China Construction Equipment Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

China Construction Equipment Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The China Construction Equipment market was valued at USD 50 billion in 2021. It is expected to reach USD 68 billion by 2027, registering a CAGR of around 5.1% during the forecast period (2022-2027).

The COVID-19 pandemic has severely impacted the automotive industry across the world. The disruptions in supply chain activities, the interruption in large-scale manufacturing, restrictions on travel, and the declining sales of vehicles during 2020, are responsible for the declining growth of the market. The rise in construction all over the country is observed after the pandemic due to the easing of restrictions in the country, the market will cope with all the losses that happen during the period and will grow at a certain pace.

Over the long term, the increasing focus on infrastructure and the development of automation in the construction and manufacturing processes is expected to have a significant impact on market growth. The road construction machinery market has witnessed a substantial increase in the recent past due to the increased road development programs undertaken, such as the Belt and Road Initiative.

Besides being the largest manufacturer of construction equipment globally, China is the largest market for construction machinery in the world. Rural construction activities, rapid urbanization, and the growth in public-private partnerships drove up demand for construction equipment. China also has one of the world’s best construction machinery supply chains, with all parts of the supply chain being in China.

Renting and leasing construction machinery is on the rise. Buying new equipment involves high cost, maintenance, and storage-related issues. Renting is becoming a viable possibility for newer businesses as well. In fact, for short-term construction applications, renting machinery has been preferable to an original purchase among construction contractors, as renting allows optimum utilization of the machinery.

Key Market TrendsGrowing Demand for Second-Hand Machines

China is one of the largest manufacturing countries and consumers of building construction equipment in the world. However, industry revenue is only expected to rise by an annualized 1.5% over the past five years till 2021. However, although spending in China surpassed the US since 2012, the demand for construction equipment has weakened in China, creating a surplus of unused and used construction equipment.

Low demand from the construction sector in the country has resulted in low profits for significant companies, and small construction equipment has incurred huge losses. The competition in the market has also been fierce, which pushed the major equipment manufacturers to lower the prices of their equipment.

As a result of this, the used equipment is increasingly becoming popular. Used equipment is generally sold in good condition and at significantly cheaper rates. A substantial economic disadvantage in shipping costs, unfavorable exchange rates, and heavy import taxes on new equipment can cost a lot more. This can be a challenge, especially for upcoming businesses and local players.

The demand for used construction equipment is driven by the use of bulk material handling equipment in large construction projects.Also, there is a lot of demand for used construction equipment for big projects like underwater tunnels, port extensions, and railway tunnels.

Motor graders are another piece of used equipment that gets a lot of demand because they are expensive to buy new, so small businesses and contractors prefer to buy used motor graders.By boosting the global demand for used construction equipment, increase spending on the renovation of existing infrastructures.

The second-hand market also seems to offer much more choice, with the availability of a vast range of machine types, models, and manufacturers – and more options in terms of price. With this, the waiting period between purchasing the equipment and actual delivery can be avoided.

Growing Investment in the China Construction Industry

The world's largest construction machinery manufacturers have established production facilities and joint ventures in China. Foreign investment prohibitions on land development, luxury hotels, office buildings, international exposition centers, and the construction and operation of big theme parks have also been abolished. This is likely to drive the construction equipment market by increasing demand for construction equipment in the nation.

The Belt and Road Initiative is expected to create increased demand for construction equipment. The Belt and Road Initiative, the flagship project of China, has been a significant demand driver for construction equipment in China. Although all the construction projects are executed overseas, the machinery is purchased and shipped from China as the government offers tax rebates to construction companies that buy the equipment for participating in the Belt and Road Initiative. Kobelco, Tadano, Caterpillar, and Liebherr have been working on increasing their presence in the country, as they anticipate massive demand from the country’s flagship Belt and Road Initiative.

For instance, The Shanghai Urban Rail transit expansion is valued at USD 44.23 billion. It includes nine rail projects and six subway lines along with three intercity railways. The project is estimated to be a total of 286km. This network is aimed at creating better connections between Shanghai’s two airports and its two major railway stations.

Additionally, China is a significant manufacturing hub for international equipment manufacturers.Through joint ventures, wholly owned investments, or acquisitions, all of the leading international manufacturers, including Caterpillar, Terex, Manitowoc, Komatsu, Hitachi, Kobelco, Volvo, Liebherr, Wirtgen, Fayat, Doosan, and Hyundai, have manufacturing bases in China. Some of these operations, like Manitowoc's tower crane factory in Zhangjiaguang, are their most significant global manufacturing bases.

As a result, major companies have been establishing manufacturing facilities in different parts of China to capitalize on the increasing demand for construction machinery. Although the country's competitive situation is intense, many global players are competing with local construction machinery manufacturers to increase their share in the market. For instance,

• In March 2021, Zoomlion officially launched full operation of its tower crane intelligent manufacturing (IM) factory in Changde, Hunan Province. Zoomlion's tower crane IM factory has greatly increased production efficiency now that it is fully operational: one tower crane leaves the assembly line every 18 minutes.Zoomlion's digital and green transformation and upgrade will be completed, and the company's annual output value will exceed USD 3.11 billion, achieving world-leading scale and quality.

Competitive Landscape

China Construction Equipment Market is consolidated with existing players such as Kobelco, Tadano, Caterpillar, and Liebherr, who captured a significant market share in 2019. The market is also dominated by local players such as Sany, XCMG, Zoomlion, China Communications Construction Company, etc. Since numerous international and regional players characterize the construction machinery market, construction manufacturers are trying to edge over their competitors by making joint ventures, partnerships, and launching new products with advanced technology. For instance,

• In September 2022, The ZAT24000H is a heavy-duty crane with a capacity of over 2000 tonnes that Zoomlion specifically built for hoisting wind power equipment. It was the world's greatest tonnage all-terrain crane as soon as it rolled off the production line. This product can fully cover the installation requirements of fans with a height of 160m or less, and has strong hoisting performance, high convenience, and wide adaptability to various working conditions, due to its unique structural design and control system, which is powered by digital and intelligent technology.

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