When it comes to industrial manufacturing, machine tools are a key element that cannot be avoided.
Anyone engaged in manufacturing knows that without machine tools, high-end products such as automobiles, aircraft, wind power, and precision medical equipment can only remain on drawings.
In the machine tool family, lathes are the most widely used and most practical workhorses.
The implementation of the policy this month has made many factory owners alert.
On June 5, when everyone was talking about the college entrance examination, the customs suddenly issued new export regulations for lathes and other metal processing equipment. After June 30, CNC lathes, milling machines, grinders, etc. cannot be exported casually, and special review and declaration procedures are required.
Some foreign trade professionals complained that after the tightening of controls, extra care should be taken when handling export orders.
Machine tool control has long been a common method in developed countries.
In the 1980s and 1990s, Europe and the United States strictly controlled China’s high-end machine tools and only sold mid-range machine tools, never letting go of high-end machines. This gap has affected two or three generations.
In today’s global competition, China’s machine tool exports are no longer marginal.
In 2025, China will become the largest exporter of machine tools in the world, accounting for 21.6%, while Germany will only have 16.7%.
Nowadays, there are many companies manufacturing precision and CNC lathes in China, and the market structure has completely changed.
After the introduction of the new regulations, the most anxious ones are those machine tool manufacturers who have received orders but have not yet shipped them.
Many people think this is a blocking order, especially affecting the Indian market.
In 2025, India will be the fourth largest market for China’s lathe exports, and various industries such as automobiles and motorcycles rely on this “industrial mother machine.”
70% of India’s machine tools are imported, and China’s low-priced mid-range CNC lathes support its local manufacturing industry.
If China does not sell, Germany, Japan and South Korea can fill the market gap.
However, the purchase cost of machine tools in these countries is higher, the price of Japanese and German brands can be doubled, and the delivery time is also longer.
This has a huge impact on Indian automakers and motorcycle factories that focus on cost performance.
Last year, Tata and Mahindra’s cars were exported to South Asia. Many parts were produced on Chinese mid-range lathes. If they are replaced with European goods, the cost of each vehicle will increase significantly.
A closer look at customs control shows that it is not a one-size-fits-all shutdown or one-size-fits-all export.
There are three levels of control: single-axis, low-end old-fashioned manual lathes are almost unaffected; common two-axis and three-axis civilian CNC machine tools require “one vote, one review”, an extra procedure, and most purchases in non-sensitive areas can be approved; five-axis, multi-axis, and ultra-precision top-level equipment are the most restrictive, and are already strictly controlled, making it difficult to completely release them to the outside world.
This control is more like precise layering, aiming to prevent high-end technology from flowing into sensitive industries, especially the military industry.
Industry insiders believe that this is similar to the “tiered sales” routine commonly used in the West, except that this time the protagonist is China.
The Indian market is special because it lacks good machine tools for a large number of mid-range manufacturing.
China’s cheap, mid-range two- and three-axis CNC lathes are highly efficient, low-priced, and fast-delivery, while German and Japanese machine tools are far less cost-effective than those in China.
Moreover, German and Japanese machine tools have long maintenance cycles and expensive spare parts, which are not suitable for India’s “replace them when they are worn out” style.
As long as technology overflow is controlled and top machine tools are not poached, China’s leading position will not be damaged.
Similar situations exist in other countries.
Israel has restricted the export of AI chips, and the United States has imposed restrictions on the export of semiconductors and advanced manufacturing equipment.
It’s all “not not selling, but approval for use”, which is a common practice in the global high-tech industry.
China’s new machine tool export regulations apply globally and are not targeted at specific countries.
However, India has huge demand and coincides with the adjustment window period, so the market reacted strongly.
Some people worry that the new regulations will force India to support local machine tool companies and seize the market in a few years.
However, the gap between precision manufacturing costs and technology accumulation cannot be made up in three to five years, and the technology is still in the hands of the original players.
The real key is who can control the high-end market.
China’s exports are mainly mature mid-range CNC machine tools, with declining profit margins and fierce competition.
Only companies that have long-term research and development of five-axis and ultra-precision equipment have bargaining power.
Last year, China’s machine tool tool trade surplus exceeded US$7 billion, thanks to its focus on both technology and market.
Some people worry that the new regulations will cause China to lose a large number of orders and harm companies.
However, the machine tool business involves consumables, cutting tools, accessories, after-sales services, software upgrades, etc., and downstream customers are deeply dependent on suppliers.
Indian factories are accustomed to using Chinese production lines, and replacement costs are huge.
Referring to the management of exported LCD manufacturing equipment and chip lithography machines from Japan and South Korea, technology classification and sales approval are the mainstream practices.
So the key is not whether to sell or not, but how to sell, what to sell, and to whom.
This sense of control is the confidence that big countries create.
