This group of "post-90s" has started a turnaround battle for China's machine tools

Image source @ Visual China

Text | Hua Shang Tao Strategy, author 丨 Wu Rui

China's machine tool industry, which has long lost the high-end and been pressed in the friction of the low-end industrial chain, has finally ushered in a breakthrough!

01 China machine tools remove the old cloth new

"We have finally succeeded in developing the world's first self-learning ARTIFICIAL numerical control system."

On April 12, 2021, Chen Jihong, chairman of Wuhan Huazhong CNC Co., Ltd., announced. The foreign counterparts around him showed a look of surprise.

This time, Huazhong CNC launched the "Huazhong 9 Type CNC System" that integrates artificial intelligence technology, which makes the machine tool work intelligently like a human for the first time in history.

This is undoubtedly a shot in the arm for the demoralized Chinese machine tool industry.

Since the outbreak of the crisis in China's machine tool industry in 2016, many large machine tool companies have fallen into bankruptcy and reorganization.

In 2017, Kunming Machine Tool Factory was exposed to financial fraud for four consecutive years; in the same year, Dalian Machine Tool Factory, one of the "Chinese Machine Tool Double Heroes", was exposed to a large number of overdue debts, and finally bankruptcy and reorganization; in 2019, the other "China Machine Tool Double Male", Shenyang Machine Tool Factory, which was once the world's first seller, also formally applied for bankruptcy reorganization because it could not pay off its debts.

In 2019, the scale of China's machine tool industry showed negative growth, at -2.31%, and 15.1% of enterprises above designated size lost money.

This year is the "darkest moment" in China's machine tool industry. For a time, the sound of singing the decline of Chinese machine tools overwhelmed: "China's high-end CNC machine tools lag behind Japan by 20 years", "China's fighter jets can only rely on Japanese CNC systems"...

But under these manifestations of decline, there is actually another vitality. Just like in nature, forest fires caused by lightning will destroy the natural ecology, but they will also burn decaying wood, promote seed germination, and bring new life to the forest.

Since 2019, a number of Chinese machine tool enterprises established in the 90s have blossomed and borne fruit with years of technological accumulation and market development, under the support of national policies.

For example, as a representative of the "post-90s", Huazhong CNC, in addition to releasing the "Huazhong 9" in 2021, also successfully developed the 3D printer cabinet "LMDH320A".

"3D printing technology" has long been monopolized by Western countries. This technology can quickly manufacture parts without the need for abrasives, and can achieve low cost and high efficiency when producing small batches, and has a large number of applications in the production of F22 fighters in the United States.

The successful research and development of Huazhong CNC this time may bring subversive breakthroughs to the mainland manufacturing industry.

In other fields, mainland machine tool companies have also repeatedly reported exciting good news.

For example, Kede CNC, a subsidiary of Dalian Guangyang Technology Co., Ltd., was successfully listed on the Science and Technology Innovation Board in 2021. The company's gross profit margin in 2020 is as high as 42.15%, and its high-end five-axis machine tool NUMERICAL control system GNC60 can achieve 96% of the functions of "Siemens 840D".

The "Siemens 840D" developed by Siemens is equivalent to "Windows 10" in the field of high-end CNC machine tools, which is an operating system used to input instructions to machine tools, and has long been in a monopoly position. GNC60 has shaken the monopoly of foreign giants such as Siemens on high-end machine tool systems.

In addition, as early as 2020, Zhongke Yiberg Machinery Co., Ltd. finally realized the basic localization of "five-axis linkage double pendulum milling head" through continuous research and development.

Five-axis linkage CNC machine tool is a high-end machine tool used to produce key components for aircraft, submarines and medical equipment.

Previously, the five-axis linkage CNC machine tool produced by the mainland, its core component "milling head" has long relied on imports. This is the same as the long-term dependence on imports of chips and memory of domestic mobile phones, but this situation is being broken.

……

The haze faded, and the "post-90s" machine tool companies began to turn around.

02 The rise and fall of machine tool faucets

Machine tools are also known as "industrial mother machines", and parts of airplanes, ships, automobiles, mobile phones, home appliances, and electrical equipment are all manufactured.

About a third of the value added created by manufacturing is generated directly or indirectly by machine tools.

The mainland machine tool industry started in the 1950s, with the technical support of the Soviet Union, the mainland built 18 backbone machine tool enterprises, including Shenyang first, second and third machine tool factory, Dalian machine tool factory, Beijing first and second machine tool factory, etc. These 18 companies are known in the industry as the "Eighteen Arhats".

For a long time, there has been a big gap between the mainland's machine tool technology and Western countries, mainly because the high-end machine tool technology of Western countries has blocked the mainland for a long time.

In 1949, the United States, Germany, Japan and other 17 countries formed the "Paris Coordinating Committee" (referred to as Batumi), unanimously restricting the export of strategic materials and technologies, including high-end machine tools, to socialist countries such as the Soviet Union and China.

In the 1960s, mainland experts could only rely on the information on foreign high-end machine tool advertisements for research and development, and the performance of the products developed could be imagined.

After the end of the Cold War, although the global economy gradually integrated, the technical restrictions of Western countries on "threatening" countries have not been relaxed.

In July 1996, 33 Western countries signed the Wassenaar Agreement, which continued to restrict the export of sensitive technologies and products, including machine tool technology, through a licensing system. If a mainland enterprise wants to buy a Japanese high-end machine tool, it must guarantee to the Japanese side that it is not used for military use, and the purchased machine tool cannot be moved or disassembled.

In the 1990s, the mainland significantly reduced tariffs, and imported machine tools with technological advantages poured into the country. With their low-grade products with outstanding cost performance, they have put domestic machine tool companies in trouble. In 1990, the market share of domestic machine tools was 70%, and in 1993, it quickly dropped to 44%.

In order to cope with the arduous challenges, "Eighteen Luohan" has transformed into the "Four Heavenly Kings" of Shenyang Machine Tool Factory, Dalian Machine Tool Factory, Qinchuan Machine Tool Factory and Kunming Machine Tool Factory through mergers and reorganizations. State-owned machine tools have finally gained a foothold in the low-end market by becoming bigger and stronger.

Entering the 21st century, the hard days of Chinese machine tools seem to be over. From 2001 to 2011, China's machine tools ushered in a golden 10 years. After China's accession to the WTO, the rapid development of the domestic manufacturing industry, especially the rapid growth of the automobile industry, has led to a sharp rise in demand in the domestic machine tool market.

In 2009, the output value and output of the continental machine tool industry reached the world's first. In 2011, Shenyang Machine Tool topped the world's machine tool industry with a revenue of 18 billion yuan. However, the realization of high revenue relies on the sales of a large number of low-profit low-end machine tools. Soon, the drawbacks were revealed.

Since 2012, with the global economic downturn, the demand for low-end machine tools has dropped sharply. The day of "lying win" by producing low-end machine tools is over, and the continental machine tool industry has entered a cold winter.

After 2012, the global market demand for high-end CNC machine tools is still relatively stable, but Shenyang machine tools, Dalian machine tools and other domestic leading enterprises in the high-end CNC machine tool position is very weak, lack of core technology, CNC systems, high-end parts rely on imports, independent production of high-end machine tools cost is higher, low profits.

As a result, they cannot compete with imported mid-to-high-end products, and eventually they can only go bankrupt and reorganize. Although low-end products can be spared for a while, breaking through the neck of high-end technology cards is ultimately unavoidable.

Shen Liechu, former vice minister of the Ministry of Machinery, once pointed out: "Shenyang machine tools and Dalian machine tools are representatives of the 'GDP hero' era, while foreign well-known machine tool companies take the road of 'specialization, refinement, specialty and new'. For example, The Swiss Studer (Stutt) has only more than 300 employees, a four-story factory, but the product technology content is high, can maintain the world's first position for forty or fifty consecutive years. ”

03 The rise of machine tool companies after 90

Although the "Eighteen Arhats" have failed, a number of Chinese machine tool companies born in the 90s have gradually become the backbone of China's machine tools.

One day in March 1994, Yang Ke, secretary of the party branch of the School of Mechanical Science and Engineering of Huazhong University of Science and Technology, said: "Now the machine tools manufactured in the mainland can only spend a lot of money to use the systems of Germany's Siemens and Japan's Fanuc, and the system functions they sold to us are limited, and can only be used in low-end machine tools." We must develop and create our own high-end CNC system to defend the interests of the nation and break the sanctions of 'Batumi'. ”

Therefore, Huazhong University of Science and Technology established Huazhong CNC Co., Ltd. Yang Kechong and the teachers present at the time later became the managers of the company.

Almost at the same time as the preparation of CNC in central China, in 1993, as a senior engineer, Yu Dehai, a Dalian native who had reached the age of confusion, left the state-owned enterprise that had worked for many years and founded Dalian Guangyang Technology Company because of a sudden illness.

At the beginning of the company's founding, a small event made Yu Dehai firm in the direction of the company's development.

Once he purchased a high-end CNC machine tool from Japan, this machine tool is not only expensive, but also the sales agreement reads: "This product will automatically detect the movement of the equipment, after the transfer, without the company's confirmation, it will not be able to operate, for the equipment can not run any loss caused, the company is not responsible." ”

Yu Dehai is very clear that Japanese companies are doing this for the sake of secrecy of core technologies.

"There are so many restrictions on buying things!"

An indignant Yu Dehai has since clarified the direction of the company's development of China's own high-end CNC machine tools and systems.

There are many "post-90s" Chinese machine tool companies such as Huazhong CNC and Dalian Guangyang, such as Guangzhou CNC, Beijing Jingdiao, Zhongke Yiberg, Guosheng Intelligent Technology, and so on.

In the golden age of Chinese machine tools from 2001 to 2011, they were not satisfied with the low-end market, but steadily promoted independent technology research and development.

In the cold winter of machine tools after 2012, they instead ushered in spring.

For example, Huazhong CNC, at the beginning of the establishment of the company, chip technology and NUMERICAL control system were completely monopolized by Europe, the United States and Japan.

Therefore, the company established a route of not studying special machine tool chips, directly using PC chips, and developing numerical control systems based on Linux systems.

From the original Central China Type 1 system, after nearly 20 years of iterative upgrading, by 2012, the function of the Central China Type 8 high-end system has been very close to that of Siemens 840D. However, for a long time, the downstream manufacturing enterprises of the domestic machine tool industry chain will often rely more on imported products, even if the performance is similar, domestic machine tool products have also been snubbed.

At this time, Huazhong 8 was fortunate to usher in the "nobleman" who let it show its fists and feet.

In April 2012, the leader of Shenyang Aircraft Industry Company (hereinafter referred to as "Shen Fei") said: "We are willing to be the first to eat crabs!" To the domestic high-end CNC system as a test base. ”

Shen Fei handed over a high-end machine tool to Central China CNC for domestic system transformation. After actual use testing, Shen Fei commented: "The performance of Huazhong 8 meets the requirements of processing aviation structural parts. ”

"This attempt has finally ended the history of domestic high-end CNC systems being unappliced in Chinese aviation enterprises." Xiang Hua, commander-in-chief of the Central China CNC Major Special Command, sighed later.

Since then, huazhong CNC's products have gradually opened up the situation in the domestic market.

At this time, Xiamen Zhongke Yiberg Machinery Co., Ltd. also ushered in a breakthrough.

At the beginning of the establishment of the company, the main agent sold foreign machine tool parts. Although the business is getting bigger and bigger, the general manager Shao Chuanwei is not happy because the foreign businessman does not want an agent to become too powerful.

"I don't like to nod my head and go to compromise with foreign investors." Shao Chuanwei said.

The company is also responsible for the after-sales maintenance of overseas brands, and has a better understanding of the technical characteristics of foreign machine tool parts. Shao Chuanwei decided that the company developed its own machine tool components, and the breakthrough focus was on the core components of the high-end machine tool "five-axis linkage double pendulum milling head".

A milling head consists of more than 100 parts. Since 2009, when he decided to engage in his own research and development, Shao Chuanwei spent 11 years to finally realize the localization of most parts of the five-axis linkage double pendulum milling head.

Just when the road to research and development of Zhongke Yiberg was getting smoother and smoother, Shao Chuanwei had new troubles.

"The products produced must have enough orders in order to have customer feedback, and feedback can continuously improve and perfect the product." Shao Chuanwei said.

This problem also plagues Central China CNC, Dalian Guangyang and other CNC system research and development enterprises. They also require a lot of user feedback to update iterations.

Shao Chuanwei and many post-90s Chinese machine tool companies are eager for more "nobles" like Shenyang Aircraft Industry Company, and it was at this time that national policies began to help.

04 Policies to help Chinese machine tools

Since 2019, the mainland's "Catalogue of Major Technical Equipment and Products Imported Without Tax Exemption" has continuously increased the types of machine tool products and parts.

This means that the import duty-free concessions implemented for many products that could not be produced domestically in the past will be abolished.

For example, in the past, the import of high-end CNC laser processing machines larger than four axes can be exempted, but import taxes will be levied from 2019.

After the implementation of this policy, it has greatly enhanced the competitiveness of Chinese machine tool enterprises in the domestic market, so that domestic machine tool products have more opportunities to show themselves. Many downstream manufacturing companies have used domestic products once, only to find that the quality is not bad.

The person in charge of Huanyu Machinery Co., Ltd. once said: "Through one or two years of use, we found that the CENTRAL China CNC system is not inferior to foreign systems in terms of processing accuracy and stability, and at the same time has a high cost performance and is trustworthy." ”

On April 10, 2020, after General Secretary Xi Jinping stressed the need to build a new development pattern with the domestic cycle as the main body and the domestic and international dual cycles promoting each other, the policies that are conducive to the development of domestic machine tool enterprises have followed.

Outline of the 14th Five-Year Plan for National Economic and Social Development of the People's Republic of China and Long-term Goals for 2035, Guiding Opinions on Expanding Investment in Strategic Emerging Industries and Cultivating Growth Poles for New Growth Points... All mentioned the need to vigorously develop the mainland high-end CNC machine tool industry.

Behind these policies is the support of real money.

Relevant data show that Huazhong CNC received 219 million yuan in government subsidies for scientific research in 2019 and 158 million yuan in 2020. In the second half of 2021 alone, Ked CNC received a scientific research grant of 55.4714 million yuan.

The role of policy support is immediate.

Among the hardware products produced by Huazhong CNC, the proportion of self-produced core parts was 60% in 2018, increased to 75% in 2019, and reached 80% in 2020.

In terms of software, in addition to Shenyang Aircraft Industry Company, the Central China 8 CNC system has also begun to be widely used by the machine tools of Jilin General Machinery Co., Ltd., Qinchuan Machine Tool, Dongfeng Chukai Auto Parts Co., Ltd., Shanghai Aerospace Equipment Manufacturing Factory and other enterprises.

For example, Dalian Guangyang subsidiary Kede CNC, from 2018 to 2020, the gross profit margin of the main business was as high as 42.29%, 44.3% and 42.15% respectively. In the past three years, the cumulative R&D investment of 211 million yuan in FRED. By the end of 2020, KED CNC has as many as 172 international and domestic authorized patents.

The company's high-end five-axis linkage CNC machine tool basically realizes independent research and development, with a localization rate of more than 90%, and the processing accuracy and failure rate are close to the international advanced level.

The products have been applied to the subordinate research institutes of aerospace science and industry and aerospace science and technology, as well as a number of domestic key enterprises such as Hangya Science and Technology and Guangxi Yuchai.

In Zhongke Yiberg, Shao Chuanwei's five-axis linkage double pendulum milling head, which shao Chuanwei has been researching and developing for many years, has also become a high-end part purchased by large state-owned machine tool factories such as Qi Heavy CNC, Wu Zhong, and Ningjiang. In addition to the pulling effect of policies, the continuous transformation and upgrading of the mainland manufacturing industry has also promoted the development of post-90s machine tool enterprises.

Looking at the current high-end manufacturing industry on the mainland, it is a more sophisticated and environmentally friendly new energy vehicle, a more intelligent and safe Fuxing high-speed railway, and a more mobile and flexible J20 fighter... The prosperity of high-end manufacturing has provided a market for the high-end downstream application products of Post-90s Chinese machine tool companies.

Taking the automotive industry as an example, 40% of the products in the machine tool industry are supplied to automobile manufacturing enterprises, laying the foundation for the overtaking of the mainland new energy automobile manufacturing industry.

The manufacture of new energy vehicle motors and body has higher technical requirements for machine tools, and the power of domestic new energy vehicles has brought substantial growth space to machine tool companies. Driven by new energy vehicles, in 2020, domestic machine tool companies such as Haitian Seiko achieved substantial profit growth.

On July 21, 2013, when General Secretary Xi Jinping inspected the Wuhan Heavy Machine Tool Group, he particularly emphasized: Industrialization is very important, and we are such a big country to be strong, rely on the real economy, and cannot bubble. Self-reliance can not be less at any time, and our own rice bowls must mainly contain our own food.

On July 11, 2017, when Premier Li Keqiang inspected Qinchuan Machine Tool Group, he encouraged employees to further innovate, improve the level of intelligent manufacturing, and create a real Chinese robot from the inside out!

Although there is still a gap in precision and stability compared with the products of high-end CNC machine tools in mainland China and western developed countries, the gap is rapidly narrowing.

With the establishment of these "post-90s" machine tool enterprises in their 30s, the "Batumi encirclement" has long become history, and the dreams of entrepreneurs such as Yang Kechong, Yu Dehai, Shao Chuanwei and other entrepreneurs have also become a reality step by step, and the era of China's machine tool industry has arrived.

Resources:

[1] "A Brief Analysis of China's Machine Tool Enterprise Strategy", "World Manufacturing Technology and Equipment Market" Ding Weiming

[2] "Cnc Machine Tool Industrial Design Innovation Exploration", China High-tech Yangqiao

[3] "The Future Development Road of Mainland Machine Tools" CNC Machine Tool Market He Minjia

[4] "Memories of the Years of Creating CNC in Central China" Wuhan Literature and History Materials Yang Kechong

[5] "Central China CNC: Replacing the Machine Tool with a "Chinese Brain"" China Economic Times Wei Haoxing Yuan Shuai Zhang Youlong