New trends in the mechanical components industry: LiuGong takes the lead, as state-owned enterprises ramp up efforts in the aftermarket, innovation, and global expansion.

The aftermarket has become a new growth driver for state-owned enterprises, as LiuGong builds a comprehensive, end-to-end service system.

As the domestic machinery market shifts from “ Incremental Competition ”  Shift to “ Existing Operations and Maintenance ” , the aftermarket business—covering parts supply, repair and maintenance, as well as complete machine remanufacturing—has become a key lever for state-owned enterprises to optimize their revenue structure and enhance their risk resilience. As a leading domestic construction machinery enterprise, LiuGong has taken the lead in elevating the aftermarket to a strategic priority, leveraging it through “ Accessory Assurance +  Service Upgrade ”  Dual-wheel drive to build a service ecosystem that covers the entire lifecycle.

A relevant official from LiuGong stated that China's current stock of construction machinery has surpassed 10 million units, with the aftermarket demand expected to grow at an average annual rate exceeding... 15% , becoming a driver of corporate revenue growth “ The Second Curve ” To meet market demand, LiuGong has established a nationwide presence. 30  Additionally, regional parts distribution centers have been established to ensure readily available common components. “24 Direct access within hours ” ; Launching initiatives for outdated equipment “ Trade in for a new one +  Core Component Upgrade ”  Service, 2024  More than have been completed since the year 5000  The core components of Taiwan's loaders and excavators have been upgraded, boosting revenue from aftermarket parts year-on-year. 22% Meanwhile, LiuGong has also launched “ Smart Aftermarket Platform ” Users can seamlessly perform one-stop operations via their mobile devices, including accessory inquiries, online ordering, and repair appointments. In the six months since the platform launched, its cumulative transaction volume has already surpassed 3  Hundreds of millions of yuan.

In addition to LiuGong, state-owned enterprises such as XCMG Machinery and Shantui Shares are also accelerating their post-market strategies. XCMG Machinery has established “ Accessory E-commerce +  Offline Service Station ”  Integrated network, 2024  The revenue share from the accessories business has increased to 28% ; Shantui Shares Launches “ Remanufactured Core Components ”  Business, by precisely repairing engines and transmission components, reduces the cost of spare parts. 40% , while also meeting environmental requirements, the current annual sales of remanufactured parts have already surpassed 5  Tens of thousands of units. From the perspective of profit margins, the gross profit margins of these state-owned enterprises' aftermarket businesses generally remain at 35%-55% , significantly higher than overall machine sales 18%-25% The gross profit margin has become a key support for the company's profit growth.

State-owned enterprises tackle core technologies, breaking through in the components sector. “ Chokehold ”  Barriers

In the field of core technologies for mechanical components, state-owned machinery enterprises continue to ramp up R&D investments, focusing on localizing critical parts for high-end equipment and breaking the long-standing monopoly held by foreign companies. LiuGong has been deeply engaged for many years in core component areas such as hydraulic systems and transmission parts. 2024 The independently developed high-pressure main pumps, electrically controlled pilot valves, and other components launched this year have already achieved performance metrics that meet international advanced standards, and currently, their installation rate in LiuGong's new models has exceeded 80% Meanwhile, we are also starting to provide supporting services to other domestic automakers.

For construction machinery “ Heart ”  Component —— The Engine Division of FAW Jiefang, part of China's First Automobile Group, has jointly developed a high-strength alloy piston with the Institute of Metal Research under the Chinese Academy of Sciences. Utilizing a new type of heat-resistant material and advanced precision molding technology, this innovation significantly extends the piston's service life. 50% , with the temperature tolerance increased to 450℃ Currently, this product is already being supplied in bulk to heavy-duty engines of enterprises such as FAW Jiefang and Dongfeng Motor, with an annual production capacity reaching 100  Tens of thousands of units. In the field of core robotic components, state-owned enterprises have also achieved breakthroughs: China North Navigation, affiliated with China North Industries Group Corporation, has leveraged its accumulated military-industrial technology to develop a high-precision harmonic reducer, achieving transmission accuracy as low as 0.1  ArcMinute has broken the monopoly held by Japanese companies in this field and is now being applied in areas such as industrial robots and specialized equipment, with annual sales exceeding 2  Ten thousand units.

To accelerate technology transfer, these state-owned enterprises have also established “ Industry-Academia-Research-Application ”  Collaborative innovation mechanism. LiuGong and Guangxi University jointly establish “ Core Components Joint Laboratory for Construction Machinery ” Focusing on tackling key challenges in wear-resistant materials and intelligent sensing technologies; XCMG Machinery, in collaboration with Tsinghua University and Harbin Institute of Technology, has achieved a breakthrough in applying digital twin technology to the field of component failure prediction. By installing sensors on critical components to monitor operational data in real time, the system has boosted the accuracy of equipment failure warnings to nearly 92% , significantly reducing downtime. 2024  In the first half of the year, state-owned enterprises such as LiuGong and XCMG Machinery all saw year-on-year increases in R&D investment in the parts sector. 30% , patent applications increased year-on-year 25% , providing a strong impetus for the industry's technological upgrade.

State-owned enterprises lead components going global, expanding their reach. “ The Belt and Road ”  Emerging Markets

In terms of overseas market expansion, state-owned machinery enterprises represented by LiuGong have leveraged “ Complete machine +  Accessories ”  The collaborative overseas expansion model, in “ The Belt and Road ”  Countries and regions along the route are rapidly opening up markets, becoming the main force in exporting mechanical components. LiuGong has now established a global presence 12  A network of overseas parts centers covers key markets such as Southeast Asia, the Middle East, and Africa, 2024  Sales of overseas accessories in the first half of the year increased year-on-year. 38% , with the Southeast Asian market experiencing growth rates exceeding 50%。

In the Southeast Asian market, LiuGong has custom-developed corrosion-resistant hydraulic hoses and waterproof electrical connectors—among other accessories—to meet the region's hot and humid operating conditions, while also providing “ Accessories +  Maintenance ”  Packing services—currently, LiuGong has already surpassed a leading market share in the construction machinery parts markets of countries like Vietnam and Indonesia. 20% China's First Tractor, part of the China National Machinery Industry Corporation, is focusing on exporting agricultural machinery parts overseas, establishing parts service centers in countries such as Kazakhstan and Pakistan. 2024  The first half of the year saw agricultural machinery parts exports increase year-on-year. 42% Among them, tractor gearboxes and core components of seeders have become best-selling products.

To enhance their overseas competitiveness, these state-owned enterprises are also engaging in localized production in the regions where they operate. For instance, LiuGong has established component production bases in India and Brazil, enabling local manufacturing of common parts such as chains and sprockets. This not only reduces logistics costs but also allows the company to swiftly meet local market demands. Meanwhile, China National Heavy Duty Truck Group has built a heavy-duty automotive components factory in Thailand, with an annual production capacity reaching 15 Tens of thousands of units, with products not only supplied to the Southeast Asian market but also reaching countries like Australia and New Zealand. According to customs data, 2024  In the first half of the year, the export value of mechanical parts from state-owned enterprises accounted for a significant share of the nation's total mechanical parts exports. 45% , among which “ The Belt and Road ”  Countries along the route account for over 60% , becoming the core driving force behind the industry's export growth.

From post-market strategic planning to breakthroughs in core technologies, and further into expanding into overseas markets, state-owned machinery enterprises are leading the mechanical components industry toward a new stage of high-quality development through comprehensive initiatives. Looking ahead, as state-owned enterprises continue to accelerate their digital and green transformations, the mechanical components sector will not only drive upgrades across the industrial chain but also demonstrate China's growing global competitiveness on the world stage.