Supply-Side Reform to Usher in a Golden Five Years for the Machine Tool Industry

The essence of "supply-side reform" is not about addressing oversupply as we understand it, but rather dealing with the mismatch between supply and demand. After more than thirty years of rapid economic growth, many people have transitioned from low income and low consumption to middle to high income and high consumption. According to data from third-party agencies, the number of middle and high-income individuals in China has exceeded two hundred million. The fundamental demand is still present, but income changes have led to a revolutionary change in demand. Consumers not only want products, they want high-quality products. From basic mobile phones to smartphones, from regular televisions to high-definition televisions, from conventional air conditioning to low-noise, energy-efficient air conditioning, from conventional trains to high-speed rail, and from driving a regular car to flying a private jet, the pursuit of better and higher quality has placed higher demands on manufacturing equipment, including machine tools.

High-quality products require high-quality equipment, and high-quality equipment requires good machine tools. The core of supply-side reform is to prepare for people's ever-increasing demands for better and higher-quality products. This year, a motorcycle parts company in Chongqing, despite a challenging market, increased equipment investment, upgraded existing equipment, and introduced several high-end CNC machine tools while phasing out old, low-end machine tools. Enterprises that engage in equipment upgrade and transformation like this are not only found in the motorcycle parts industry but also in various other industries. It's not limited to Chongqing; equipment manufacturing companies all over the country are doing this. However, not all equipment companies and industries are undertaking this transformation; it's the market-sensitive, reform-oriented, and well-capitalized equipment manufacturing companies that are driving the recovery of the machine tool market and ushering in what will inevitably be a golden five years for the machine tool industry.

Production to Service Industry Model Upgrade

For ordinary machine tools and low-end CNC machine tools, anyone can be hired off the street and, with a little training, operate them without needing to read blueprints. With the widespread use of mid-to-high-end CNC machine tools, when issues arise, ordinary workers or technicians can no longer address them. This demands that the machine tool industry not only provides good products but also good services, including pre-sales, sales, and after-sales service. Only with good products and services can users have a satisfactory experience. An industrial model shift from a product-centered approach to a user-centered one is taking place in the machine tool industry.

Moving from a product-centered approach to a user-centered one isn't something that can be achieved with just slogans and a few policies. It requires a revolution in thinking, from top-level strategic design thinking to grassroots tactical implementation concepts. The industry needs to restructure its business processes, from design to service, from production to sales, so that customers experience a simple, intimate, and unique product design and service. It also calls for a management innovation in the machine tool industry, moving from a product production sales performance management model to a core customer satisfaction management model that encompasses a comprehensive process revamp. Traditional manufacturing companies were driven by a two-wheel model: production and sales. The transformation to a user-centered approach introduces a new set of wheels: customer service, product design, production quality, and sales channel innovation.

The industry model upgrade presents challenges as well as opportunities. It's not something that can be accomplished in one or two years. However, the resurgence of the machine tool market indicates that China's machine tool industry is gearing up for what could be a golden five, eight, or ten years.

The Internet + Machine Tool Business Model Revolution

Imagine if today you wanted to buy a pen for your child. Would you prefer to spend an hour driving to a shopping mall, struggling to find a parking space, and then going up to the stationery store on the third floor to buy a pen, which would take half a day? Or would you rather buy it conveniently through your phone or computer and wait for it to be delivered to your doorstep? If you're a procurement manager or a business owner looking to buy a batch of computers, would you prefer to visit a wholesale market, a computer store, supplier companies, or trade shows in person, or would you prefer to handle it easily through your phone or computer? What about topping up your phone balance? Would you choose to do it the old way, looking for a business office or a top-up card shop, or would you prefer quick online recharge through your phone or computer in under a minute?

Real Internet isn't just about displaying information; that's an outdated concept. The true essence of the internet lies in interactive communication and valuable sharing; it caters to human nature by providing cheap, convenient, fast, and lazy solutions. Currently, there isn't a well-defined internet + machine tool business model. One reason is that decision-makers, production and sales personnel, and designers in the manufacturing industry tend to be older, which has delayed the widespread use of the internet in the machine tool industry. Another reason is that the general online network or display network lacks professional thinking and doesn't solve the service issues customers encounter.

The Internet + Machine Tool is a business model revolution. It eradicates all information asymmetry, perfectly integrates information and reputation, reshapes traditional marketing concepts based on information and trust, and reinvents the industry. The innovation in machine tool business models is accelerating the arrival of the machine tool industry's golden five years.