After the closing of the Second Session of the 12th National People's Congress, Premier Li Keqiang, in response to questions from Chinese and foreign journalists at the Golden Hall of the Great Hall of the People, said that China's economy needs to upgrade, export products also need to upgrade, and Chinese equipment going global must be able to withstand competition in the world market, improve quality and upgrade.

　　During the Two Sessions, entrepreneurs, experts and scholars from China's construction machinery industry expressed their views on the development of the industry and existing problems, and put forward opinions and suggestions.

　　Easily Affected by Macro Situation: Future Growth Rate Continues to Slow Down is a "High Probability Event"

　　At the beginning of the year, the National Bureau of Statistics released data showing that China's GDP grew by 7.7% in 2013. In 2014, it has become a consensus that China's economic growth rate will slow down. Against the backdrop of slow global economic recovery and fierce international competition, how China's construction machinery industry, mired in overcapacity, can transform and upgrade, break through the technology monopoly of developed countries, and establish comparative advantages in competition with emerging economies has become an important issue for the industry's development. At this year's Two Sessions, this issue was also fully reflected.

　　"The construction machinery industry is a strongly cyclical industry, and its development is closely related to the macroeconomic situation. The future growth rate will continue to slow down, which is a high probability event, so it is inevitable to go through a long and painful transition period," said Wu Xuan, general manager of the Wealth Management Department of Rixin Securities, when talking about the future development trend of the construction machinery industry.

　　Since 2011, China's economic growth mode has shifted to pursuing quality and efficiency, energy conservation and environmental protection, and intensive and efficient development. This means that the construction machinery industry, driven by fixed asset investment, will face a long-term environment of insufficient demand, overcapacity and intensified competition. At the 2013 Global Construction Machinery Industry Conference and Top 50 Summit, Wang Min, chairman of XCMG Group, a leader in the domestic construction machinery industry, also presented his "medium-speed mentality theory" to the media.

　　Wang Min said that with changes in the industry's development speed, the high-speed mentality during the high-growth period should be adjusted to a medium-speed mentality. He said that although the world economy is still unstable and relatively sluggish, development remains the main theme, and there are still many opportunities. Especially for Chinese enterprises, they have already transitioned from an expansion-oriented stage to a stage of transformation and upgrading.

　　Industry Status: "Big but Not Strong" Key Technologies Depend on Imports; Entrepreneur: No Innovation Means Waiting for Death

　　Chinese heavy industry enterprises cannot be said to lack strength. In the "2013 Global Construction Machinery Manufacturers Top 50 Ranking," 11 Chinese companies were listed, compared with 8 from the United States, 11 from Japan, 5 from Germany, 3 from Sweden, 2 from South Korea, and 2 from Finland. Among the top 15, three Chinese companies—XCMG Group, Zoomlion, and Sany Heavy Industry—ranked 5th, 6th, and 10th respectively. However, while super-large enterprises frequently top international manufacturing rankings and make large-scale overseas acquisitions and investments in factories, the production of key components for China's construction machinery is heavily dependent on imports and has long been constrained by others.

　　Wu Xuan told reporters that China's construction machinery manufacturing industry is big but not strong: large production capacity, large scale, and many enterprises, but factors such as weak key technologies and dependence on imports for components have seriously constrained the industry's development. At this year's Two Sessions, a group of construction machinery industrialists from the front lines expressed their views and put forward opinions and suggestions on how to promote the industry's transformation and upgrading.

　　On the 13th, Zhan Chunxin, a deputy to the National People's Congress and chairman of Zoomlion, said during the Two Sessions that to achieve industrial upgrading, balanced development must be achieved across the industrial chain. Although China's equipment manufacturing industry has produced a number of leading enterprises with scale exceeding 100 billion yuan and with brands, status, and discourse power globally, most of the supporting enterprises are still start-up, small and medium-sized enterprises. They are at the bottom of the industrial chain, with small scale, weak technology, poor equipment, and no ability to upgrade themselves, making it difficult to support the industry's breakthrough to high-end. The core components with key technologies that support main engines occupy high added value, but most must be purchased from European and American enterprises, which has become a bottleneck restricting the industry's upgrade to high-end.

　　"For example, for construction machinery and automotive products, not only is the brand premium capability of China's main engine (complete vehicle) products far lower than that of internationally renowned brands, but key components such as hydraulic parts and electronic products used by domestic brands are also heavily dependent on imports. At the same time, manufacturing-developed countries are using their advantages to seize the global market and China's mid-to-high-end market, emerging economies are accelerating the development of industries with comparative advantages, and competition among countries to seize the commanding heights of international division of labor is also becoming more intense," said Wang Jinfu, a deputy to the National People's Congress and chairman of Chery Heavy Industry, during this year's Two Sessions.

　　At the 2013 China Top 500 Enterprises Release and China Large Enterprise Summit, XCMG Chairman Wang Min said that enterprise innovation is mainly technological innovation. Today, making ordinary homogeneous products is no longer profitable. Multinational companies occupy the high-end market and earn big money, while we still have a gap. Therefore, innovation is promoted by competition and also forced by the desire to live better. No innovation means waiting for death.

　　Wang Min said that after decades of effort and accumulation, China's construction machinery industry has solved 90% of the problems, but the most critical is to overcome the last 10%. "This is like climbing the last few hundred meters of Mount Everest. It requires gathering greater strength and using more financial resources, wisdom, and talent to solve the last few hundred meters and the 10% of problems. If this problem is not solved, we will always be constrained by others."

　　Two Sessions Deputies Suggest Establishing a Common Technology R&D Platform; Expert: Sustainability is the Key to Success

　　On how to solve the structural problems existing in the construction machinery industry, deputies offered suggestions at this year's Two Sessions. "On the one hand, we need to improve the capabilities of small and medium-sized supporting enterprises, focusing on cultivating a group of strong, refined, and specialized SMEs; on the other hand, we need to effectively invest in the R&D and industrialization of key components to fill the gaps in the industrial chain," said Zhan Chunxin.

　　Zhan Chunxin believes that the inability to share resources is also an important factor restricting the pace of industrial upgrading. The problem arises because of the lack of joint R&D and achievement sharing for common technologies. He analyzed that for the large equipment manufacturing industry, disciplines such as materials, machinery, electrical, and hydraulics all belong to common industry technologies. "Different industries, same principles." Basic research and extended development of common technologies can benefit all branches of large equipment manufacturing.

　　In response to the technical innovation and breakthrough challenges in the construction machinery industry, the deputies proposed a set of solutions. Wang Jinfu said that policy environment, technology, and talent are the three essential elements in transformation and upgrading. Zhan Chunxin suggested that the state formulate preferential policies to encourage and support suitable enterprises, research institutes, and universities to form cross-industry key and common technology R&D platforms and alliances, horizontally connecting the industrial chain and accelerating the transformation and upgrading of the equipment manufacturing industry.

　　Regarding the suggestions of the committee members and deputies, Wu Xuan told reporters that a tripartite co-construction platform is worth promoting and can achieve win-win results from the perspectives of national strategic height, enterprise cost reduction, and the enhancement of universities' economic and scientific research strength. If we rely solely on state subsidies for enterprises to conduct related technology R&D, the cost will be very high, and the results may not be satisfactory.

　　Wu Xuan emphasized that although the idea is good, whether it can be sustained is the key to determining future success. He believes that relevant government departments can promote it from the following three points: first, gradually reduce the procurement volume of purchased components; second, require national brands to conduct mandatory pilot trials of new technologies; third, introduce key technologies through Sino-foreign joint ventures to achieve mutually beneficial cooperation.

　　XCMG, Zoomlion, and Sany are the "three giants" in the domestic construction machinery industry. In recent years, the three companies have frequently made moves in "overseas expansion." Although their models are different, their ultimate goal is to integrate high-quality resources through cooperation, establish international platforms, and enhance corporate strength. Taking XCMG as an example, to overcome key technical challenges in core components, XCMG acquired companies in Germany and established R&D centers, cultivating high-end technical talent overseas. Some analyses say that this strategic plan is of great reference significance and worth learning from by other enterprises.