Germany is the teacher of China’s manufacturing industry. It was true a hundred years ago, and it is still true now, a hundred years later. In various exquisite pictures of products made in Germany, people marvel at Germany’s high-end technology and the professionalism of its workers, believing that this is the “environment” of high-end manufacturing.

Germany’s domestic machinery manufacturing industry is doing well. Rapidly growing competitors from China pose a serious threat to the strong position of German companies in this sector on world markets.

Chinese companies enter the European market strongly

German media said that the machinery manufacturing industry is a model industry and one of the pillars of the German national economy. It has benefited from prosperous export business in the past few years. Industry experts warn German manufacturers not to rest on their laurels just because exports are currently strong. In fact, according to an analysis report by the Boston Consulting Group, Chinese companies have driven the growth of the machinery manufacturing industry globally in the past few years: Chinese companies’ share of the world market increased from 23% in 2008 to 37% in 2012 – —An increase of more than 50% in just 4 years.

According to the report, this growth has obviously had a negative impact on German manufacturers: its share of the world market fell from 12% to 9% during the same period. “European machinery manufacturers must realize that the competitive environment has changed and must respond to increasingly obvious threats, or they will be overwhelmed by aggressive challengers from China,” the report’s authors wrote.

Experts from the Boston Consulting Group believe that Chinese manufacturers mainly benefit from the large amount of cheap labor and high output provided by China. High yields make their production cheaper. High demand in the domestic market and support from the Chinese government have also helped Chinese companies. The advantages are reflected in the data given in the report: It is said that from 2006 to 2011, Chinese machinery manufacturers’ share of the global construction machinery market increased from 3% to 15%, an increase of four times.

Emerging industries drive the rise of Chinese manufacturers

Even more impressive is the growth of manufacturers of telecommunications equipment and wind turbines: their share of the global market has increased from a few percent to about 25%.

The report believes that the rapid development of emerging markets has also promoted the rise of Chinese manufacturers. Many customers in these markets, while not wanting the cheapest machines, value cheap prices and are happy to sacrifice quality for the sake of it.

Chinese manufacturers have offered products for this segment that fall somewhere between cheap products and expensive high-tech products, often from Germany, with great success, the report said. Nicholas Lang, a senior partner at Boston Consulting Group, warned that this was also having an impact on market share: “German companies have fallen behind Chinese rivals in the most threatened subsectors of machinery manufacturing, especially in fast-growing emerging markets. in this way.”

German machinery manufacturers lose market share

German machinery manufacturers should also be afraid that Chinese competitors have significantly increased their market share in Europe: from 2008 to 2012, China’s sales of traditional machinery, optical products and electronic products to EU countries (excluding Germany) increased by 23%. During the same period, German producers lost business there: they sold 4% less of their products in other EU countries.

Ralph Moldenhauer, a partner at the Boston Consulting Group and an expert on corporate strategy development, believes this opposite trend will continue. “Chinese companies will continue to invest heavily in scientific research, provide more high-value products in the future and continue to actively acquire companies in mature markets to obtain technology, brands and markets.”

He and his colleagues identified 18 sub-sectors of machinery manufacturing that are particularly threatened by Chinese competitors. The list ranges from measuring technology and medical technology right up to welding machines.

Chinese manufacturers have reportedly overtaken German rivals’ market leadership in four sub-sectors, including data processing machines, electronic circuits and casting moulds.

The German Machinery and Equipment Manufacturers Association also warned of the ambitions of Chinese competitors. “German companies cannot be pushed off the top of the technological pyramid,” said Reinhold Festegg, the association’s president.

However, Chinese companies are emerging on the back of massive government support for high-tech sectors, putting them in direct competition with German machinery manufacturers.

The report also said that now, Chinese manufacturers are very powerful in the so-called low- and medium-tech fields and have partially led German manufacturers. In the long term, Chinese competitors can gain experience in this area and prepare to enter more demanding technology areas.