CNC system companies actively promote the intelligent transformation of the machine tool industry.

The CNC system, as the 'brain' of the machine tool, to some extent determines the functionality, performance, and technical level of CNC machine tools, while the development of the CNC system industry is highly dependent on the machine tool mainframe industry.

According to statistics from the China Machine Tool & Tool Industry Association, the main business income of key contact enterprises from January to June 2019 decreased by 17.6% year-on-year. The main business income of metal processing machine tools decreased by 26.8% year-on-year. Among them, the main business income of cutting machine tools decreased by 33.5% year-on-year, and the main business income of metal forming machine tools decreased by 2.6% year-on-year, indicating downward pressure on the machine tool and tool industry.

In this context, how is the operational situation of CNC system industry enterprises? What are their performances? How do they respond to the current downward pressure?

The Media Department of the Machine Tool Association conducted interviews with several key enterprises in the CNC system industry through visits, phone calls, and written invitations, to understand the operating conditions of CNC system enterprises in the first half of the year, perceiving market changes from the perspective of enterprises, hoping that the good experiences and practices of the interviewed enterprises can be shared and encouraged among industry peers.

The interviewed enterprises are in different situations, but overall they are in a downward phase.

In recent years, the machine tool and tool industry has experienced three industry economic downturns in the fourth quarters of 2008, 2013, and 2018. The market's baptism has made enterprises more resilient, and their mindset and methods for combating downward pressure are different from before. It is widely recognized that in 2019, simply 'enduring' is not feasible; most enterprises choose to actively transform and innovate, but they also face various risks and difficulties brought by transformation and upgrading.

(1) Operational risks brought by new business development and new product research and development. Wuhan Huazhong CNC Co., Ltd. has increased its investment in technology and market development in fields such as CNC systems, industrial robots, automation, and new energy vehicles during its transformation process. In this process, the company faces risks related to operational transformation and the development of new business areas; competition in the industrial robot and intelligent manufacturing fields is very fierce, and both the CNC system and robot industries are technology-intensive sectors. Since its establishment, Huazhong CNC has placed great importance on technology and product research and development, but R&D requires a certain level of investment, and the market acceptance of new products also requires a certain period. If related technologies cannot be applied to product development and market demand in a timely manner, it also brings operational risks.

(2) Operational risks caused by the expansion of company scale. Chao Tong Co., Ltd. has actively undergone two transformations and upgrades in recent years: one from mainly producing servo motors to manufacturing functional components, and the other from functional components to producing five-axis machining centers, initially forming an industrial chain for CNC machine tools. In 2014, Chao Tong became a new three-board listed company in the domestic servo industry, obtaining substantial financing from the capital market, and the company invested 200 million yuan for equipment upgrades; in 2015, the foundation of the Chao Tong Beijing Miyun Intelligent Equipment Industrial Park was laid, which has now been completed and put into production; in 2017, a wholly-owned subsidiary, Shandong Chao Tong Intelligent Equipment Co., Ltd., was established, planning to invest 600 million yuan in the Qingzhou Economic Development Zone of Shandong to build the Chao Tong Qingzhou Intelligent Equipment Industrial Park. The large investments and energy inputs have had a certain impact on the main business, and the company has already put forward corresponding countermeasures to improve its operating conditions.