By Amy Wang
AEM Technology and Safety Manager - China

The 10 years from 2001 to 2011 are often called the “golden decade” in China for both production and marketing of construction machinery.

Various national and regional policies favorable to foreign and domestic OEMs – along with a huge stimulus investment in infrastructure by the central government after the 2008 financial crisis – encouraged investment and technological innovation.

However, since 2012, construction machinery manufacturers are more and more aware of the severity of the downturn of the Chinese construction machinery market. In 2015, sales of excavators decreased about 30 percent, wheel loaders about 50 percent and rollers about 20 percent compared to 2014.

Regulatory Environment More Challenging

Meanwhile, there seem to be other factors that are making the situation more challenging to multi-national OEMs in China. According to results of the recently released China Business Climate Survey conducted by AmCham China, for the first time in five years its members report “inconsistent regulatory interpretation and unclear laws” as the top business challenge. American companies also feel less welcome than in prior years and fewer companies are increasing their investment levels in China, especially in the equipment manufacturing industry sectors.

For example, non-Chinese multi-national companies would like to have the same rights as Chinese domestic companies in the standards/regulation development process. However, during a recent meeting with AEM, an official from the Standardization Administration of China (SAC), the top authority for national standards development and one of the country’s major regulation-making bodies, openly expressed the idea of limiting foreign companies' participation in the drafting and revision process of Chinese mandatory standards (technical regulations). This could be a hint of a worsening regulatory environment for non-Chinese companies.

Still a Top-Three Investment Priority

Despite the above-mentioned challenges, the AmCham China survey also indicates that China still remains a top-three investment priority for 60 percent of its member companies. American companies list brands, technology, IP and innovation as top advantages over domestic competitors.

An example of this continuing high level of interest in the Chinese market is the work that non-Chinese engine manufacturers are doing to comply with China’s new non-road engine emission regulations. All diesel engines installed on off-road mobile machinery in China must be Chinese Stage III or higher level after April 1, 2016.

While many Chinese medium-sized domestic non-road engine and machinery OEMs are struggling to develop the technologies that will allow them to comply with the new national emission regulation, AEM member companies are already conducting their engine emission tests as well as working under the AEM China Engine Committee to negotiate with authority institutes under the Chinese Ministry of Environmental Protection (MEP). They are also lobbying for implementation practices that benefit members – sweeping away unreasonable or unnecessary requirements so that members can save time and cost.

New opportunities are also evident in China’s 13th “Five-Year Plan,” which begins in 2016 and runs through 2020. In order to ensure the steadiness of the Chinese national economy and key industry sectors including the heavy equipment industry, the Chinese government has committed under the plan to maintain its investment and strategies on infrastructure, real estate, etc. For example, China invested USD 130B on railway construction in both 2014 and 2015, while the investment on railway construction in the 13th “Five-Year Plan” is estimated to be around USD 650B in total.

 In brief, the Chinese construction machinery market in 2016 is foreseen with more challenges – as well as more opportunities – than ever before.

 Helping Members Succeed in China

 AEM’s China office provides support, connections and research for members selling products in China, creating manufacturing facilities, or seeking new partnerships. With AEM China, members have the benefit of a full-time office that has been operating continuously for more than 18 years, staffed by Chinese nationals who know the ins and outs of doing business. Not only has AEM learned much about the intricacies of Chinese business culture and regulations, AEM is now well-networked with business and government leaders.

 For more information, contact AEM’s Amy Wang (, tel: +86-10-8519-1566).