Welcome to the EU SME Centre Webinar series
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1 Welcome to the EU SME Centre Webinar series
2 Purpose The EU SME Centre in Beijing is a project funded by the European Union To assist European SMEs to export to China and establish, develop and maintain commercial activities in the Chinese market Free, confidential information and advice, and practical support services
3 Services Information and advice BD Support services Enquiries Publications Training Webinars Databases Legal HR & Training S&C Hot desks Briefings Matchmaking and networking
4 3 Please continue to submit your text questions and comments using the Questions Panel
5 IN COOPERATION WITH How to be successful in China s machinery industry? May 7, 2013 A project funded by the European Union
6 Our Speaker Stephanie Heydolph Chief Representative, VDMA Mrs. Stephanie Heydolph represents VDMA Beijing and Shanghai Representative Offices as Chief Representative since January She holds a Magister in Chinese Studies and Economics from Hamburg University and permanently lives in Asia since From , she was working for Messe Munich International in Germany and China.
7 97 1. Brief Introduction VDMA 2. Overview: China machinery imports & exports 3. China: Machinery market key segments 4. Key growth drivers and trends 5. Opportunities for EU SMEs 6. Regulatory environment 7. Access to the market
8 10 1. Introduction VDMA
9 11 Introduction of VDMA VDMA is the German Engineering Federation, Europe s largest industry federation with a sole focus on mechanical engineering VDMA represents no automotive engineering, nor electrical engineering, there are separate industry federations in Germany (VDA, ZVEI) VDMA has 40 sub-associations for machinery VDMA represents 3,100 European member companies and est. 970,000 employees (in Germany) VDMA China Representatives Offices established in Beijing and Shanghai since 2004/2005 with 12 experienced engineers Further information:
10 Machinery: world trade 12 year Source: foreign trade data of 47 report states Copyright VDMA statistics database
11 Overview: China machinery imports & exports
12 China: Large customer market 14 Proportion of Registered members by EU SME Centre In machinery sector
13 15 China s worldwide machinery imports (2012) In Million Euro Japan Germany United States Republic of Korea Taiwan Italy France Switzerland Singapur United Kingdom Source: foreign trade data of 47 report states Copyright VDMA statistics database)
14 16 China s worldwide machinery exports (2012) In Million Euro United States Japan India Russia Hongkong (SVR) Indonesia Brasil Germany Republic of Korea Thailand Source: foreign trade data of 47 report states Copyright VDMA statistics database
15 17 China s machinery imports from EU27 (2012) total machinery imports Mio.Euro Germany Italy France United Kingdom Austria Others Source: foreign trade data of 47 report states Copyright VDMA statistics database)
16 18 China s machinery exports to EU27 (2012) total machinery exports Mio. Euro Germany Italy United Kingdom France Netherlands Others Source: foreign trade data of 47 report states Copyright VDMA statistics database)
17 19 3. China: Machinery Market key segments
18 20 China Machinery Industry Federation China Machinery Industry Federation (CMIF) is the Chinese Engineering Federation CMIF represents 120 direct and 77,800 indirect member companies CMIF has 48 sub-associations, including automotive manufacturing (CAAM) and electro-technical society (CES) China has est. 120,000 machinery enterprises representing est. 20 million employees Further information:
19 21 Machinery Industry in China In 2012, China is leading the TOP Ten ranking of world-wide machinery output, followed by USA, Japan, Germany and Italy The total output in 2012 is est. at 678 billion EURO The development of China s mechanical engineering increased steadily from the years and especially from 2010 to 2011 (up to 25% increase YoY) In 2012, the China economic slowdown lead to decreased exports from Germany almost less 10% YoY (2012 compared to 2011) CMIF predicted two digit-annual growth of 14% for VDMA expects single-digit growth in China for the future S.Heydolph Source: VDMA, CMIF
20 Machinery Industry in China 22 Regional structure of China s machinery industry in 2011 Output value Fixed asset investment 1.Jiangsu 4. Liaoning 6. Shanghai 5. Zhejiang 2. Shandong 3. Guangdong Source: CMIF
21 23 Regional structure of China s machinery industry KPMG: There is more than one China
22 24 3. Key growth drivers and trends
23 25 German machinery trade 2012 China is the largest customer market for German machinery exports China is the fifth-largest supplier for German machinery imports
24 26 Key Growth Drivers China remains the largest global customer market for high-end machinery China sets clear targets for upgrading its manufacturing industries, these targets are set by the National Development and Reform Commission (NDRC): 12 th Five Year Plan Guideline Catalogue of Industries for Foreign Investment Mechanical Engineering generally is an encouraged foreign investment industry, only the sector of mining equipment underlies restrictions
25 27 12th Five-Year Plan for National Strategic Emerging Industries 7 strategic Emerging Industries: 1. Energy-saving and Environmental Protection 2. New generation of information technology Industry 3. Biological industry 4. High-end Equipment Manufacturing Industry 5. New Energy Industry 6. Advanced materials 7. New Energy auto Industry Aviation equipment Railway transportation equipment industry Marine engineering equipment Intelligent equipment - manufacturing industry Downstream industries Automotive industry Power Transmission Construction machinery Mining equipment Aviation equipment Aerospace equipment Ocean equipment Material handling Agriculture machinery Types of equipment: High-end CNC machine tools NC metal cutting machine tools
26 28 Trends The following key segments are identified for China (based on 2012 production data): 1. Mining equipment (est. 537 bn. RMB) 2. Construction equipment (est. 508 bn. RMB) 3. Other machinery (est. 489 bn. RMB) 4. Material handling (est. 370 bn. RMB) 5. Precision tools (est. 288 bn. RMB) In addition, there is a general development in Northeast China for stronger mechanization of the agricultural sector as well as a strong development in Eastern China (Shanghai, Jiangsu) for factory automation and robotics
27 29 4. Opportunities for EU SMEs
28 Opportunities for EU SMEs Specialized high-end machinery e.g. agriculture equipment, power transmission, productronics, automation, machine tools, material handling, valves China has demand for high-end components of machinery and specialized components Technology transfer to Chinese companies. Many European companies are keen to enter the Chinese market and develop long term partnerships in China. China IPR SME helpdesk, a project also funded by European Union, provides guidance and support on IP protection and strategies in China:
29 31 5. Regulatory environment
30 Machinery Industry in China 32 For some components, the CCC mark is relevant The China Compulsory Certification mark, commonly known as the CCC, is a compulsory safety mark for many imported products to be sold or used in the Chinese market. The regulation concerning this mark was implemented on May 1st 2002 and became fully effective on August 1st 2003, integrating two previous compulsory inspection systems, "CCIB" (Safety Mark, introduced in 1989) and "CCEE" (also known as the "Great Wall" Mark, for electrical commodities), into a single procedure. The CCC safety regulations require manufacturers to obtain the CCC mark before exporting or selling products that are listed in the CCC catalogue in China. The catalogue of CCC-compulsory products clarifies whether a product or a component part requires a CCC mark and divides products mandatory to get the CCC mark. To read more about the CCC application process and necessary steps, please refer to the Centre s guideline at: Many Chinese service providers can offer services to support foreign companies in applying for this certification (the China Certification Corporation and the CCC Service Centre amongst others). To find out more, please visit the EU SME Centre s service providers database at: Remark VDMA: relevant for mining equipment, printing equipment and certain construction machinery equipment
31 33 6. Access the market
32 IPR Business Strategy & HR Legal Issues Standard & Conformity Market Research
33 China Office: FICE vs. WFOE 35 Export - not allowed to sell in RMB - must be channeled through a licensed trading company/local agent Representative Office - can not carry out direct revenue earning business activities (no purchase/sales contracts, receive of payment, issue of invoices) - restricted to conduct indirect operational activities (business liaison, introduction on products, market research, technol. exchanges) FICE (Foreign Invested Commercial Enterprise) Joint Venture WFOE (Wholly Foreign Owned Enterprise) distribute storage warehousing garage services inventory management repairs maintenance training and delivery Equity Joint Venture (EJV) Contractual Joint Venture (CJV) assembly production (part / complete) R&D
34 Identify market segment & price 36 European manufacturers high end machinery segment European manufacturers medium machinery segment Chinese manufacturers PAST low machinery segment Chinese manufacturers PRESENT Remark VDMA: For manufacturers in the high-end segment, there are plenty of opportunities. For manufacturers in the middle segment, expect strong competition from the Chinese manufacturers!
35 Latest Publication (Machinery) 37 Report: Machinery sector report Case studies: Metra Exporting to the Chinese machinery sector Bernard Controls (China) Entering the Chinese machinery market Adira Entering the Chinese machinery equipment and components market Mixel Mixing it up in China Stavus Machinery & Electrical Equipment Exporting machinery to China
36 38 Q & A enquiries@eusmecentre.org.cn
37 IN COOPERATION WITH
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