German machinery manufacturer to develop Chinese mid-market

by:Gewinn     2022-05-20
A few days ago, a joint study by the Institute of Small and Medium Enterprises at the University of Mannheim in Germany and the German Federation of Machinery and Equipment Manufacturers shows that in view of China's increasing importance and economic vitality, China will further become the strategic core of German machinery manufacturers in the future. The research report titled 'Developing Local Business Models in China's Mid-End Market' emphasizes that focusing on only one segment or mature market cannot maintain international competitiveness; the research analyzes the rapid development of the German machinery industry in the Chinese market opportunities and risks in the process. In 2012, China became the world's largest machinery market with sales of 678 billion euros, surpassing the United States' 330 billion euros. In 2003, China's machinery sales were 77 billion euros, 9 years later reached 678 billion euros, with a compound annual growth rate of 27.3%. Lindler, chairman of the German Machinery Manufacturing Federation, said that companies capable of long-term development in China must enter the market as soon as possible, rather than waiting for Chinese competitors to take action. Research shows that in the next three to five years, 25% of German machinery manufacturers will have their own Ru0026D facilities in China. The mid-end market is very important in the future, and German companies must pay more attention to the Chinese market in formulating strategies and business models. Given that many German machines outperform Chinese customers, the researchers worry that these customers are at high risk of losing to Chinese competitors. Research shows that in the next three to five years, the mid-end market will become the largest segment of China's machinery and equipment, accounting for an increase from the current 34.3% to 40.3%, which can achieve a growth rate of up to 6%. For this reason, German machinery manufacturers In the future positioning in China, we should pay special attention to the mid-end market. The strong service and relatively high-priced products of German machinery manufacturers cannot always meet the price-performance expectations of local customers. Due to the emergence of more competitive suppliers in China and other emerging markets, local customers have more alternatives, German companies must consider their products and business models to better meet local needs, but currently only 25% participated in the survey of German companies understand the targeted competition measures of their Chinese counterparts as well as their European counterparts. In order to ensure continued growth in the Chinese market in the future and to cope with new Chinese competitors, German machinery manufacturers need to implement and test a dual business model in advance. For German machinery manufacturers: first, to achieve global expansion through innovation and to protect the existing high-end market; second, to develop new growth opportunities in the mid-end market in parallel in emerging economies such as China. The analysis pointed out that the long-term development of China's high-performance, high-value-added machinery market is conducive to the realization of super-level profits for German companies, and at the same time, it is necessary to promote the development of new customers in the mid-end market. In order to develop the mid-end market, German machinery manufacturers must ensure the existing strength and competitive advantages of the high-end market, such as technology, brand, consulting and service, etc., and at the same time transfer the above advantages that have been adapted to local needs to the mid-end market.
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