While manufacturers join a continually growing pool of foreign competitors in Chinas $8.4-billion equipment marketplace, sales in the rest of the world are getting stronger after a three-year buying drought. Following a modest 1 to 2% price inflation this year in North America, where international prices typically are at their highest, analysts now think that Chinas sudden influx of research, development and manufacturing will have prices there skyrocketing in the next five to seven years. That eventually could match the developing nation with its Japanese, Korean and western counterparts.
This is welcome short-term news for international manufacturers and dealers who have been lucky to grab 3 to 5% profit margins on new equipment sales, says David Phillips, managing director of Off-Highway Research in London. "The international manufacturers have been looking very closely at the Chinese market," he says. "Instead of exporting, they are manufacturing locally." Such local partnering will help equipment outsiders tap into an otherwise unfamiliar market and boost margins overall, he says.