Machine tool makers urged to enhance distribution channels in mainland China

Taipei, Sept. 3, 2003 (CENS)--To beat foreign rival competitors, Taiwanese machine tool makers have to strengthen distribution channels and services in the lucrative mainland market, said C.C. Wang, managing director of the Taiwan Machine Tool Foundation (TMTF).

Wang made the remarks at a seminar at the headquarters of the Precision Machinery Research & Development Center in Taichung City, central Taiwan. The seminar, co-sponsored by the Taiwan Association of Machinery Industry (TAMI) and TMTF, was focused on the production and distribution strategies of Taiwanese manufacturers of machine tools in mainland.

Wang said mainland China has emerged as the world's largest consumer and importer of machine tools. Although Taiwan-based machine tool makers have found many investment opportunities in the mainland over the past several years, they have also encountered harsh competition from rival manufacturers of Japan and South Korea.

It is estimated that mainland China will turn out four million automobiles this year, leading to a booming procurement of such capital goods as machine tools. With this, the number of individual investors is increasing, many of them concentrating on mold-making and subcontract production of mechanical components and parts.

Recently, TMTF commissioned a mainland-based semi-official research institute to conduct a survey concerning the satisfaction of mainland consumers about imported machine tools. The survey found mainland consumers are not satisfied with Taiwan-made machine tools in terms of machining accuracy, reliability, and machining speed. But they give high praise to the machines made by Germany, Japan and the U.S.

According to mainland consumers' judgement, Taiwan ranked first in terms of prices, maintenance and after-sale services offered by the manufacturers of machine tools, followed by the U.S., Germany and Japan. The mainland consumers complain that German manufacturers usually delay repair and maintenance jobs as well as technological back-up, and Japanese manufacturers offer too expensive components and parts for repair and maintenance.

Wang said Taiwanese makers of machine tools are facing increasing threat in the mainland. For instance, Japanese manufacturers still have advantage over Taiwanese counterparts in the mainland's medium to high-end machine tool market; manufacturers of South Korea are broadly entering the mainland market by penetrating into the medium- and large-sized firms there; and mainland manufacturers are making all-out efforts to develop innovative machine tools by launching joint ventures with foreign makers to upgrade the accuracy, quantity and quality of their products.

In addition, some Japanese and German machine tool makers have independently launched production in the mainland to turn out high-quality models at low prices, which will affect sales of Taiwanese manufacturers in the mainland market.