BICES 2011 and China’s Five-Year Plan

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The BICES show was held from October 18 to the 21 at the Beijing Jiuhua International Exhibition Center, North of Beijing, China. The biennial show covered a total of 1.3 million sq.-ft., both indoors and outdoors, and held exhibits from 1,200 companies. Although BICES has traditionally been a show for equipment users from China and a few surrounding countries, this year showed a marked increase in Western companies and individuals displaying their products.

The Five Year Plan

Since the Chinese revolution in 1949, the government has established goals for the country in five-year increments. Each five-year plan sets annual goals for all segments of the Chinese economy. Detailed plans are a main feature of a centrally controlled economy such as China. The current plan (2011 to 2015) sets very ambitious goals for the construction equipment sector. 

Mr. Su Zimeng, Secretary-General of the China Construction Machinery Assn. (CCMA) spoke to BICES attendants about the current five-year plan and some of its goals. 

According to the plan forecasts, China’s construction machinery market is expected to be more than $131 billion annually by 2015, an average annual growth rate of 17%. The goal for exports is $26 billion per year. That $26 billion is comprised of 30,000 hydraulic excavators; 40,000 wheel loaders; 6,000 bulldozers; 3,000 motor graders; 10,000 construction cranes; 80,000 forklifts; 11,000 compaction rollers; 16,000 truck mounted cranes; 1,500 crawler mounted cranes; 10,000 ready-mix trucks; 1,500 concrete pump trucks and 800 rotary drill rigs.

The plan calls for manufacturers to shift from expanding capacity to emphasizing technological innovation with a focus on improving quality, reliability and durability. The plan acknowledges that China lags behind products built in other parts of the world. Furthermore, it calls for Chinese manufacturers to upgrade their marketing, after-sale service and management systems in order to build an international presence. The plan also calls for improving industry wide standards.

In the past, the standards were set by Chinese research institutes. The standards must now be developed by industry associations such as CCMA.

Zimeng went on to say that the plan called for the industry to manage used equipment in China. There are presently four million secondhand construction machines in China, most of which are not suitable for use in the mainstream equipment market. As a result they are sold in private transactions and often pose a safety risk. The current secondhand market is not regulated or monitored and lacks policies and the means to evaluate and test the equipment. Information about secondhand machines is inadequate which has slowed its development.

The 12^th five-year plan recommends that the industry establish a transaction management system to promote the formation of an open, standardized market. This would not only stabilize the domestic Chinese market but would also promote sales of secondhand Chinese machines in the international market.

It is interesting to see how Chinese government plans are transformed into new products by the equipment manufacturers. For example, on display at BICES were more than six electric-drive mining trucks. The development effort stems from the government’s desire to reduce its country’s reliance on foreign-built mining trucks.

The Chinese government recognizes that in order for its products to be world-class, the domestic manufacturers require imported hydraulic systems and sophisticated control systems, most of which are sourced from Japan, Korea, Europe and the U.S. But, importing those products increases the cost to manufacturer of those products in China. As a result, there is a concerted effort to form joint ventures and partnerships with foreign companies that includes an exchange of technology.

Company announcements and product introductions