China exported US$3.84 billion of motors to countries along the "Belt and Road", a year-on-year increase of 64.6%; exports to RCEP countries US$3.02 billion, a year-on-year increase of 53.3% . Japan and Germany are the main importers of Chinese electrical products.

Along with substantial growth, China's motor exports still face many difficulties. Factors such as the sharp rise in raw material prices, soaring international freight prices, and sharp fluctuations in exchange rates continue to compress the profit margins of Chinese motor companies. Due to the impact of the epidemic on both sides of the supply and demand and the different pace of recovery, the prices of raw materials such as steel and copper in the upstream of the motor have risen sharply, the supply of raw materials is insufficient, and the supply cycle is lengthened. According to data from the Shanghai Shipping Exchange, since the beginning of this year, the China Export Container Freight Composite Index and the Shanghai Export Container Freight Composite Index have seen a clear upward trend, and there is no sign of a fall. The container chartering market is also rising. Terminal congestion, shortage of containers, and shipping bottlenecks have all exacerbated the situation of tight capacity.

Since April this year, large fluctuations in the exchange rate have brought adverse effects to companies. According to a survey conducted by the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, companies said that foreign exchange collection has been delayed, the exchange rate is low, and the appreciation of the renminbi offset some of the profits. Some companies report that profit margins have fallen by more than 50%, existing orders are insufficient, and new orders are difficult to sign. Some companies even suffered continuous losses in the first and second quarters. Motor companies generally have larger scales and have long-term supply agreements. At present, most companies have meager operating profits.

At present, China's motor product structure tends to be low-level products with low added value, and the road to transformation is difficult. "In the export market, my country's small and medium-sized motor basic series products account for a large proportion, and the high-tech, high-value-added products are small, the output is small, and the export is small. There is a large differentiation in my country's motor industry, and most companies focus on the low-end The production of products is subject to fierce competition among companies in the industry." Zhang Sen said that in recent years, due to the international market’s inherent impression of low prices and poor stability of Chinese motors, superimposed on the long-term occupation of high-end markets by first-line brands such as Europe, America and Japan, Chinese motor companies have entered the high-end market. The market is extremely difficult. At home, China's huge market demand has attracted foreign manufacturers, who have seized the market by virtue of their advantages in technology and management.

In addition, the electrical machinery industry also has the problems of high competition pressure, serious product homogeneity, and the lack of high-level technical personnel and management personnel in enterprises.

Faced with export difficulties, Chinese electrical machinery companies must accelerate their pace of transformation and upgrading and actively explore emerging markets. Chinese motor companies must take high-efficiency, energy-saving and intelligent manufacturing as their development direction, and respond to the "dual carbon" goal. Under the development trend of green and low-carbon, motor companies will surely become the vanguard of energy saving and emission reduction in the industrial field. The rise of raw materials has led to rising production costs of enterprises, which has also forced enterprises to transform and upgrade and increase the added value of products.

Zhang Sen said, "Chinese motor companies must continue to enhance brand awareness, increase R&D investment, improve independent innovation capabilities, optimize motor companies’ production technology, equipment, processes, materials, etc., and promote the integration of my country’s motor energy efficiency with international standards, and eliminate most low-cost motors. Energy-efficient motor products, to create world-class clean, high-efficiency and energy-saving motor products in all aspects, and to develop in the direction of reliability, low noise, high-efficiency DC, and intelligent control."

In addition, at present, economic globalization and free trade are facing severe challenges from unilateralism and anti-globalization. Chinese electrical machinery companies need to actively adjust and respond, diversify their layout, and open up emerging markets. Zhang Sen said, "Chinese electrical machinery companies should expand the'Belt and Road' and RCEP international markets, and understand the market needs, technical standards, humanistic environment, laws and regulations of these countries. Government departments make full use of the guiding role of foreign trade special development funds to provide training Enterprises make good use of the free trade zone policies to open up overseas markets, guide them to increase investment in technological innovation, and foster new advantages in foreign trade competition." (Reporter Liu Yelin)