The general machinery industry has been an important pillar of China’s rise as a manufacturing powerhouse. These private machinery companies have numerous specializations, ranging from component and precision tool makers to producers of heat exchangers and gearboxes. Their products are used in a diverse array of sectors from agriculture to logistics.
The industry’s growth has outpaced China’s economic growth. In 2016, the industry’s value-added output grew by 9.6%, compared to 6.9% for the overall economy. However, the industry is still replete with low-end manufacturers—fewer than 40% of the core components and materials for general machinery products are made domestically.
As China still relies on imports for high-end machinery, it wants to climb the value-added ladder and find partners and technologies to bolster its domestic machinery industry.
As China’s factor costs, such as labor and raw materials, continue to rise, downstream manufacturers are being forced to acquire machinery with higher efficiency and technological sophistication. The changing environment will incentivize Chinese companies to further venture abroad and acquire know-how from advanced markets with best industry practices.
Bosun Tools is primarily engaged in manufacturing power tools. Some of its products include diamond blades, diamond core bits, table saw, floor grinder, and core drill machine. The company has six subsidiaries across North America and Asia. In 2016, 62% of its revenue came from exports.
Thailand, South Korea
USA Bosun Tools Inc. 425 South Turnbull Canyon Road City of Industry, CA 91745; T: 626.968.6300; E: email@example.com
As of the end of 2016, the Chinese company invested $2.5 million and $2 million into its subsidiaries in Canada and South Korea, respectively. The primary focus of both subsidiaries is to expand into the local market. The company also invested $16 million into its subsidiary in Thailand, in order to avoid tariffs on exports to the United States.