“Industry profits have already experienced negative growth, and the machinery industry will face severe challenges.†Recently, Cai Weici, vice president of China Machinery Industry Federation, made a conclusion at the China International Industrial Subcontracting Exhibition and called for transformation to SMEs. According to Cai Weici, in the first two months of this year, the profit of the machinery industry totaled 124.3 billion yuan, down 6.7% year-on-year. It was the first negative growth after the financial crisis in 2009. At the same time, the growth rate of industrial production and sales is still further declining. According to the latest data released by the National Bureau of Statistics at the end of last month, the total output value of the machinery industry in the first quarter of this year increased by 12.23% compared with the same period of last year, and the growth rate continued to slow down. Negative growth in profits has long been a sign. Last year, the national machinery industry's total output value growth rate was 25.06%, and the profit growth rate fell by 34.46%. The profit decline rate was much higher than the production and sales. Cai Weici said that the trend of slowdown in production and sales growth will reach the bottom in the first half of the year, and the machinery industry will turn into a period of steady growth. As domestic demand slows down, machinery companies pay more attention to expanding external demand. At the International Industrial Subcontracting Exhibition, buyers from Germany and India organized a $100 million order, attracting more than 200 SMEs. According to the statistics of the Machinery Industry Federation, SMEs account for the vast majority of domestic machinery companies, accounting for 72% of the industry's revenue. At the exhibition, Cai Weici strongly urged enterprises to actively participate in the international division of labor. "At present, China's machinery exports account for only 10% of the total sales revenue of the machinery industry. Small and medium-sized machinery companies have great potential in key parts and process cooperation," he stressed. However, the machinery industry has been at the low end for many years, leading to the scarcity of high-end products. In 2011, China's machinery industry achieved a surplus of US$12.4 billion in foreign trade, but its source was mainly concentrated on the processing trade of SMEs, while the general trade reflecting high-end equipment had a huge deficit of US$22.2 billion. Not only has the international market failed to win, but domestic high-end machinery and equipment are also dominated by foreign manufacturers. Cai Weici seems that the current solution for SMEs is to reduce costs by improving production efficiency and management level, and to specialize in market segments. In addition to the backwardness of technology, the domestic market has fallen, and the lack of an international certification system directly affects corporate orders. A representative of the Chongqing Tiema Group introduced that domestic companies do not have internationally recognized international standards, and some certification systems are not strictly assessed, causing companies to repeatedly encounter the road to the international procurement system. Ma Jian, the representative office of the United Nations Industrial Development Organization in China, believes that although Chinese SMEs are mainly low-end products, their cost advantage still helps to absorb foreign industrial transfer. According to the introduction, the orders signed by the International Industrial Subcontracting Exhibition last year will generate US$300 million in exports next year.
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