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

**Abstract**: Due to the small scale of domestic machine tool enterprises, limited production capacity, and slow development of key functional components, the overall market competitiveness of Chinese machine tool companies remains weak. When competing with global industry leaders, most domestic firms rely on price reductions to capture market share. This strategy has led to a saturated market with little differentiation in product quality and performance. In high-end sectors, there are few real-world applications, and the majority of advanced technologies are still imported. Currently, domestic machine tools can only meet less than 20% of the demand for high-end capabilities, with the rest being met through imports. Among mid-to-high-end products, very few companies have established strong market positions, particularly in the high-end segment where practical applications remain 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 companies. Among the key enterprises tracked by the association, over 90% have undergone large-scale technological upgrades in recent years, especially in large-scale manufacturing areas. However, most of the investment has been directed toward physical infrastructure—factories, equipment, and facilities—while spending on technology infrastructure, research capabilities, and innovation training has remained relatively low. As a result, many products remain focused on the mid-to-low end, lacking differentiation and specialization. Product homogenization often leads to intense price competition. Major international players like Germany and Japan have adjusted their strategies to target the Asian market, particularly China, by expanding into the mid-range sector while maintaining their high-end leadership. These shifts have intensified the challenges faced by the domestic machine tool industry. At present, China’s machine tool industry is still positioned at the middle to low end of the global industrial value chain. The rapid growth seen in the past was largely driven by strong domestic demand, reforms in corporate systems, and cost advantages in labor. National industrial policies also played a significant role. However, the impact of technological progress and management innovation has been relatively limited. The economic environment and growth drivers that once supported the industry are undergoing fundamental changes. As a result, traditional development models and business strategies are becoming less effective. Companies not only need to overcome current operational difficulties but also adapt to a new development landscape by upgrading their entire industry structure. To achieve sustainable growth, enterprises must focus on several key relationships: balancing short-term gains with long-term goals, aligning scale expansion with product quality, ensuring a proper balance between hardware investment and software development, and bridging the gap between product innovation and industrial application. As the development of the machine tool industry aligns more closely with evolving market demands, the traditional low-end tools are no longer sufficient to meet the needs of modern manufacturing. Industrial upgrading has become an urgent necessity. The main challenges include severe product homogeneity, overcapacity, and an increasingly competitive market environment. In this context, transformation is essential for the entire industry. This kind of industrial upgrade also aligns with the national strategy for 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 CNC machine tool industry's development environment.

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