After the closing of the Second Session of the 12th National People's Congress, Premier Li Keqiang stated during a Q&A at the Golden Hall of the Great Hall of the People that China's economy must upgrade, export products must upgrade, and Chinese equipment going global must withstand competition in the world market, improving quality and upgrading.

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

　　Susceptible to Macro Trends: Continuous Slowdown in Industry Growth 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 across all sectors 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. A continuous slowdown in growth in the future is a high probability event, so it must go through a long and painful transformation period," said Wu Xuan, general manager of the Wealth Management Department at Rixin Securities, in an interview with China News Service's Finance Channel, discussing the future development trend of the construction machinery industry.

　　Since 2011, China's economic growth model has shifted to pursuing quality and efficiency, energy conservation and environmental protection, and intensive efficiency. 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 put forward his "medium-speed mindset theory."

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

　　Industry Status: "Big but Not Strong" Key Technologies Rely on Imports; Entrepreneur: Innovate or Die

　　Chinese heavy industry enterprises are indeed powerful. In the "2013 Global Construction Machinery Manufacturers Top 50 Ranking," 11 Chinese companies were listed, compared to 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 engage in large-scale overseas mergers and acquisitions and factory investments, China's production of key components for construction machinery relies heavily on imports and has long been constrained by others.

　　Wu Xuan told China News Service's Finance Channel that China's construction machinery manufacturing industry is big but not strong: large capacity, large scale, and many enterprises, but 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 frontline construction machinery industrialists 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 group of leading enterprises with revenues in the hundreds of billions and global brands, status, and influence, most of the supporting enterprises are still startups and small and medium-sized enterprises. They are at the bottom of the industrial chain, small in scale, weak in technology, poorly equipped, unable to upgrade themselves, and difficult to support the industry's breakthrough to high-end. The core components with key technologies that support main engines hold high added value, but most are purchased from European and American companies, which has become a bottleneck restricting the industry's upgrade to high-end.

　　"For example, in construction machinery and automotive products, not only is the brand premium 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 in domestic brands also rely heavily on imports. At the same time, developed manufacturing countries are using their advantages to seize global markets and China's mid-to-high-end markets, emerging economies are accelerating the development of industries with comparative advantages, and competition among countries to seize the high ground in the international division of labor is 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 homogenized products no longer yields profits; multinational companies occupy the high-end market and earn big money, and we still have a gap. Therefore, innovation is driven by competition and also forced by the desire to survive better. Not innovating is waiting to die.

　　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, 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 Propose Establishing a Common Technology R&D Platform; Expert: Sustainability Is Key to Success

　　On how to solve the structural problems in the construction machinery industry, deputies offered suggestions during this year's Two Sessions. "On the one hand, we need to enhance 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 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 from 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 are all industry common technologies. "Different trades, same principle." Basic research and extended development of common technologies can benefit all branches of large equipment manufacturing.

　　Regarding technological innovation and breakthrough challenges in the construction machinery industry, deputies proposed a set of solutions. Wang Jinfu stated 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 establish 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 from committee members and deputies, Wu Xuan told China News Service's Finance Channel that a tripartite co-construction platform is worth promoting and win-win for all parties, whether from the perspective of national strategy, enterprise cost reduction, or the enhancement of universities' economic and research capabilities. 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 cooperation can be sustained is the key to future success. He believes that relevant government departments can promote it from the following three points: first, gradually reduce the procurement of externally purchased components; second, require national brands to conduct mandatory pilot projects for 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 differ, 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 this strategic plan is of great reference significance and worth learning from by other enterprises.