Global machinery exports dominated by China and Germany
The strong economic recovery in key sales markets gave a major boost to machinery exports from Germany in 2021. However, it was not enough to recapture the title of world export champion, with Chinese competitors further extending their lead.
The strong economic recovery in key sales markets gave machinery exports from Germany a strong boost in 2021. Machinery exports rose by almost 10 percent in nominal terms to 179.4 billion euros. The pre-crisis level of 181.7 billion euros in 2019 was thus only narrowly missed.
However, it was not enough to recapture the title of world export champion in mechanical engineering, with Chinese competitors further extending their lead. Machinery exports from China rose by more than 26 percent to 210.1 billion euros.
“The development in the EU domestic market is a worrying factor. With an increase of 32 percent, Chinese machinery exports to the EU excluding Germany grew significantly faster than German machinery exports to EU partner countries (plus 11 percent). This means that China also increased its market share in the EU last year,” says VDMA chief economist Dr. Ralph Wiechers. “However, it is important to note that a significant proportion of China’s machinery exports come from manufacturing facilities operated by foreign companies in China or in which they have a stake in the form of joint ventures.”
Foreign investors play important role for China
The share of foreign owned companies machinery exports of Chinese total machinery exports was around 27 percent in 2017. Joint venture companies were also responsible for just under 14 percent of machinery exports. This meant that companies with foreign ownership accounted for 41 percent of exports.
“More recent export data by ownership structure is not available. However, at least one in three machines from China is still likely to come from companies with foreign ownership,” says Wiechers. “This also includes engagements of German companies. Yet it is not possible to quantify how large this number is with the available data.”
A look at the sectors of the mechanical engineering industry, however, shows that export successes by foreign owned companies can vary greatly. In 2017, for example, the export share of foreign owned companies in Chinese industrial robot exports was still over 80 percent.
Germany ranks fifth among customer countries for China
The analysis of China’s latest export data provides revealing results for the regional positioning of Chinese machinery exporters. For example, the three sales markets of the EU, ASEAN and North America are of roughly equal importance to them. Machinery worth 35 billion euros was exported to all three regions in 2021.
By way of comparison, machinery worth just under 71 billion euros was exported from Germany to the EU partner countries last year, which corresponds to a share of just under 44 percent of total German machinery exports. This shows the enormous importance of the domestic European sales market for machinery exporters from Germany. Machinery worth 19.8 billion euros was shipped to North America and only 4.4 billion euros worth of machinery to ASEAN.
The top 5 sales countries for machinery exports from China are the USA (up 22 percent to 31.1 billion euros), Japan (up 22 percent to 11.1 billion euros), Vietnam (up 30 percent to 10.5 billion euros), India (up 39 percent to 8.9 billion euros) and Germany (up 40 percent to 8.5 billion euros).
Significantly more Chinese machinery exports to Russia
Machinery exports from China to Russia increased by 55 percent to 8.0 billion euros in 2021.
To Ukraine, manufacturers from China supplied machinery worth 1.1 billion euros (up 44 percent). Machinery exports from Germany to Russia increased by 3.8 percent to 5.5 billion euros last year, with “Made in Germany” machinery worth 1.1 billion delivered to Ukraine.
“China is now by far the number one foreign machinery supplier in Russia due to the high gains. However, in terms of their respective total exports, the combined sales market of Russia and Ukraine for China and Germany is at a similar, manageable level of less than 5 percent each,” Wiechers analyzes. As a result of the Russian invasion of Ukraine and the far-reaching mutual sanctions imposed by Europe and Russia, however, the shares are likely to shift noticeably in the foreseeable future. “We have to assume that even if peace is concluded quickly, sanctions will remain in place and European machinery and plant manufacturers will have a harder time in this market than their Chinese competitors,” says the VDMA chief economist.
