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Tool companies need to increase product price
In today's competitive landscape, China's cutting tool manufacturers face several critical challenges that could hinder their long-term growth if not properly addressed. Despite the increasing demand for advanced tools, many companies continue to focus on low-tech, low-value products, which limits their ability to compete globally.
Currently, the technological content of Chinese cutting tools remains relatively low. In developed countries, carbide cutting tools dominate the market, accounting for up to 70% of all tools used. Meanwhile, high-speed steel tools are declining in popularity, with their share now below 30%, and continuing to shrink at a rate of 1% to 2% annually. This shift highlights the global trend toward higher-performance materials.
Luo Baihui, Secretary-General of the International Mould & Hardware & Plastics Industry Suppliers Association, noted that carbide cutting tools have become essential in various industries such as automotive, mold manufacturing, and aerospace. However, many Chinese companies are still mass-producing high-speed steel and low-grade standard cutting tools without considering market saturation or actual industry needs. As a result, they have missed out on the high-value, high-technology segment of the market, allowing foreign competitors to take control.
According to recent data, China's annual cutting tool sales amount to approximately 38.5 billion yuan. Yet, the share of cemented carbide tools is less than 25%. Meanwhile, the domestic manufacturing sector already requires more than 50% of its cutting tools to be carbide-based. This mismatch has led to a gap in the mid-to-high-end market, which is now being filled by foreign suppliers.
In 2007, China produced 16,500 tons of hard alloys, with 4,500 tons used for cutting tools — a figure comparable to Japan’s. However, the value of the finished tools was only $800 million, far behind Japan’s $2.5 billion. This stark difference shows that while China produces a large volume of raw materials, it lags in creating high-value, high-performance cutting tools.
As a result, many Chinese manufacturers are forced to rely heavily on imported high-end tools to meet domestic demand. The growth rate of major foreign tool companies in China’s high-end market has reached 30% annually, significantly outpacing the growth of domestic toolmakers. This trend underscores the urgent need for Chinese companies to innovate, improve quality, and capture a larger share of the high-value market.