Manufacturing News

Excavator segment digs in for long-haul success

Business has been booming for Chinese excavator makers since the beginning of the year, fueled by surging market demand and signs of economic rebound both at home and abroad.

In the first quarter, China's top 26 excavator makers sold a total of 126,941 digging machines, up 85 percent year-on-year, said the China Construction Machinery Association.

As new orders surged, excavator sales in February hit a record, the association said.

The figure, often regarded as a key barometer of the vitality of an economy, corroborated the country's better-than-expected economic recovery and solid fundamentals.

Business activity in China's manufacturing and services sectors has been picking up pace. The purchasing managers' index for the manufacturing sector came in at 51.9 in March, indicating further expansion from the previous month, said the National Bureau of Statistics.

In its latest World Economic Outlook, the International Monetary Fund on Tuesday projected that the Chinese economy will grow by 8.4 percent this year, 0.3 percentage point above its January forecast.

The robust pace of sales reflects strong demand for construction machinery and macroeconomic vitality in the first quarter, according to industry insiders.

"Going into the second quarter, infrastructure growth is expected to rebound, supporting a continued strong economic recovery," said Gao Ruidong, chief macroeconomist at Everbright Securities.

Ever-growing market

CCMA Chairman Su Zimeng said the sales boom of excavators can be attributed to China's huge economic growth capacity and massive infrastructure.

Under the country's coordinated regional development strategy, demand for infrastructure construction remains huge with continuous efforts to drive development of the Beijing-Tianjin-Hebei region, the Yangtze Economic Belt and the Guangdong-Hong Kong-Macao Greater Bay Area.

Official data showed that during the January-February period, investment in infrastructure and the manufacturing industry increased by 36.6 percent and 37.3 percent, respectively, year-on-year.

China has also been stepping up policy and fiscal support for "new infrastructure", which has been included in the country's 14th Five-Year Plan (2021-25).

From 5G big data centers to urban rail transit, the presence of construction machinery manufacturers remains crucial, generating sustained growth of China's construction machinery market in the future, Su said.

"At present, the excavator market is still on the rise, with equal stress on stock update and incremental demand. It can be predicted that high levels of prosperity will last for China's construction machinery industry, which will surely continue to grow steadily in the next five years," he added.

Saying that the country is experiencing a sped-up urbanization process with the future trend being the replacement of human labor with machines, Su added that Chinese construction machinery, represented by excavators, will embrace good development opportunities with their ever-expanding application scenarios.

For example, micro excavators, some of which are narrow enough to be driven through doorways, are becoming increasingly popular among Chinese buyers as they can function well in confined spaces and help in smart agriculture.

Going global

Chinese excavator plays have also been seeking a stronger global presence.

In the first quarter, the country's 26 leading excavator makers exported a total of 13,376 digging machines, surging 81.9 percent year-on-year, the CCMA said.

In Xuzhou, Jiangsu province, one of the country's top excavator manufacturers-Xuzhou Construction Machinery Group-saw over 200 units of its custom-made excavators ready on April 2 to be delivered to Europe, the United States and Australia.

While the global market faces mounting pressure of coronavirus-induced recession, overseas sales of the company's digging machines bucked the downward trend by gaining over 50 percent year-on-year in developed overseas markets.

Exporting machines to 187 countries and regions, the company reported annual exports of $1.6 billion last year, with overseas income accounting for about 30 percent of its total, according to Wang Min, chairman and CEO of XCMG.

With their research and development, production, brand and management system highly internationalized, some enterprises' competitiveness in overseas markets has improved by leaps and bounds, said Su, adding that China's exports of construction machinery totaled $21 billion in 2020 despite the impact of COVID-19.

The global economy is also on its way to recovery. Global growth this year is projected at 6 percent in the IMF's latest World Economic Outlook, higher than the previous forecast.

"Construction machinery, as a key industry of international production capacity cooperation, will see its vista of internationalization broadened," Su said.

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