Orient: China's construction machinery exports have high competitive barriers; concerns over external policies have limited impact.

Orient released a research report stating that the competitiveness of Chinese construction machinery enterprises going global continues to strengthen, mainly relying on product advantages and solution service advantages rather than simple policy influence. Moreover, Chinese enterprises continue to strengthen the construction of overseas localized sales and service systems. The bank believes that corporate competitiveness will continue to support market share improvement and remains optimistic about the medium- to long-term investment opportunities in the sector's overseas expansion. Orient's main viewpoints are as follows: Trade policy concerns are expected to have limited impact on the overseas competitiveness of construction machinery Due to previous international trade changes, the market has formed concerns about the sustainability of construction machinery exports, but the bank believes that the overall competitiveness of China's equipment going global is limitedly impaired. The market previously observed disruptions from international trade changes, including the Ministry of Finance lowering the export tax rebate rate for new energy vehicle value-added tax and China and Europe reaching a consensus on hybrid vehicle and electric vehicle trade. At present, China's exports of excavators and other construction machinery account for a large proportion and contribute significantly to total growth (in September 2026, domestic excavator sales were 9,911 units, up 7.16% year-on-year, and exports were 12,800 units, up 20.7% year-on-year), so concerns about the competitiveness of construction machinery exports have marginally increased. However, the bank believes that the main driving force for China's construction machinery going global comes from product and solution competitiveness. Even if minor policy adjustments occur, the bank expects the impact to be limited, which is expected to bring medium- to long-term investment opportunities. Overseas share of construction machinery continues to rise, mainly relying on product and solution advantages rather than simple policy support China's construction machinery exports continue to grow rapidly, and overseas market share continues to rise. The bank believes the core driver comes from product and solution capabilities. From a product perspective, China's construction machinery has made significant progress in electrification and intelligence, and the price gap for similar products offers high cost-effectiveness. From a solution capability perspective, China's construction machinery going global will carry out precise modifications according to special overseas environments. For example, in Africa, where working conditions involve high temperatures, high dust, and poor road conditions, domestic construction machinery enterprises can quickly modify and launch suitable machines. For example, in Brazil, local banks are established to solve dealer financing problems and shorten the equipment transaction cycle. The bank believes that the competitiveness of China's construction machinery is rooted in the cost advantages of a complete supply chain, customized working-condition solutions, and localized service combinations. Overseas policies are not the core condition for seizing overseas market share. The competitiveness barrier for equipment going global continues to rise, with strong shock resistance Domestic construction machinery already has a foundation of market stickiness, and the bank believes its comprehensive advantages in going global have a strong moat. The bank observes that while construction machinery enterprises gain overseas market share in this round, they are also advancing localized sales and service systems, such as setting up local subsidiaries, service stations, and warehousing centers, and building localized after-sales, maintenance, and parts supply systems to quickly respond to customer needs and equipment operation and maintenance requirements. The bank believes that Chinese equipment enterprises continue to bind overseas customers and strengthen customer stickiness, and their competitiveness has formed a strong barrier. Export share will continue to maintain an upward trend. Risk warnings Macroeconomic fluctuations leading to investment falling short of expectations, high overseas interest rates dragging on demand, intensifying overseas trade frictions, rising raw material prices dragging on corporate profitability, exchange rate fluctuation impact, overseas policy changes