China's high-efficiency cutting tool market has great potential for development

The development status and prominent contradiction of China's tool industry
The development status of China's tool industry can be said to be a microcosm of the macro economy. On the one hand, the reform and opening up has achieved tremendous development in the past 30 years. Especially since the beginning of the new century, this development has been accompanied by qualitative improvement, and the momentum is very good.

However, it should be noted that the current dominant position in the tool industry is still the extensive development of resource consumption; in 2007, China’s high-speed steel consumption was 80,000 tons, and cemented carbide consumption was 16,500 tons. It accounts for 40% of world consumption. However, the sales of cutting tools in China account for only 15% of the global total. This contrast fully reflects the extensive development of the industry and the serious waste of resources.

For example: high-speed steel cutting tools, China produced 4 billion pieces in 2007, which is an astronomical figure in the global tool industry, 50 times that of the industrial giants in Japan (2007 production of high-speed steel tools in Japan, 87 million pieces), production What are so many tools? Most of them (80% of the total) are exported as household kits. It costs 65,000 tons of high-speed steel (estimated that 20,000-30,000 tons is low-alloy shoddy high-speed steel) and exchanges 800 million US dollars, which is cheaper than the price of materials in the international market. It relies entirely on national tax rebate subsidies.

Another example is that cemented carbide cutting tools are the main force of modern high-efficiency cutting tools that are being developed in China. In recent years, they have grown at an annual rate of more than 30%. Some high-end products meet the development needs of modern manufacturing, and the development momentum is good. But the overall level is still not high. For example, in the 165,000 tons of cemented carbide produced in China in 2007, 4,500 tons were used for cutting tools, which is equivalent in number to Japan. But the value of making tools, Japan reached 2.5 billion US dollars, China is only 800 million US dollars, less than 1/3 of Japan. This shows that the overall level of domestic high-efficiency cemented carbide tools is still quite different from that in foreign countries. Therefore, the demand for manufacturing has to rely on a large number of imports to solve, in 2007 imports reached 7.5 billion US dollars. The sales of major foreigners in China have grown by 30% annually, exceeding the average annual growth rate of domestically produced tools.

The above situation shows that in China's tool industry, the current situation of wasting resources, low-level expansion, and extensive operation is still very serious. It is imperative to implement industrial restructuring.

The unreasonable pattern of "low-end melee, high-end failure" in China's tool market can be clearly seen from the sales of domestically produced tools in 2007. In 2007, the sales revenue of domestic cutting tools was approximately RMB 21 billion. Of which, exports were 850 million US dollars. Calculated at the average exchange rate of the year, it is about 6.5 billion yuan. Therefore, the sales of domestically produced tools in the domestic tool market in 2007 was approximately RMB 14.5 billion, of which cemented carbide tools accounted for approximately RMB 5.8 billion, accounting for approximately 40%. In the same year, imported tools were 750 million US dollars, about 5.8 billion yuan, mainly cemented carbide efficient tools. Therefore, in 2007, the consumption of cutting tools in China was about 20 billion yuan, of which cemented carbide tools accounted for about 54%. According to the above data, the domestic tool market share in the domestic market exceeds 70%. The share is not low. However, the current prominent contradiction is that in the field of modern efficient tool market, multinational companies still dominate. At present, the sales of hard alloy high-efficiency tools in developed countries account for more than 70% of all tools. The proportion of cemented carbide tools in domestically produced tools is only 40% of the domestic sales. If the total domestic and foreign sales is even lower, only 28%. The serious and unreasonable structure of China's tool products can be seen in general.

Medium and long-term development prospects - China will become the world's largest tool market
The rapid development of the manufacturing industry has made China's cutting tool market have great potential for development. The total amount is expected to exceed that of Germany, the United States and Japan, providing a sufficient operating space for the adjustment and development of China's tool industry.

In the development of modern high-efficiency tools, it is necessary to pay attention to a large number of cemented carbide tools, as well as the use of ultra-hard tools and high-performance high-speed steel tools with sharply increasing demand. In short, in the development of modern manufacturing, improving processing quality and efficiency is an eternal pursuit. Modern and efficient tools are the tools of high precision, high efficiency, high reliability and specialization for this demand.
We believe that although the global economy will have cyclical changes and turbulence. However, the large pattern of manufacturing transfer to China is based on the objective needs of resource allocation in the context of globalization, and there will be no reversal. At present, the output value of China's manufacturing industry is generally between Japan and the United States, but at the level of physical output, it has greatly exceeded Japan and the United States. China's machine tool consumption has ranked first in the world for five consecutive years.

In 2007, China's machine tool ownership reached 5 million units, far exceeding the developed countries, and the number of CNC machine tools reached 600,000 units. The number is comparable to that of Japan and the United States, but the grade is low. In developed countries, the use of efficient tools to harness the potential of digital manufacturing technology has become a consensus. Annual tool consumption is about 50% of machine tool consumption. In China, tool consumption is only 320% from machine tool consumption. It shows that in China's tool consumption, cheap and inefficient traditional knives still dominate, machine tool functions are far from full, and the potential of manufacturing to improve labor productivity is great. This is not only the gap between China's tool industry, but also the use of China's tool industry. The key to developing a large Chinese tool market is to develop modern and efficient tools to replace cheap, inefficient traditional tools.

Through the above analysis, we can clearly see that the biggest opportunity facing Chinese tool companies is that at our doorstep, there is one of the world's largest tool markets, providing sufficient space for our development. However, we are faced with severe challenges. The modern and efficient tools that the market needs, we are developing very slowly, unable to meet the needs of the manufacturing industry, and have to import a lot. It is not in line with the traditional standards of the development of modern manufacturing industry; the cutting tools are blindly developed, the total amount is out of control, and the passive situation of overproduction and low-price competition is formed. Therefore, there is only one way out for China's tool industry, that is, to develop modern and efficient tools, to achieve structural adjustment and industrial upgrading, and to get rid of the low-level and repetitive development path.

Since the beginning of the new century, the Chinese tool industry has begun the process of structural adjustment and industrial upgrading, but the pace of progress is too slow. Faced with the challenges of the new economic situation, the vast number of industry enterprises must have a sense of urgency and accelerate the pace of adjustment. Develop a large market for potential Chinese tools. To achieve this, the scale of the Chinese tool market will exceed that of Japan, the United States and Germany. In doing so, not only will China's tool industry grow and develop, but China's manufacturing industry will greatly improve production efficiency and competitiveness through the extensive adoption of modern and efficient tools. The benefits obtained are much higher than the tool industry and are a win-win situation.

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