Kobelco restructures due to changing Chinese market

Kobelco’s SK210C excavator in action.

Japan-based OEM Kobelco Construction Machinery (KCM) has announced that it will integrate its Chinese production subsidiary into its manufacturing and sales subsidiary, so there is only one manufacturing plant of excavators in the country, in light of changing market conditions in China.

As part of the move of integrating the production subsidiary Hangzhou Kobelco Construction Machinery into Kobelco Construction Machinery (China), production capacity in China will be reduced from 10,500 units a year to 5,500 units a year.

Part of HKCM’s supply capacity for fabrication products will also be shifted to KCMC, with much of the remainder being shifted to a plant in India.

The Chinese market of hydraulic excavators has in recent years accounted for approximately 50% of worldwide demand but sales have been falling, and KCM said that competition from Chinese domestic manufacturers is becoming fiercer. The current market share of foreign-capital manufacturers has fallen to approximately 20% from around 50% in 2018, and sales prices have fallen.

KCM said that, outside of China, they expect demand for hydraulic excavators to remain steady in developed countries and grow in developing counties. The company plans to steadily increase sales of its hydraulic excavators by strengthening its local sales networks and expanding product models and specifications to meet market needs.

The changes in production are being made in stages and are expected to be completed in or around January 2023.