Study on Market Characteristics and Development Trend of Tower Cranes in China

Tower cranes (hereinafter referred to as tower cranes) are one type of construction machinery equipment and are mainly used for vertical and horizontal transportation of materials. They are widely used in many fields such as real estate, municipal engineering, and industrial construction.

In the early 1950s, China's tower cranes began with imitation. After the reform and opening up and the 1998 housing reform, China's tower crane industry has developed rapidly. In 2008, the tower cranes sold about 20,000 units. China has become a major producer of tower cranes in the world and is also one of the major demand markets for tower cranes in the world.

At present, China's tower crane market presents two distinctive features: First, the market is still immature; second, it is closely related to economic development.

First, the market is still immature (1) The level of technology is low Although the number of tower cranes in China has reached 140,000 units, there is a shortage of large tower cranes and there is an excess of medium and small tower cranes. In 2008, there were more than 400 tower crane manufacturers that had obtained production licenses in China, but only about 30 manufacturers were able to produce tower cranes with more than 200 TM.

(2) Product resemblance In 1984, China imported a full set of French Potan F0/23B, H3/36B, and GTMR360B products, which were respectively digested and absorbed by Beijing Construction Machinery, Sichuan Construction Machinery, and Shenyang Construction Machinery. Since then, the drawings of these three major products have spread widely and have become templates for our tower crane products. Even now, many tower crane manufacturers in China are still using these drawings.

(3) The disorderly development of the market At present, domestic tower crane manufacturers can be divided into four categories: the first category is the first-tier manufacturers (such as Zhangjiakou Potain, Zoomlion, Fushun Yongmao, etc.); the second category is specialized manufacturers ( Such as professional production of large flat-top tower cranes and tower cranes, Nanjing Zhongsheng, etc.); the third category is local small factories (such as many manufacturers in Shandong). Among the three types of manufacturers, the first and second types of manufacturers are stronger and the quality of products is better, but the number of manufacturers is smaller; while the third type of manufacturers is weaker, but cut into the construction market of second- and third-tier cities at a low price. However, the sales volume of the products accounted for 50% of the sales volume of tower cranes nationwide.

(4) Lack of leading manufacturers Among the more than 400 tower crane manufacturers in China, there are no more than 15 first-line manufacturers. Among them, those who maintain stable growth and have strong competitiveness are mainly Zoomlion and Fushun Yongmao. The sales volume of 200 units (above 63TM specifications) can be among the major tower crane manufacturers in the country.

(6) Industry concentration is low The sales volume of the top ten manufacturers in the tower crane industry accounts for only 28.5% of the industry, and the industry concentration is far lower than that of loaders (92.3%), crawler cranes (99%), and automobile cranes ( 99.5%) and other mature construction machinery industries, and this pattern will not be fundamentally changed in the short term.

Second, it is closely related to economic development Because the main downstream industries of tower cranes are construction and real estate, these two industries are closely related to economic development. It can be further subdivided into: From a long-term point of view, urbanization and industrialization driven by economic development dominate the development of the construction industry and the real estate industry; and from the short-term (the next five years, ie 2010-2014), it is the current situation. The economic situation and the corresponding government economic policies have dominated the development of the construction industry and the real estate industry.

(1) From the experience of developed countries (such as the United States) for a long time, the tower crane market has developed along with urbanization and industrialization. When China's urbanization and industrialization have reached the level of developed countries (such as the United States), the tower crane market will stagnate and shrink.

Since the reform and opening up, the urbanization rate in China has risen linearly, rising by almost one percentage point each year, reaching 45.7% in 2008. Calculating the urbanization rate of 70% of developed countries (such as the United States and Japan), it will take about 25 years for our country to reach their level.

The Chinese Academy of Social Sciences 2007 "China's Industrialization Process Report - Evaluation and Research of Provincial Industrialization in China from 1995 to 2005" holds that the industrialization index has reached 100, which is the level of industrialization in developed countries. In 2008, China’s industrialization index was 53. According to the average annual increase of 3% in the previous industrialization index, it would take 22 years for China’s industrialization index to reach 100.

Therefore, combining the above two data, China's tower crane market can maintain prosperity in the next 25 years, after which the entire market will stagnate and shrink.

(2) Short-term (the next 5 years, ie 2010-2014)

From the troika that drive economic growth (investment, consumption, exports), analyze the current economic situation and the corresponding government economic policies.

1 Investment In 2009, “proactive fiscal policy and moderately loose monetary policy” had a very significant driving effect on the economy, and the 4 trillion economic stimulus plan was effective. However, judging from the financial situation of the Chinese government and the duration of previous investment in fixed assets, the possibility of continuing to increase investment in fixed assets during 2011-2012 is very small. The year 2013 is a change of year for the government. To ensure the level of economic development, a new round of large-scale fixed-asset investment will be started to ensure stable economic development in the year and the following year.

2 Consumption In recent years, China’s consumption has grown steadily. This has benefited from the government’s continuous and stable guidance. Specific measures include: VAT transition, reduction of administrative fees, increase of residents’ income, individual tax reform, pension system reform, rural tax and fee exemption. , medical insurance system reform. And during the 12th Five-Year Plan period (2011-2015), the government will continue to introduce effective measures to stimulate domestic demand and promote consumption, and consumption will have more and more obvious effects on the economy.

3 Exports Our exports depend on the market situation in Europe, the United States, and Japan. At present, many data indicate that although the global economy is still at the bottom, there are signs of recovery. The World Bank, the International Monetary Fund, and the World Economic Cooperation Organization predict that the global economy will recover in 2010 and re-enter the boom period in 2012.

Based on the above analysis, it is concluded that under the influence of the global financial crisis, China's economy will remain in a period of in-depth adjustment from 2009 to 2010. However, as the global economy picks up, the old production capacity that was suppressed and the new production capacity created by investment will be released in 2011-2012, promoting rapid economic development. This short-term economic development trend will definitely affect the development of the construction industry and the real estate industry, and thus affect the tower crane market.

Based on the above two characteristics, China's tower crane market will have the following development trends in the future:

Third, the product to large-scale, professional development The current mini-tower (size 100 TM below) due to numerous manufacturers, the profit has been very thin. Domestic first-line manufacturers have been continuously developing and launching large-scale towers (with specifications over 300mm) and boom-type, inner-climbing, and portal-type tower cranes, and launching new products for different industries (such as Potain for the Longtan Hydropower Project. Tower spreader) to increase technical barriers and gain more profits.

Fourth, market competition will be more intense The boom period of the tower crane market will not continue. The next 25 years will be the most vigorous period for tower cranes in China. All manufacturers will not give up this opportunity and the entire market will become more competitive.

V. The major manufacturers actively increase the technical content of products, but the main reasons for the very cautious expansion of production capacity are:

(1) Due to the economic crisis, the market is uncertain in the early stage. Export demand has plummeted, and domestic demand is mainly driven by the 4 trillion economic stimulus plan. It cannot be maintained in the long term.

(2) In the period of tower crane sales in 2006 and 2007, major manufacturers (such as Zoomlion and Fushun Yongmao) all increased their production capacity by building new plants or mergers and acquisitions; The purpose of manufacturers to increase production capacity is not to produce medium and small tower cranes, but to produce large-scale, professional tower cranes, but the market capacity of these tower cranes is relatively small.

6. Gradient shift in the market Currently, the tower crane market is still dominated by the Bohai Bay, Yangtze River Delta, Pearl River Delta and other developed regions. However, as the industrial gradient shifts, the mainland construction market will develop rapidly and tower crane demand will gradually shift to the mainland.