The Struggles of the Chinese Machine Vendors

Went to check out Chinese companies that builds automated production lines for the auto industry. Each project order is big money—smallest ones, like sub-lines, are around 5 million yuan, and bigger ones hit 30 to 50 million yuan. Problem is, customers are slow to pay. But the parts they want? Mostly imported stuff like ABB, FANUC FA America robots, Siemens PLCs and electrical components, Festo pneumatics—all gotta be paid for upfront in cash.

These production lines are super complex, with tons of little issues popping up. You can’t stop the line once it’s running, or the main factory slaps you with fines. If the machine messes up a car part during assembly, they make you buy the whole car. After the line’s delivered, you pretty much need people stationed at the factory long-term to handle all the equipment problems—sometimes for two or three years. And getting the final acceptance? That’s a whole other headache. No approval, no payment.

It’s complicated, sure, but in this industry, basically anyone can build these lines. What customers really want is a supplier who can also front the cash. That’s a big deal to them. The folks working on this—field engineers, workers, project managers—they’re under crazy pressure. Fall behind schedule, and customers chew out the project manager, push the boss to explain, and some client project managers even cuss out bosses handling billion-dollar projects.

A lot of these equipment company bosses are looking to raise funds or go public, but for small manufacturers pulling one or two hundred million in projects a year, getting funding is tough. Going public in today’s market? Pure fantasy. Most of the money comes from bank loans, using fixed assets or orders as collateral—land’s the big one.