However, we have also seen the problems exposed in China's construction machinery industry after its rapid development and growth. As domestic policies and real estate policies have tightened, severe overcapacity has emerged in the domestic construction machinery sector, followed by vicious competition and price wars. Aggressive Chinese-style marketing has at one point worsened the market environment for domestic construction machinery. Unlike our Chinese construction machinery peers, the United States, Japan, and Germany—once among the top three in international construction machinery—have remained quite calm in the face of industrial development and market growth issues, especially Germany. Many people are familiar with German machinery manufacturing; German manufacturing has long won the favor of buyers worldwide for its outstanding stability and safety.

    The structure of the machinery manufacturing industry is unique in German industry, reflected in the German term “Mittelstand,” which indicates that the sector is composed of small and medium-sized enterprises. The international community has long called this structure the “typical German structure,” symbolizing an autonomous corporate culture and representing the independence, creativity, and liberal philosophy of German entrepreneurs. Some outside observers once claimed that this structure had become completely outdated, especially as the trend of globalization reinforced this view. But the fact is that the German machinery manufacturing industry has rarely been as competitive in international markets as it is today. Even if the US dollar continues to depreciate, experts still believe that German machinery manufacturing will maintain growth in 2007 for the fourth consecutive year, and may even exceed the all-time high set in 2006.

    Unlike Made in China, the competitive advantage of “Made in Germany” lies in non-price factors. The German machinery manufacturing industry continues to benefit from its technological leadership in global special-purpose machinery, services, and system solutions, and further encourages enterprises to use their advantages to participate in international competition.

    Some once believed that globalization would make it impossible for traditional high-wage economies like Germany to continue enjoying comfortable lives. After all, the future belonged to high-tech and service industries, not old-style manufacturing. But Germany overturned conventional wisdom. It provided other developed countries with a development model. German companies have cleverly used their advantages to develop themselves amid the wave of globalization. The most important point is the return to the traditional economic model.

    In a high-wage country like Germany, the fundamental reason why most industrial sectors can maintain world-leading positions is that they possess numerous advanced proprietary technologies. This is the result of Germany's long-term commitment to participating in international competition in research and development.

    In contrast, China's machinery manufacturing industry has been blindly pursuing capacity and performance growth, and its performance in industrial technological innovation and patents—especially in core construction machinery technologies—has been less than satisfactory. At present, China's construction machinery industry faces enormous market challenges. We need to think calmly and change our mindset. Perhaps we should learn from the excellent quality of German manufacturing, continuously improve the quality of Chinese-made products themselves, and defeat global competitors through genuine strength.