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.
Tongyu Heavy Industry makes and sells large forgings and castings. Wind Power Spindle and Ductile Cast Iron Pipes are the company’s main products. The latter is often used in the water system in urban areas. Its clients include GE, Vestas, Alstom, ABB, Nordex, and Acciona. In 2016, 19.5% of its revenue came from exports.