ニュース

Competition between Chinese and Russian construction machinery manufacturers has gradually reached a climax, and the import volume of most types of equipment has kept everyone on their toes. It is worth noting that this situation has even severely hit those big brands that seem to have long established a foothold in the market. In fact, there are few real scenarios for the development of the industry, and its implementation depends on the decision of the government, which has not been shaken for 20 years.

"The sanctions have not only failed to crush our economy, but have stimulated its development. The significant growth is due to our Chinese partners. Competition in the construction machinery sector is very fierce." - Andrei Lovekov, commercial director of the "ID-Marketing" analytical agency, described the current situation.

The key statement here is about the growth of Chinese machinery imports. In fact, statistics confirm this: in 2023, China accounted for 82% of the market share. In response, the Russian Special Machinery Association constantly reminds the Ministry of Industry and Trade and the government as a whole to provide more support measures. However, government officials are convinced that they have already done a lot.

"We proposed a trend to support local machinery manufacturers as early as 2014. The most positive mechanism was the ban on foreign machinery from entering the field of government procurement. Criteria were established to determine whether a machine was produced in Russia, and what technical operations needed to be completed in Russia before the product could be considered locally produced. What's more, local machinery manufacturers are ready for the current challenges. There have been some small interruptions in some components such as transmission systems, hydraulic systems, and electronic components. Although not without difficulties, enterprises have been able to switch to a new component base." - said Stanislav Chertorezhsky, deputy director of the Agricultural, Food and Construction Machinery Department of the Russian Ministry of Industry and Trade.

Of course, things are not that simple. Although Russian enterprises have made progress in the manufacture of steel components, conflicts with metallurgical plants still exist. For example, the Cheboksary Power Plant has mastered the technology of producing forklift bridges in the past year, and has developed tandem bridges in cooperation with Kamaz, and has designed four bridges for backhoe loaders with the Yelabuga Automobile Plant.

"The progress of localization depends on the manufacturers' own willingness to replace imports. We have long been producing graders, loader bridges, track system components and pump equipment components for global companies with production bases in Russia and around the world. For example, the Wilo Group believed in our country and castings long before the special military operation, and the localization rate of its products has reached 99%, and it is still increasing its market share." - said Alexander Dmitriev, General Manager of the Cheboksary Power Plant.

But there are also some component bases that are barely produced in Russia, or are very poorly made, or are assembled from Chinese parts and add a huge premium. Everyone is familiar with the accusations of KAMAZ PJSC against Itelma and AvtoVAZ against Avtotor. Although the critics themselves also purchase a large number of Chinese components. But this does not prevent domestic machine-building plants from obtaining localization points and using budget subsidies. To be fair, there are indeed some manufacturers in Russia that are truly trying to get rid of their dependence on imported parts to the greatest extent possible.

"There are certain KPIs at the Ministry of Industry and Trade, there is a trend towards technological sovereignty, and Russia has created good tools for localizing products of foreign manufacturers. Next to me sat a representative of UMG (Russian excavator manufacturer), but in my opinion, there is no excavator production in Russia at all. Your current market share is extremely low, even below the statistical margin of error.

But through the special investment contract of the Ministry of Industry and Trade, government decree No. 823, preferential leasing, I predict that in the next few years at least three excavator manufacturers will appear, including us. In the next 3-8 years, these three plants will occupy 50% of the market and compete with foreign suppliers. "- said Vladimir Antonov, Executive Director of Chetra. In addition, he also noted that the Chetra brand has already started producing loaders. He hopes to be able to enter the top three in this field. But for this, he asked representatives of the Ministry of Industry and Trade to develop long-term government support measures to clarify the return on investment plans and the development of new products.

Another issue is the confrontation between Chinese machinery dealers and local factories. Although the latter still rely to some extent on the supply of components from China, the competition for a place in the local market is quite fierce. "Competition is good. The more mature and reliable manufacturers we have, the better," said Vladimir Antonov with a smile.

In fact, Russia did not produce machines such as "telescopic arms" until 2021, and then the United Machine Building Group joined in. However, after European component suppliers were sanctioned and withdrew, UMG had to find new partners and move production to the Bryansk Arsenal.

At the same time, Chinese suppliers have also flooded into the already small "telescopic arm" market. Currently, Manitou is still the supply leader, but XCMG, Lingong, Sany Heavy Industry and Dieci are catching up. Now, Rostselmash has also joined the ranks of manufacturers, with plans to start serial production in 2026. "The number of 3,000 units is not enough for deep localization, but when analyzing market dynamics, we realized that if we don't localize now, there will be problems in the future. The experience of other countries shows that telescopic forklifts are gradually rising due to their wide range of applications."

“This year there has been a slight slowdown, but this market segment is growing because the equipment is in short supply. There are a limited number of manufacturers, only 5 to 7 companies worldwide that produce high-quality machines. When Rostselmash brings their products to the market, the market will continue to grow, given the factory’s position in the agricultural sector. In this field, telehandlers are widely used, so our competition with them will be fierce,” admitted Alexey Sluhay.

"Chinese technology should be used, because 99% of Russian equipment comes from there. How can domestic manufacturers compete with 100,000 imported Chinese machines?" Mr. Belopotapov said that there is no time to realize special investment contracts (SPIK) in the next eight years, and it is necessary to introduce Chinese partners and cooperate with them in an all-round way. The International Conference of Industrialists and Entrepreneurs is ready to provide manufacturers with plans for end-customer orders for the next few years, mainly enterprises with state participation or enterprises in industrial sectors.

"After February 2022, about 160 brands entered Russia from China. We have been able to survive and maintain sales growth due to the continuous updating and expansion of our product lines. We are not only focused on selling equipment, but also provide a complete set of services. Look at the overall statistics." - Vadim Nechiporenko, commercial director of XCMG dealer "Сюйгун Ру" Co., Ltd. said. At the same time, he mentioned rising capital costs and increased scrap recycling taxes as factors leading to the decline in sales. But these events are short-term, and Chinese suppliers will then readjust prices or reduce the production costs of machines. But such measures first harm Russian consumers.

The representative of XCMG explained that this was mainly due to the backlog of machines at the customs clearance points between Kazakhstan and the Sino-Russian border caused by the 2022 sanctions, which later all poured into Russia, resulting in a backlog in warehouses. Therefore, there are not many equipment imported from China at present, and it is mainly to digest the existing inventory. Mr. Nechiporenko said that there is still enough market space in Russia for all major Chinese suppliers, but the question is who can survive the challenges of the next round of interest rate hikes and increased scrap recycling taxes.

Therefore, the Ministry of Industry and Trade is willing to help foreign players entering the special equipment market, but only on the condition of long-term cooperation, such as technology localization, either independently or together with Russian partners. Domestic manufacturers will begin to localize and occupy a larger market share. And in the next 5-8 years, this proportion should reach 50%.

Under the current situation, the Russian market is gradually moving towards localization and cooperation. Although a large number of Chinese equipment brands have entered Russia, truly successful cooperation models are still limited. With the promotion of the Russian government and industrial sectors, localized production has become the key to development. The Russian construction machinery market is going through a complex and challenging period. The effect of localized production and import substitution policies remains to be seen, and cooperation with China may be the key to future breakthroughs.

Source: Mechanical Intelligence Bureau