China's machine tools have achieved good results in good market applications.

**Abstract:** Due to the limited scale of domestic machine tool enterprises, constrained production capacity, and lagging development in key functional components, the overall market competitiveness of Chinese machine tool companies remains weak. When facing competition from global industry leaders, many domestic firms resort to lowering product prices in order to capture market share. This strategy has led to a situation where high-end markets are still dominated by foreign brands, and real applications of domestically produced high-end machine tools are relatively rare. Currently, less than 20% of the required capabilities for advanced machine tools are met domestically, with the rest relying heavily on imports. Among mid-to-high-end products, only a few companies have managed to build strong market positions, especially in the high-end segment, where genuine market penetration is still limited. Chen Huiren, deputy secretary-general of the China Machine Tool Industry Association, pointed out that this situation stems from the imbalance between hardware and software in Chinese machine tool enterprises. Among the key enterprises tracked by the association, over 90% have undergone large-scale technological upgrades in recent years, particularly in heavy machinery and factory infrastructure. However, most of the investment has been directed toward physical assets like equipment and facilities, while spending on technology infrastructure, research capabilities, and innovation training remains insufficient. As a result, the majority of products remain concentrated in the middle- and low-end segments, often characterized by homogenization and lack of differentiation. Product homogenization has led to intense price competition. Major international players such as Germany and Japan have recently adopted new strategies in the Asian market, especially in China, by extending their high-end leadership into the mid-range market. These moves have further intensified the challenges faced by domestic manufacturers. China's machine tool industry is still largely positioned at the middle- and low-end of the global industrial chain. The rapid growth seen in the past was driven mainly by strong domestic demand, corporate reforms, cost advantages, and supportive national policies. However, the role of technological advancement and management innovation has been relatively secondary. The economic environment and growth drivers that once supported the industry are now changing rapidly. As a result, traditional development models and business strategies are becoming less effective. Companies not only need to overcome current operational challenges but also adapt to a new development landscape by upgrading their industries and improving their competitive edge. To achieve sustainable growth, enterprises must carefully balance several key relationships: short-term gains versus long-term goals, scale expansion versus product quality, hardware investment versus software development, and product innovation versus industrial application. At present, the machine tool industry and market demand are gradually shifting towards high-end sectors. Traditional low-end machine tools can no longer meet long-term production needs, making industrial upgrading an urgent necessity. The main challenges in the development of China’s machine tool industry include serious product homogeneity, overcapacity, and a deepening market crisis. In this context, transformation has become a pressing issue across the entire sector. This kind of industrial upgrading is also essential for the country’s strategic emerging industries. Wang Weiming, deputy director of the Equipment Industry Department at the Ministry of Industry and Information Technology, stated that the technological upgrades previously managed by the ministry will now be elevated to a central planning level, leading to continuous improvements in the development environment for CNC machine tools.

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