In the early years, foreign brands enjoyed smooth sailing in the Chinese market. But in recent years, foreign brands in China have not only had to face the impact of the cyclical downturn in the construction machinery industry, but also to compete fiercely with a large number of strongly rising domestic brands, which has continuously squeezed their room for survival.

In response, a number of foreign brands have adopted strategic contraction in the Chinese market: some have exited, some have cut production, and others have parted ways, finding themselves mired in development confusion in the Chinese market.

Lost foreign brands

As early as four years ago, some foreign brands had already begun withdrawing from the Chinese market.

In 2021, John Deere announced that, effective November 1, 2021, it would gradually cease sales of complete construction machinery units in China.

In 2022, CNH Industrial announced that, effective December 31, 2022, it would cease its construction equipment sales business in the Chinese market.

In 2024, Kato Works Co., Ltd. announced on its official website the decision to dissolve and liquidate Kato (China) Construction Machinery Co., Ltd., meaning Kato has completely withdrawn from the Chinese market.

Besides outright departures, quite a few companies have chosen to cut production.

In 2023, Kobelco Construction Machinery announced the consolidation of its two production bases in Chengdu and Hangzhou into Kobelco Construction Machinery (China) Co., Ltd., adjusting its production (assembly) capacity in China from the previous 10,500 units per year to 5,500 units per year.

In 2023, Komatsu announced a restructuring of its China business, merging its Chinese subsidiaries in Jining, Shandong and Changzhou, Jiangsu, and cutting its annual construction machinery equipment production capacity in China by 40%. In March 2025, Komatsu stopped publishing data on excavator operating hours in China, while continuing to publish operating hours data for other regions.

In 2025, HD Hyundai Construction Equipment decided that the production line of Hyundai (Jiangsu) Construction Machinery Co., Ltd. would halt production starting in April, transferring all production tasks to the group's subsidiary factory in Yantai.

In addition, some foreign brands have chosen to part ways.

In 2025, Volvo Construction Equipment sold its entire 70% stake in Shandong Lingong Construction Machinery Co., Ltd. to Lingong Group. This means Volvo has officially and completely ended its nearly 19-year cooperation with Shandong Lingong.

Compared with Chinese domestic brands that are constantly expanding their territory, these foreign brands in the Chinese market have either exited, cut production, or parted ways over the years, able only to adopt conservative strategies to minimize losses.

Reasons for foreign brands' departure

1 The rise of domestic brands

In recent years, domestic brands have significantly improved in quality and also enjoy advantages in price, channels, and service, with market share soaring. Taking excavators as an example, in 2000 foreign brands accounted for more than 95% of China's excavator market share, while by 2023 domestic brands' market share had exceeded 80%. The continued shrinking of foreign brands' market share in China has become the main driver for their adjustment of China strategies.

2 The impact of industry cycles

Since the second half of 2021, China's construction machinery industry has entered a cyclical downturn, which coincides exactly with the timing of foreign brands' concentrated withdrawal from the Chinese market in recent years. For example, when explaining the reasons for the dissolution of Kato China, Kato cited factors such as the decline in China's real estate sector, falling demand for construction machinery, and intensified competition with local low-priced product manufacturers.

3 Insufficient strategic adaptability of foreign brands

In the early days, foreign brands' strategies in the Chinese market focused on high-end product positioning and high pricing. However, in an environment of rapid changes in domestic economic cycles, Chinese customers prioritize cost-effectiveness when choosing products. With the rise of domestic brands and intensifying market competition, the high-price disadvantage of foreign brands has become prominent, their quality advantage has weakened, and their cost-effectiveness has been declining day by day, creating a vicious cycle that ultimately led to a rapid reduction in their loyal customer base.

4 The gap in electrification and intelligentization is gradually widening

In emerging technology fields such as electrification and intelligentization, domestic brands develop faster and iterate products more quickly. Due to long R&D cycles and difficulties in localization adaptation, foreign brands find it hard to meet the Chinese market's demand for new energy construction machinery, and their competitiveness is further weakened.

Future development strategies of foreign brands in China

1 Deepening cultivation of China's domestic market

Now and in the future, foreign enterprises need to respond to rapidly changing and continuously upgrading market demands with fully localized strategic thinking and actions. For example, Caterpillar is increasing digital investment in the Chinese market, striving to enhance customer value. Digitalization is the booster for all of Caterpillar's business growth, covering the entire process from design and manufacturing to after-sales service and customer support end to end; in particular, aftermarket services are stepping up digital implementation to better support customers.

2 Based in the Chinese market, reaching the global market

Amid a rapidly changing global business environment and fierce local competition in China, some foreign companies have chosen to contract their China operations and focus on high-profit markets, or to promote regionalized supply chain layouts to diversify risks in response to global supply chain restructuring. For example, HD Hyundai Construction Equipment, Komatsu, and Kobelco Construction Machinery have stabilized sales revenue and reduced costs by adjusting their production capacity and supply chain layouts in China and shifting to aftermarket services.

Looking globally, Chinese companies remain in a challenger position

In recent years, domestic brands have accelerated their expansion in the Chinese market and occupy an absolutely dominant position, but looking globally, Caterpillar and Komatsu firmly hold the world's first and second positions, unshakable, and domestic brands remain in a challenger position. According to the "Yellow Table 2025" list released by International Construction magazine based on 2024 sales revenue, Caterpillar retained the top spot with a 15.9% market share, Komatsu held second place with an 11.2% share, while the 13 listed Chinese brands together accounted for 18.7% of the market.

Looking ahead, Chinese construction machinery enterprises can only write a glorious chapter belonging to domestic brands on the global stage by continuously breaking through technological barriers and constantly strengthening their global footprint.