In 2018, the localization rate of high-end CNC machine tools in China is expected to continue to increase

CNC machine tools are digital control machine tools and are automated machine tools equipped with a program control system. According to the different performances and grades of CNC machine tools, CNC machine tools can be divided into high-end CNC machine tools, mid-range CNC machine tools, and low-end CNC machine tools. High-end CNC machine tools refer to CNC machine tools that have high-speed, precision, intelligence, compound, multi-axis linkage, and network communication functions.

As the "mother of industry," machine tools are a symbol of the level of manufacturing in a country. CNC machine tools were invented by the American inventor John Parsons in the last century. With the development of electronic information

technology, the world machine tool industry has entered the era of mechatronics with digital manufacturing technology as its core, among which CNC machine tools are one of the representative products. CNC machine tool is a kind of high-efficiency, automatic machine tool equipped with a program control system, which can better solve the complex, precise, small batch, multi-variety parts processing problems, and represents the development direction of modern machine tool control technology.

Industrialized countries such as Europe, the United States, and Japan have completed the industrialization of CNC machine tools, and China started from the 1980s and is now in the development stage. Although China's foundry machine tool industry has achieved certain results, it still faces many constraints. Compared with foreign products, the gap in China's CNC machine tools is mainly due to the high-speed, high-efficiency and precision of machine tools.

The market scale of CNC machine tools is high, exceeding RMB 300 billion in 2017

From the perspective of China's CNC machine tool market, benefiting from the rapid development of China's auto, aerospace, shipbuilding, power equipment, construction machinery and other industries, great demands have been placed on the machine tool market, especially CNC machine tools, and the CNC machine tool industry has grown rapidly. According to statistics, in 2014-2016, the sales revenue of CNC machine tools in China exceeded RMB 240 billion; in 2016, the sales of CNC machine tools in China was 273.23 billion yuan, which was an increase of 7.69% year-on-year. Sales in 2017 were approximately 306.03 billion yuan, exceeding 300 billion yuan for the first time.

Chart 1: Status and Planning of China's Smart Grid Investment in 2009-2017 (Unit: 100 million yuan, %)

Downstream applications are still dominated by the automotive industry, consumer electronics will become the mainstream market in the future

From the perspective of the downstream consumer demand of the CNC machine tool industry, the automobile is the main downstream demand area, with consumption accounting for approximately 42%; followed by aerospace, the proportion of consumption is approximately 18%; molds and construction machinery are respectively the third and the third largest for CNC machinery. The fourth consumer sector accounts for about 15% and 10% respectively.

In the future, with the gradual popularization of smart phones, the acceleration of replacement speed, the promotion and development of 3C industry terminal devices such as tablet PCs and wearable devices and consumer electronics products, the 3C industry will usher in the spring of development, and the consumer electronics industry. The products will become the new growth point of the industry, and will strongly promote the development of light cutting CNC machine tools applied in this field.

Chart 2: Downstream Market Structure of CNC Machine Tool Industry in China (Unit: %)

The contradictory upgrade of the demand structure of CNC machine tools and the low localization rate of high-end products

In recent years, there has been a clear contradiction between supply and demand in the CNC machine tool industry in China, which is mainly reflected in the overcapacity of low-grade CNC machine tools and the lack of supply of high-end CNC machine tools, leading to structural imbalances on the supply side. As the low-end CNC machine tool industry has a low threshold and enters many enterprises, and in recent years, the effective demand for the low-end CNC machine tool market has been insufficient, excess capacity has appeared in this area; on the other hand, with the development of the national economy and the upgrading of industrial structure, high-grade The application of CNC machine tools is becoming more and more popular, and the demand for products is getting larger and larger, but supply is difficult to meet the demand.

Due to the late start of China's high-end CNC machine tools, domestic production capacity can not meet domestic demand, and most domestic high-end CNC machine tools rely on imports. In 2016, CNC machine tools specifically supported the research and development of high-end numerical control systems and have accumulated more than 1,000 sets of sales. The domestic market share has increased from less than 1% before the special launch to about 5%. In 2017, the localization rate of high-end CNC machine tools in China was about 6 About % is still small. However, from the perspective of demand, the demand for high-end CNC machine tools in China has reached about 10% in 2013, and is about 15-20% in 2017, which is quite different from the localization rate of 6%.

At present, China's manufacturing industry urgently needs to change from a "manufacturing power" to a "manufacturing power." After several decades of development, China's CNC machine tool industry has become the world's largest producer and seller of products. The rapid development of technology and production capacity has already provided the basis for responding to the national manufacturing transformation. In the future, the demand for CNC machine tools in China will shift from middle to low to high-end, in other words, high-end CNC. The machine tool will have a larger import substitution space.

Chart 3: Localization rate of different CNC machine tools in China (Unit: %)

The three major trends lead the future of China's CNC machine tool market will exceed 500 billion yuan

The key to the economic development of the 13th Five-Year Plan is to realize the transformation of economic growth mode. The advanced manufacturing industry is the direction of transformation of traditional manufacturing industries. The development of high-tech industries such as electronic information, bio-engineering, and new energy and new materials will be precise and efficient. Specialized CNC machine tools have opened up new demands; from regional development analysis, the upgrading of eastern China's industries, the rejuvenation of old industrial bases in the northeast, and the development of the central and western regions have accelerated the pace, providing the domestic market for the development of CNC machine tools; economic globalization, international The transfer of capital and industry to China, the exchange of international technology and talents, and the strong development of China's international trade have provided an external environment for the development of China's CNC machine tool industry, making the CNC machine tool industry a rare strategic development period. In the future, China's CNC machine tool industry will present the following three major development trends:

First of all, the comprehensive competitiveness of domestic CNC machine tools will be greatly improved, which will cause a fundamental change in the market share of domestic CNC machine tools.

Secondly, a group of wholly-owned enterprises or joint ventures set up by a multinational machine tool group in China, such as DMG in Germany, Harding in the United States, and Little Giant in Japan, will produce production capacity through

localized production.

Finally, the industrialization of universal CNC machine tools will be formed. Popular CNC machine tools and CNC machining centers are among the fastest growing and most important products in all types of products, and they are also the most widely used type of equipment in manufacturing. As a mid-range CNC machine tool, the universal CNC machine tool has become the mainstream of consumption. Its proportion in CNC machine tools has exceeded 30%, and the growth rate is much higher than that of other types of machine tools, including the growth rate of CNC machine tools.

Chart 4: Three Trends of China's CNC Machine Tool Industry during the Thirteenth Five-Year Plan Period

From 2018 to 2023, China's CNC machine tools will maintain a growth rate of 10% to 12% due to technological development and the gradual recovery of the downstream market. By 2023, the market size of China's CNC machine tools industry will exceed 500 billion yuan.
Exhibit 5: Market Forecast of China's CNC Machine Tool Industry in 2018-2023 (Unit: 100 million yuan)