Summarize this content to 2000 words in 6 paragraphs in Arabic China has struggled to develop the most advanced machine tools essential to manufacturing, despite its huge strides in artificial intelligence, renewable energy, semiconductors and electric vehicles.High-end machine tools, used to make everything from jet engine parts to tiny circuit board components, continue to be built and supplied to China by Japanese, European and US companies.\u201cMachine tools are probably the last quandary for China\u2019s manufacturing sector,\u201d said Xiao Feng, an industrials analyst at CLSA.\u201cIt\u2019s the base of everything,\u201d said Mingda Qiu, senior China analyst at Eurasia Group. \u201cIt\u2019s an indispensable part of the supply chain.\u201dChina\u2019s particular challenge has been building the hardware and software that operate high-precision computer numerical control (CNC) machine tools, a corner of the industry long dominated by Germany\u2019s Siemens and Japan\u2019s Fanuc.Beijing in 2015 had pledged to \u201csignificantly decrease\u201d foreign dependence on the technology by 2025, but the incumbents\u2019 competitive advantage and the Chinese government\u2019s shifting priorities have slowed progress, according to analysts.\u201cIt looks like the government has started to look away from machine tools and focus on robots,\u201d said Morten Paulsen, head of Japan research at CLSA. \u201cLeft on its own, the industry just wasn\u2019t profitable enough.\u201dPowerful network effects add to the challenge. The duopoly held by Siemens and Fanuc means for other entrants, \u201cit\u2019s like trying to sell a PC with a home-made operating system\u201d, said Paulsen. The varied applications of machine tools also require a deep understanding of industries ranging from medical devices and electronic components to aviation.Siemens and Fanuc \u201cstill have better brand positioning\u201d, said an employee, who asked not to be named, at a Chinese machine tool manufacturer that prefers using them over domestic CNC controllers.Given machine tools\u2019 high price tags, manufacturers are cautious about unknown brands, said Renaud Anjoran, chief executive of Sofeast, which helps foreign companies set up supply chains in Asia.\u201cWe\u2019re not talking about buying something we can easily replace if it stops working,\u201d said Anjoran, noting the significant disruption to production from faulty machines.Beijing laid out efforts to support the CNC machine tool industry as early as 2007, when the sector was part of the government\u2019s 11th five-year economic plan.\u201cThe 11th five-year plan led to a boom of CNC manufacturers,\u201d said Robert Tam, a senior project fellow at the Hong Kong Polytechnic University Industrial Centre. But after an initial surge in companies in the sector, many closed down amid intense domestic competition. In more recent years, local government support has also dried up due to revenue shortfalls from the country\u2019s property collapse.In 2017, Dalian Machine Tool, one of China\u2019s oldest machine tool manufacturers, dating back to the People\u2019s Republic\u2019s founding, went bankrupt. Then in 2019, Shenyang Machine Tool, another well-established company, also folded after a debt-fuelled expansion.Both companies have since been bought by the state-owned conglomerate Genertec, which has overseen a reorganisation that analysts say has been challenging.Slowing industrial demand and declining local government subsidies have led to further consolidation, with foreign groups growing their share of China\u2019s market, according to Ming Lee, head of greater China industrials at Bank of America.Data from the bank shows foreign machine tool companies command roughly two-thirds of China\u2019s market, with Fanuc, Mitsubishi and Siemens comprising 33 per cent, 20 per cent and 16 per cent, respectively.Chinese companies have rushed to dominate the market\u2019s lower end, where they can compete on cost. \u201cThe way they tried to gain market share was through price cuts,\u201d said Lee.That has led to industry profits dropping sharply. A recent report from the China Machine Tool and Tool Builders\u2019 Association highlighted a 5.2 per cent decline in the sector\u2019s revenues to Rmb1tn ($138bn) in 2024, while profits plunged 76.6 per cent to Rmb26.5bn. It attributed this to \u201cthe intensification of\u2009.\u2009.\u2009.\u2009vicious competition\u201d further eroding profit margins.Brutal price competition has also meant a shift away from the long-term research and development China needs to compete at the industry\u2019s top end, even as it has become competitive at making the hardware of machine tools.\u201cIf everyone blindly pursues scale, it becomes challenging to maintain long-term investment,\u201d said Liu Junqi, a machine tool analyst at brokerage Northeast Securities.Chinese companies now dominate the industry\u2019s middle and low end, according to analysts. The country went from being a net importer of machine tools to a net exporter in 2021, although many of the tools made in China and sold internationally are manufactured by foreign companies operating in the country, said Paulsen.Some industrial experts are convinced China will eventually succeed at creating high-end CNC machine tools.\u201cChina is definitely getting there,\u201d said Robert Voyle, chief executive of the Aviation Services Research Centre at Hong Kong Polytechnic University. \u201cThey\u2019re not quite on the high-end CNC yet, but they will be.\u201dHowever, Beijing will probably remain more focused on advanced technologies for chip manufacturing and space exploration, even if cutting-edge CNC machine tools are applicable to those areas.\u201cWhen you have to balance different priorities with only limited resources, that\u2019s where you\u2019re going to have to make some kind of compromise,\u201d said Eurasia Group\u2019s Qiu.<\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic China has struggled to develop the most advanced machine tools essential to manufacturing, despite its huge strides in artificial intelligence, renewable energy, semiconductors and electric vehicles.High-end machine tools, used to make everything from jet engine parts to tiny circuit board components, continue to be<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-221501","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/221501","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=221501"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/221501\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=221501"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=221501"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=221501"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}