China Int'l Machine Tool Show 2013 Hosts 117 Taiwanese Makers

TAMI chairman remains cautiously optimistic about Taiwan's machine tool export

With the number of Taiwanese machine-tool suppliers at the China International Machine Tool Show 2013, held in April in Beijing, totaling 117, up from the originally expected 60-70, Taiwanese makers may be opportunistically touting the inseparable ties between operators on both sides of the Taiwan Strait.

Such promotion may erstwhile seem contradictory for Chinese makers are also seen as rivals. However the harsh reality is that Taiwan's machine-tool industry—and perhaps others—is anxious to expand exports to China when its own competitiveness is being eroded due to the weaker Japanese yen, which makes globally reputable Japanese products less expensive globally.

The Taiwan Machine Tool & Accessory Builders' Association (TMBA) confirms that during the first four months of this year Taiwan's exports of machine tools plunged 19.6% year on year to US$1.09 billion mostly due to the sharp 30% devaluation of the yen against the greenback in the last six months or so. Hence the association chairman, Eric Chuo, has urged the Taiwan government to devalue the NT dollar by 10% to below 30:1 against the U.S. dollar to shore up export competitiveness, warning that Taiwan's machine-tool makers would face even harder times in the second half without more devaluation.

Meanwhile the Taiwan industry has been struggling to boost exports to China, which has dethroned Japan as the world's No.1 machine-tool market since 2002. The Taiwan government-backed Industry Technology Research Institute (ITRI) estimates China to demand more than RMB500 billion (US$80.6 billion) worth of machine tools by 2015.

Such massive demand has lured heavy investments from machine-tool powers including Germany, Italy, Japan and Taiwan, to generate in China's machine-tool industry a projected revenue of RMB800 billion (US$129 billion) by 2015, with China to become in five years the world's No.1 machine-tool manufacturer.

Taiwan's machine-tool manufacturers, inspired by the size of China's machine-tool industry and market, stress the inseparability of the two sides.

1,500 Exhibitors

Such belief was reflected by the number of Taiwanese machine tool exhibitors at CIMT 2013, which hosted 1,500 exhibitors. Regardless of the outbreak of the H7N9 avian flu, 117 Taiwanese manufacturers attended the show to be the second-largest exhibitor group, next only to China. Luckily, many Taiwanese exhibitors were given six more minor halls covering some 126,000 square meters, who would have otherwise been left out or had to struggle in the overcrowded venue.

The 2013 machine-tool show drew a reported 200,000 buyers from 60 economies to place in the top-4 globally along with EMO of Europe, IMTS of the United States and JIMTOF of Japan.

In contrast to single-function milling machines and cutting machines typically exhibited in the past, most Taiwanese exhibitors demonstrated multifunctional, five-axis machining centers, double-column machine tools, milling-turning hybrid machines, servo-driven pressing machines, electric discharging machines (EDMs) with robotic arms, and management system software and service platform, all of which were pitched at China's car, aircraft, electronics and precision-processing industries, driven towards automation by labor shortage.

Taiwan's exhibitors expected to bag ample orders at and after the show based on Beijing's new leadership planning to introduce new stimulus policies to fuel steady growth of the world's No. 2 economy.

But Taiwanese makers still face challenges in gaining more market share in China despite the exclusively preferential terms for Taiwan-to-China exports spelt out in the Economic Cooperation Framework Agreement (ECFA) signed between the two sides. German and Japanese machine-tool manufacturers, given zero duties in China, have commanded much higher shares in China than Taiwanese manufacturers for being able to offer mechanical performances unmatched by Taiwanese makers, according to the chairman of the Taiwan Association of Machinery Industry (TAMI), S.C. Hsu.

“So we need to accelerate negotiations with the Chinese authorities to include more of Taiwan's machine-tools in ECFA's preferential-tariff list,” Hsu stresses. He hopes 400-500 more items will be included in the list this year at the follow-up talks, which will make around 90% of machines to enjoy duty-free status in 2014, and 98% in the following year.

The association has drawn up concrete steps to help Taiwan's machinery makers expand market share in China. The association will lead its members to promote excellent products at trade fairs dedicated to Taiwan-made products in Tianjin, Dalian and Hangzhou, where all participants must be winners of the Ministry of Economic Affairs's Taiwan Excellence Award, Rising Star Award, and the association's R&D innovation award, Hsu stresses.

Hsu also suggests Taiwan's manufacturers upgrade processing precision, introduce five-axis processing technology, as well as build capability to make milling-turning hybrid machines and automated peripherals to take on German and Japanese equipment suppliers.

In spite of the yen-induced Japanese competitiveness, Hsu remains cautiously optimistic about Taiwan's machine tool export for this year, estimating Taiwan's exports to rise 5-10% from 2012's US$4.2 billion, citing the Purchasing Managers' Index having risen above the expansion-indicative benchmark of 50 worldwide.