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**CHINA: The Machine Tool Market Powers up**

By Eileen Bai and the U.S. Department of Commerce Manufacturing Team

**Rise of the Machines**

China\'s manufacturing sector has been dramatically growing and
developing for the past decade. In just the last four years, China has
become the **largest** consumer of machine tools in the world, as well
as the No. 1 importer of machine tools. Japan, Germany, Italy,
Switzerland and U.S. as well as Taiwan are still the main exporters of
machine tools to China. However, South Korea and Australia also have
dramatically increased their sales and are quickly becoming the new
large exporters into the Chinese
market.![](media/image2.jpeg){width="2.3958333333333335in"
height="1.801388888888889in"}

The automobile, mold, electron machinery, hardware, household appliance,
ship building, and IT industries are all creating a large demand for
high technology machine tools, especially in the Guangdong Province. To
give a clearer perspective, Guangdong Province in only the first half of
last year (2006) realized over 270 billion USD in foreign trade making
it number one for the entire country. Guangdong imported over USD 120
billion worth of goods. Machine tools made up a significant portion of
that total. Foreign invested manufacturing facilities and large
private/state owned enterprises have been the main end-users of imported
machine tools in order to meet the ever increasing demands, to meet
world-class standards and quality, and to meet increasing competition
between both foreign and domestic manufacturers.

**Capitalists Tools?**

Even before accession to the WTO, Guangdong Province was well on its way
as a center for manufacturing particularly in autos, furniture,
electronics to name a few. With entry into the WTO, opportunities
increased appropriately but so did the competition. Since 1978, China
began a new economic phase that has seen rapid development in many areas
and in several industry sectors. Wanting to emerge from developing
country status, China began putting high emphasis on upgrading its
conventional industry with more advanced high technology machinery and
equipment. This emphasis was in part pushed by infrastructure
development that began in the eastern coastal areas and is continuing to
march toward the Western areas, even today. In parallel, the "pillar"
industries such as auto, consumer electronics, IT, and others felt the
demand for better quality and quantity. With the Olympics looming in
2008 and the Asian Games in 2010, Chinese government would like to put
its best face forward and is importing more advanced high technology
machinery and equipment to meet the constant and competitive demands in
above mentioned industries as well as logistics, and service industries
to name just a few.

**Tool Talk**

China\'s consumption of machine tools has reached over USD10 billion for
whole country in 2005, and 70 percent of which were imported from
foreign countries/areas. Guangdong Province has been the economic engine
of China and is ranked No. 1 with regard to imports and exports in and
out of China for last 17 years.

s help you export. export.gov

**Like a Well Oiled Machine**:

Japan is the most active exporter in China as well as in Guangdong
market. Japan machine tools exports to China have seen a steady increase
in sales at about 25 percent per annum for the past several years. The
high-end products/machine tools from Japan, Germany, and Switzerland are
considered as top product lines with regard to high precision, high
technology and high quality. Since there are large numbers of Hong Kong
and Taiwan invested enterprises as well as small/medium size local
private enterprises in Guangdong Province, the machine tools from Taiwan
are also widely accepted because of their low price and higher-grade
technology when compared to their counterparts from the domestic
producers. It is estimated that **50 percent of imported** machine tools
in Guangdong China market are from Taiwan.

**Assembly Required**

Foreign invested manufacturing facilities and large private/state owned
enterprises have been the main end-users of imported machine tools in
order to meet world-class quality standards and to meet the ever
increasing competition between foreign and domestic manufacturers. Many
believe that the automobile industry is the largest industry in the
province and is one of so-called pillar industries in Guangdong. With
three of the largest Japanese automobile enterprises, Honda, Nissan, and
Toyota, already manufacturing and expanding in Guangzhou, the demand for
machinery in the manufacturing (complete assembly) of completed sets of
vehicles and parts is exceedingly high. It is estimated that Guangzhou
will manufacture over 1 million cars and other vehicles per year in next
ten years. The automobile industry will become the largest buyer of
machine tools in all of southern China.
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height="1.8340277777777778in"}

**Hi-Tech Trouble**

Due to the shortage of high technology and lack of good metal materials
and products, Chinese companies still do not have the technical ability
to manufacture enough high technology machinery and equipment to meet
the demands of the market. The China's import tariff of machine tools
has not been changed since China entered WTO in 2001.

**For More Information and a full Industry Report**

**In the U.S.** - Please contact <mark.cooper@mail.doc.gov> of the U.S.
Department of Commerce Manufacturing Team

**In China**- The U.S. Commercial Service in Guangzhou, China can be
contacted via e-mail at: <eileen.bai@mail.doc.gov>; Phone: (86-20) 8667
4011 ext 628; Fax: (86-20) 8666 6409; or visit our website:
www.buyusa.gov/china

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