| China's Tower Crane Market Analysis |
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Strong demand and surging supply
Since the 1980s, China's tower crane industry has been growing rapidly, especially in recent years, tower crane sales have been climbing. Industry statistics showed that sales in 2001 were 9,738 units, while it became the first country with output exceeding 10,000 units in 2002. Due to government macro control and industry consolidation, tower crane output retreated in 2004. From 2005 onwards, China's tower crane sales resumed its fast growing trend, exceeding 20,000 units in 2006. China has now become a major producer country of civil tower crane machinery, as well as one of the major demand markets. Technical developments
Since the 1990s, as many large scale projects such as urban construction, water dams, power plants and bridges flourishing to the market, technical requirements for tower cranes from both domestic and international markets continue to get higher. During this period China has gradually developed product types such as 400tm and 900tm lever arms and 300tm luffing arms, equivalent to technical level of 1990s in developed countries, which substantially reduced the need and volume for tower crane imports. Some key technical issues have also been solved during this development period, such as high power lifting bodies CVT, PLC control and crane remote control. In 2006, Sichuan Construction Machinery Group launched the largest tower crane in China, a super tower crane M1500 (1500tm) with maximum lifting capacity of 60t. Fushun Yongmao Construction Machinery also launched the largest tonnage flat-top crane STT553 (550tm).
State-owned enterprises restructuring and private enterprises rising
There were many provincial tower crane manufacturers in the 1980s. But as the market developed, private enterprises had rushed to capture market shares from their state-owned counterparts. Some provincial companies, such as Sichuan Construction Manufacturing and Shenyang Construction Machinery, have been successfully restructured and gained stable market shares and recognition. On the other hand, many private companies have become prominent in the tower cranes market, such as Yongmao Construction Machinery, Shandong Fangyuan Group, Jiangsu Zhengxing Construction Machine, Zhejiang Huba Group and Beijing Construction Engineering. Currently, first-tier tower crane manufacturers in China consist of Sichuan Construction Manufacturing, Shenyang Sanyo, Changsha Zoomlion and Yongmao, which are collectively leading the industry direction and export markets. Although industry profit margins are getting slimmer in recent years, especially in small to medium tower cranes market, many new entrants are still joining in.
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Strong export growth, foreign capital difficult to enter
Along with the prosperous domestic market, tower crane exports are also booming. For first-tier manufacturers, export sales have made up more than 50% of their total revenue. From 2001 to 2006, China's tower crane annual export has grown from 67 to 1,748 units, and export destinations grown from 11 to 63, including some developed countries. Due to rapid growth of exports, it is expected that further expanding the export market will become an important strategy for many Chinese tower crane manufacturers in the future. Compared with exports, there have been much fewer tower crane imports into China in recent years, and even rarer for foreign crane manufacturers gaining success in China. A handful of joint-ventures or wholly owned foreign producers did enter the Chinese market in past two decades, but most of them today have either pulled out or are still struggling, mainly due to pricing and cultural issues. In 2006 Spanish COMANSA invested $20.4 million to form a production JV with Hangzhou Jie Holding, but the result remains to be seen.
Existing industry problems
Although China's tower crane industry has significantly narrowed the gap from developed countries in the past 50 years, there are still apparent issues related to overall structure, performance and quality, especially in areas of manufacturing quality and product reliability. There are currently several hundred producers in China, but few of them possess scale advantages. Crane output numbers have been large but quality varies considerably, and most products are still in the small to medium crane category. China has so far produced more than 200,000 units of tower cranes, but product types are still in a narrow range, with shortage for large and mega cranes but surplus in small and medium types. One reason for such phenomenon is due to the restriction on product developments by technical regulations. Back in the 1980s, in order to facilitate resource management and then customer demands, the regulator issued regulatory prescriptions on crane specifications. Although the market became more organised, it has nevertheless restricted the diversity and innovation of tower cranes in China, resulting in fierce market competition. Industry experts pointed out that in developed countries, product developments are driven by market forces, from 1-2tm micro cranes to mega tower cranes of 5,000 tm.
China has a large crane output volume, but the quality varies considerably, due to significant capability differences between producers. Some have strong technological capabilities, reliable products and brands, while others possess limited production equipment and weak capabilities, cutting into the market with low prices and illegitimate means. As China's construction booming, many small to medium construction companies, which have limited strategic planning and capital, have taken the risk to purchase cheap cranes with low technical contents and unreliable quality. Coupled with reckless project management process, it may lead to significant dangers to construction safety.
Some industry issues are related to government regulators. There are too many local bureaus in charge of setting regulations, inspection, licensing and approval, while too few to implement regulations and take real responsibilities. In certain regions, fee-charging local governments will grant market access to any crane products and companies, opening the door for inferior products to flood into the market.
Tower crane industry outlook
Due to an ongoing flow of large infrastructure projects and rural expansions in China, the demand for tower cranes of all sizes should continue to be strong, and large and medium crane companies should continue to co-exist. The Chinese crane industry should improve its technological capabilities and quality levels of large tower cranes, in order to satisfy the requirements from large engineering projects and export markets. The smaller cranes segment needs to consolidate, in order to improve product safety and reliability.
In terms of technical developments, China's tower crane industry should develop crane products of various structural types. Flat top cranes and luffing cranes have gained significant progress in China in recent years. Because the boom of a luffing crane can flexibly manoeuvre r to some extent, suitable for projects in high density and narrow fields, it has attracted increasing attention in the Chinese market. In some steel structured skyscraper projects, such as Shanghai World Financial Centre, new CCTV headquarter and International Trade Centre 3 in Beijing, various large luffing tower cranes have been imported from Australia-based company FAIVO.
Source: http://www.chinairn.com/
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