China’s excavator sales volume has accounted for more than 50% of the global market share, and is in a period of rapid development. Domestic brands are emerging one after another like mushrooms after rain. This prosperity is attributed to two main factors: technology and complete industrial chain.
From a technological perspective, since the reform and opening up, China’s excavator industry has ushered in a landmark era: the entry of joint venture brands. Shanghai Construction Machinery Factory, Guiyang Mining Machinery Factory, and others began to introduce models from Germany’s Liebherr. Subsequently, Hangzhou Heavy Machinery introduced the German Demag. Compared to German brands, Japanese excavators may be more suitable for the Chinese market. Later, Shandong Pushdozer General Factory, Huanggong, Jiangxi Changlin, and others jointly introduced the full set of production technology of Japanese Komatsu excavators (except for engines). The subsequent sales also proved that Japanese excavators are more suitable for the Chinese market compared to German ones. These joint venture factories, through years of technology absorption and localization, have seen many factories exit the excavator stage due to operational issues. However, some brands, with structural adjustments and group efforts, continue to be active on the excavator stage.
Another important factor is that China has a complete industrial chain. The industrial chain can be divided into upstream component suppliers, midstream excavator manufacturers, and downstream end-users.
Upstream components mainly include hydraulic components, motors, bearings, electronic control systems, and other mechanical components. Hydraulic components are the core components, accounting for about 35% of the overall cost. Therefore, the production situation of hydraulic components directly affects the price of Chinese excavators. Hydraulic components have a high level of manufacturing technology content. Due to insufficient research and development capabilities, most of China’s hydraulic manufacturers have long been dominated by foreign brands, such as Eaton from the United States, Kawasaki and Komatsu from Japan, Bosch Rexroth from Germany, and Doosan from South Korea. Currently, only Hengli and Aidi Precision in China can partially substitute. Overall, high-end excavator hydraulic components are still dominated by foreign brands. However, these brands have factories in China, ensuring that Chinese excavators are not lacking in high-end hydraulic configurations. After thirty years of development, the component industrial chain has become more complete, providing sufficient guarantee for the midstream manufacturers of complete machines.
The midstream stage involves the manufacturers of complete excavators, who are mainly responsible for processing, assembling, and selling the upstream components. This intermediate link involves different processing and assembly processes, and its level directly affects the production efficiency and quality of excavators. This not only requires manufacturers to have a certain level of production technology, but also requires research and development personnel to have sufficient experience and operational capabilities.
The excavator industry belongs to a capital-intensive and technology-intensive industry. Enterprises in leading positions in the industry are willing to integrate upstream and downstream, achieve full industry chain coverage from research and development design to component production and processing, in order to better control quality and flexibly adjust delivery cycles.
The downstream mainly consists of end-users, including agriculture, real estate, municipal engineering, infrastructure, etc. With the good momentum of China’s economic development, fixed asset investment continues to increase, and infrastructure construction is progressing rapidly, driving the continuous development of the excavator industry, with an annual growth rate exceeding 15%.
With the dual benefits of possessing joint venture technology and a complete industrial chain, China’s excavators are no longer limited to the Chinese market and are going global, playing an increasingly important role in the global market.
