In the current era of global digitalization, the vision of net-zero emissions and sustainable development has become mainstream, and the demand for supply chain resilience is constantly increasing. These disruptive trends have placed the global machinery and equipment industry at a critical juncture of transformation. A recently released report provides an in-depth analysis of the industry’s current state and future development.
Bain & Company’s “2022 China Machinery and Equipment Industry Report” points out that in the next decade, companies will continuously transcend traditional industry boundaries, accelerating upgrades with digitalization as the engine, and fully deploying a new era of “Machinery +”—integrated hardware and services (Machinery as a Service). Within the industry, digitalization as the future development trend and the enormous value it can create for enterprises has become a consensus. It is worth mentioning that leading and emerging Chinese machinery and equipment companies are actively exploring innovative services and business models in this new wave, becoming pioneers in the industry.
Bain & Company Senior Global Partner and Chairman of Performance Improvement for Asia Pacific stated that as market competition intensifies, the pace of hardware-centric innovation is gradually slowing, and the machinery equipment industry is undergoing a structural transformation. In the past, companies primarily drove growth by developing more precise, faster, and cheaper machines; now, they are focusing on the integration of hardware and software, automation and digitalization, and customizing sophisticated, one-to-one integrated solutions based on specific customer needs. This shift reflects the industry’s deep focus on customer needs and keen insight into market changes.
The report also shows that the transformation of the machinery equipment industry has triggered a significant increase in M&A transactions, with machinery equipment transactions far outperforming other industries.
In 2021, the average transaction size in the industry surged to $161 million, with global M&A transaction value reaching $63 billion, the second highest in the past decade, second only to $72 billion in 2020.
Bain & Company Global Partner and Chairman of the Industrial Products, Manufacturing and Automotive Practice for Greater China noted that M&A provides an effective way for machinery and equipment companies to enter high-growth and key strategic markets. Faced with constantly changing industry dynamics, many companies and investors are adjusting their business portfolios, rapidly building new capabilities in software, IoT, and AI—capabilities distinct from traditional machinery and equipment manufacturing—through acquisitions. These investment activities not only help companies address the challenges brought by industry digitalization but also accelerate their transformation towards service-driven, solution-based new business models. Looking ahead, the global machinery and equipment industry, driven by digital upgrades, will exhibit a more diversified and innovative development trend. Chinese enterprises, with their proactive exploration in innovation, are expected to play a more significant role in this transformation, bringing more high-quality Chinese machinery and equipment to the global market. At the same time, industry mergers and acquisitions will further optimize resource allocation and enhance the competitiveness and development quality of the entire industry.
