South Korea's construction machinery manufacturers have shrunk in China

10 years ago, thanks to Chinese economic development and real estate rise, South Korea construction machinery sales market in the most China, but now, because of the double whammy of the development of China's construction machinery industry and the rise of the real estate industry tends to be saturated, South Korea will transfer engineering machinery development had to look out.

South Korea's construction machinery manufacturers have shrunk in China

Once a glorious age

10 years ago, Hyundai Heavy Industry and its Doosan Infracore led the market of China's excavator (building equipment market key product), accounting for 40% of the total market share. The reasons for the success of the two companies are that their prices are much lower than those of Japanese and American competitors, such as Komatsu and Caterpillar. With the increasing number of Chinese real estate development projects, their profits have soared.

This makes the modern heavy industry and Dou Shan become the most obvious Korean enterprises benefiting from the Chinese economic boom. The Chinese economic boom is a great driving force for the economic growth of Korea. Last year, 25% of Korea's exports went to China.

Today's Chinese dream is disillusioned

Last year, 3743 excavators were sold in China, far below the record of 18 thousand and 467 in 2010. In the same period, the sales of Dou Shan in China fell from 22 thousand and 93 to 6905. The landslide reflects a sharp slowdown in China's construction market as Chinese developers respond to the backlog of unsold real estate.

Since last year, the new area of residential and commercial property has been shrinking, and the first 4 months of this year have dropped by 17% from the same year.

Since 2012, with the loss of confidence in construction enterprises, sales of related equipment have been declining. Last year, the sales of excavators in the Chinese market were 84 thousand and 573, half of the peak of 169 thousand and 182 in 2011.

"It's not the only Korean manufacturer," said Lee Jae-won, an analyst at Yuanta Securities. Every family (manufacturer) suffers in China. "

But the Korea Companies suffers more than most companies.

The Korea Companies's pricing strategy makes it easy for them to meet the challenges of Chinese competitors, which can offer lower prices to customers. Sany (Sany Heavy Industry) is one example, and the company's market share rose from 6.6% in 2009 to 17% in the first quarter of this year.

For the Korean engineering machinery industry, the Chinese market is becoming smaller and smaller.

At the same time, the high quality reputation to Japanese competitors, Hitachi built Komatsu machine (Hitachi Construction Machinery) and Kobe steel (Kobe Steel) continue to enjoy lucrative position in the high-end excavator market, and Caterpillar together. In the past 5 years, Caterpillar's market share in China has doubled to 11%.

Even if these Korean excavator manufacturers take the market share, there is no indication that the Chinese market is going to rebound. In the first quarter of this year, the total sales volume of excavators decreased by 49%.

Dou Shan took measures to reduce its dependence on China, such as the acquisition of American manufacturer Bobcat in 2007 by $4 billion 900 million. In the first quarter of this year, North America and Oceania accounted for 69% of the revenue of Dou Shan construction equipment, and China accounted for 11%.

As sales in China continue to decline, the sales volume of modern heavy equipment business decreased by 21% in the first quarter of this year, while the group had a total loss of 192 billion 500 million won ($172 million). Modern heavy industry is the largest shipbuilding enterprise in the world.

At the same time, Rhee Sang-gi saw its long-term potential in India, which last year had a 20% share in the India excavator market.

Foreign manufacturers in the construction machinery industry market share of China's retreat, on the one hand that the rise of China's construction machinery industry, no longer dependent on imports, but rely on our own strength, this is a manifestation of the rise of great powers.