The construction machinery industry faces significant downward pressure, but its outlook remains bright.

　　Currently, China's economic situation remains generally sluggish, and the construction machinery industry, as a key segment of China's equipment manufacturing sector, continues to operate at a low level.

　　It is reported that in the first half of 2015, 18 listed construction machinery companies and key component manufacturers achieved combined revenues of 50.09 billion yuan, a 29.31% decrease compared to 70.744 billion yuan in the first half of 2014. Meanwhile, these 18 listed companies collectively posted an overall net loss of 590 million yuan for the first half of the year, marking a significant year-on-year decline of 114.89% from the 3.96 billion yuan profit recorded in the first half of 2014.

　　Under the pressure of heavy investments in fixed assets, accounts receivable, and inventory, companies in the industry are facing significant cash flow challenges. In the first half of 2015, the net cash flow from operating activities for 18 A-share construction machinery firms totaled -4.388 billion yuan—of which, Zoomlion alone accounted for -4.108 billion yuan. Meanwhile, cash flow from financing activities across these companies is also trending downward. Overall, it’s clear that the entire construction machinery industry will likely report losses in 2015, as the sector remains in a deeply sluggish state.

　　To gain the upper hand in future international competition and achieve the transformation from a manufacturing giant to a global powerhouse, the construction machinery industry must further enhance the technological added value of its product sales. However, a prominent challenge currently facing the industry is that the production of critical components and core technologies remains severely constrained, hindering both industry growth and broader sectoral transformation.

　　The nation emphasized in the 13th Five-Year Plan that during this period, it would accelerate the transformation and upgrading of traditional industries, deeply advance the integration of information technology with industrialization, focus on fostering strategic emerging industries, vigorously develop the service sector—especially modern services—and actively nurture new business models and formats, ultimately building a new modern industrial development system. As a result, the opportunities and challenges the "13th Five-Year Plan" will bring to China's construction machinery industry have become a major industry focus.

　　Enhanced by technological innovation

　　In recent years, China's construction machinery industry has entered a "new normal," forcing companies to contend with prolonged periods of low-level operations. However, the introduction of various national policies and the gradual strengthening of the industrial chains within China's construction machinery firms have boosted confidence, helping these businesses navigate through challenging times. Meanwhile, industry players are seizing this downturn as an opportunity to focus on internal improvements, investing in technological upgrades to stay competitive.

　　It is reported that during the 12th Five-Year Plan period, China's construction machinery industry demonstrated a clear competitive edge, with domestic self-sufficiency in machinery products significantly improving. Meanwhile, the industry made substantial strides in internationalization, markedly enhancing its global service quality—leading 11 Chinese construction machinery companies to rank among the world's top 50. Additionally, the sector saw a dramatic boost in technological innovation: from 2010 to 2014, the industry collectively earned one First-Class National Award for Scientific and Technological Progress, four Second-Class awards, and two Second-Class National Awards for Technological Invention. Moreover, over 100 of the industry's products received prestigious science and technology accolades at the China Machinery Industry level as well as provincial and ministerial levels.

　　The proportion of industry R&D personnel increased from 7.2% in 2003 to approximately 15% in 2013; significant achievements have been made in energy conservation, emission reduction, and green manufacturing; with clear product advantages, China has become one of the countries in the world with the most comprehensive range of construction machinery categories and product varieties. Meanwhile, advancements in intelligent and digital technologies have yielded tangible results—most companies have already established enterprise resource planning systems centered around ERP, creating integrated platforms that seamlessly manage procurement, production planning, manufacturing, finance, sales, and warehousing. Additionally, the industry has made new strides in standardization efforts, ensuring that Chinese standards now support the global expansion of construction machinery products. Companies are placing great emphasis on after-sales service, proactively providing customers with tailored, end-to-end solutions, which has significantly boosted user satisfaction and met the demands of key national sectors.

　　Su Zimeng, Vice President and Secretary-General of the China Construction Machinery Industry Association, stated, "The overarching approach to the industry's future development should center on innovation, prioritize quality, focus on strengthening foundational capabilities, and aim to optimize the overall environment."

　　Currently, the engineering machinery industry is advancing through technological stages characterized by digitalization, intelligent systems, user-friendly designs, energy efficiency and environmental sustainability, as well as trends toward gigantism and miniaturization, weight reduction, and lightweight construction. Moving forward, the industry is poised to enter a new era of multidimensional innovation—driven by high performance, multifunctionality, enhanced reliability, human-centered design, superior environmental adaptability, diverse energy sources, and cutting-edge robotics.

　　Quality manufacturing is the key.

　　According to reports, in the 2015 global ranking of construction machinery manufacturers, the operating profits of 11 Chinese companies amounted to just 8% of those generated by 6 U.S. firms—yet their total assets were more than half of the U.S. companies' combined wealth. When compared with Japanese enterprises, the disparity becomes even more striking: while the profits of China's 11 companies matched only 11% of Japan's 11 companies, their total assets actually surpassed those of their Japanese counterparts by 20%. Although China is a major player in both the use and manufacturing of construction machinery, there remains a noticeable gap between the value and quality of its products and their internationally recognized counterparts. Enhancing product quality and boosting efficiency will therefore be critical for the future growth of China's construction machinery industry. High-quality products are also central to the integration of industrialization and informatization; after all, only a robust foundation of superior manufacturing can pave the way for the development of cutting-edge, high-end equipment at the industry's upper echelons.

　　Shen Liechu, former Deputy Minister of the Ministry of Machinery Industry and Special Expert Advisor to the China Machinery Quality Association, recently stated at the 2nd Council Meeting of the 7th Session of the China Machinery Industry Quality Management Association, as well as during the launch event for 100 nationally recognized user-satisfactory products, that Chinese enterprises should adopt the "comprehensive approach to enhancing product quality in the machinery industry." He emphasized the need to consistently uphold the principles of improving not only the "full-lifecycle quality" of products but also their "full-lifecycle cost-effectiveness" and "high-quality full-lifecycle service."

　　He pointed out that total-life quality isn’t about delivering a product that’s already qualified at the factory; rather, it’s about maintaining that quality throughout the user’s actual usage. Similarly, when evaluating the cost-effectiveness of a mechanical product over its entire lifespan, one shouldn’t rely solely on the initial, additive ratio at the time of manufacture—but instead assess the product’s reliability, maintainability, as well as repair costs and efficiency across its entire lifecycle.

　　Currently, China's construction machinery industry faces several significant challenges. First, the industry suffers from severe structural overcapacity, including excess production capacity, land use, and equipment inventories. Second, older equipment that fails to meet the new emission standards must be phased out of the market as soon as possible. As mandated, starting April 1, 2016, machines meeting Stage II emission standards—including newly manufactured ones—will no longer be allowed for domestic sales. Meanwhile, emission-related regulatory frameworks urgently require further refinement. Third, restoring order in the industry's aftermarket has become a top priority. Finally, companies need to strengthen their innovation mechanisms and capabilities. Product performance still lags behind, with a noticeable shortage of high-end offerings, while there is an insufficient supply of large- and ultra-large-scale equipment.

　　These issues—not only those related to quality problems in manufacturing technology but also the lack of reliable after-market service guarantees—are key bottlenecks hindering the industry's development.

　　Promising development prospects

　　Currently, there are still plenty of opportunities for further industry development. Energy-efficient and eco-friendly products hold the greatest market potential, as shifting consumer demands continue to drive innovation in this space—examples include urban living and waste management equipment, as well as construction waste processing systems.

　　Engineering machinery products designed for extreme environments—such as high altitudes, freezing temperatures, and intense heat—are also set to see significant growth. This includes specialized equipment like marine engineering machinery, large and ultra-large dredging vessels, underwater bulldozers, and other ocean-based heavy-duty machines tailored to unique industry needs. While emissions from non-road machinery pose a major challenge, they also present a valuable opportunity. As we enter the era of intelligent construction equipment, the aftermarket potential for construction machinery is poised for substantial expansion.

　　During the 13th Five-Year Plan period, the construction machinery industry will remain committed to driving growth through technological innovation, focusing on quality and efficiency to optimize its structural adjustments, thereby achieving sustainable development. Taking advantage of key national strategies such as the Belt and Road Initiative and the Yangtze River Economic Belt, the industry will leverage these opportunities to integrate resources effectively, establish 15 R&D centers, and further accelerate the global expansion of China’s construction machinery sector, ultimately supporting the nation’s broader "Made in China" strategy.

　　Su Zimeng once stated that, over the next five years, construction machinery companies—especially industry leaders—should further increase their investment in technology, accelerate research and innovation in critical technologies, and align with the national strategy to steer the industry’s product structure toward the mid-to-high-end segment. By adhering to environmental emission standards, safety regulations, and energy efficiency requirements set by laws and industry benchmarks, these companies will effectively curb the entry of low-end products into the market. During the 13th Five-Year Plan period, the share of high-end products is expected to reach a significant level. With these comprehensive measures in place, China’s construction machinery industry is sure to emerge from its current downturn and embark on a new phase of robust growth.

　　During the 13th Five-Year Plan period, as the global economy and industrial operations continue to stabilize and improve, coupled with the steady implementation of favorable economic and policy measures in China, various infrastructure projects and urbanization initiatives remain firmly in the development phase. The coming years will prove critical for the industry’s transformative growth. As a leading sector within China’s equipment manufacturing industry, the country’s construction machinery sector—having undergone profound restructuring—will undoubtedly achieve higher-quality development. Meanwhile, China is poised to maintain its position as the world’s largest market for construction machinery. Looking ahead, the industry holds immense opportunities for growth, with vast untapped market potential on the horizon.