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.
Jiangsu Jin Tong Ling manufactures fluid machinery and compressors. Its products are used across industries as diverse as automotive, waste treatment, and food processing. In 2016, 4.7% of its revenue came from abroad.
In 2010, the Chinese company established a joint venture with ETI-Turbo Inc. (ETI) to co-develop air compressors. ETI is a US-based industrial machinery research and development company. The Jiangsu company invested $1.53 million in exchange for a 51% stake in the joint venture. In September 2017, the Chinese company also announced its plans to invest $9.46 million in Australia’s Ethanol Technologies Ltd. This investment would give Jiangsu Jin Tong Ling a 14.9% stake in Ethanol Technologies.