China Country Market
Insights and Opportunities
Construction Equipment Sector
Overview: The Chinese construction equipment market presents many opportunities and challenges for American companies seeking to increase sales in China. Although the global economy has slowed, Chinese construction equipment imports increased 17% in 2008 compared with 2007. The China Construction Machinery Industry Association predicts that imports will increase 12% in 2009.
Many American companies have successfully entered the Chinese market. Some large companies (e.g. Caterpillar, John Deere, and Terex) are increasing production in China and have become the key players in China’s construction equipment industry. Chinese manufactures of construction equipment benefit from Chinese government support in the domestic and international market. U.S. companies face fierce competition from Chinese, Korean, Japanese, and German manufactures.
Rapid development of urban centers, China’s aggressive western region infrastructure development plans, and the 2010 Shanghai World Expo should provide more opportunities for the construction equipment market. The construction market is a major driver of China’s economy. During the 11th Five Year period (2006-2010), the plan for total construction is estimated to reach 2 billion square meters each year. (According to the National Bureau of Statistics of China, in 2006 China completed 1.79 billion square meters, in 2007, China completed 2 billion square meters, and in 2008, China also completed about 2 billion square meters).
Stimulus Package: In November 2008, the Chinese central government announced a 4 trillion RMB (USD 586 billion) investment to stimulate domestic growth. The investment will focus on China’s infrastructure, including roads, power, healthcare, etc. Each Chinese Ministry has their own investment plan.
Ministry of Housing and Urban & Rural Development: Within next three years, Ministry of Housing and Urban & Rural Development will invest 900 billion RMB (USD 132 billion) on building affordable housing, and the public and private sector will invest 2.7 trillion RMB (about USD 397 billion) on commercial and residential construction.
The State Energy Bureau: The State Energy Bureau will invest 200 billion RMB (USD 29 billion) on clean energy infrastructure projects including the Guangdong Yangjiang Nuclear- Power Project, the Zhejiang Qianshan Nuclear-Power Plant expansion project, gas transmission projects from Nin Xia to Guangzhou and Hong Kong, and Hydro power conservancy projects in Guizhou and Jiangxi province.
China Civil Aviation Administration: The China Civil Aviation Administration will invest 250 billion RMB (USD 36 billion) on airport infrastructure in the cities of Chengdu, Xian, and Guangzhou in 2009.
Ministry of Communication and Transportation: The Ministry of Communication and Transportation will invest 1000 billion RMB (USD145 billion) in 2009 for highway, road and port construction.
Ministry of Water Resources: The Ministry of Water Resources will invest 20 billion RMB (About UDS 3 billion) in construction of water conservancy projects including rural reservoirs and irrigation works.
Ministry of Railways: The Ministry of Railways will invest 3,500 billion RMB (USD 510 billion) on railway construction within the next three years (through 2011).
A number of best opportunities for U.S. exports of construction equipment include the following equipment: concrete machines; excavators; shovel loaders; lifts; self-propelled bulldozers; angle dozers; graders; levelers; scrapers; mechanical shovels; tramping machines and road rollers.