society
make the elevator car itself on their own assembly line before selling the entire product to customers. “Some elevator enterprises do not even have a single assembly line, but purchase all the parts from other manufacturers before assembling and selling the whole unit to customers,” Yao told our reporter. “In fact, they provide nothing but the installation service.”
Photo by Feng Li
Testing
A worker on an elevator assembly line
workers because of high training costs, lengthy training periods and the fact that workers in the industry are underpaid. “The most experienced installation and maintenance workers have mostly become heads of their own enterprises,” said Yao Yongqi, a former salesman who is now the head of an elevator manufacturer in the Fenhu Development Zone in Suzhou, Jiangsu Province. At least 20,000 additional maintenance workers and 10,000 more installation technicians are needed annually to keep up with the growing number of elevators being installed nationwide, but official statistics show that fewer than 10,000 total people entered those professions in 2014. In 2012, Canny Elevator partnered with Changshu Institute of Technology in Jiangsu Province to open China’s first undergraduate elevator manufacturing and maintenance program. It enrolls 20 students every year.
Manufacturing
Official statistics show that in 2014, 550,000 elevators and escalators were assembled in China, about two-thirds of them under foreign brands. Among the remaining 200,000 or so, about 160,000 were made in Suzhou, mainly in the city’s Fenhu Development Zone. Fenhu is home to more than 100 elevator and elevator parts enterprises, including 11 factories capable of producing entire units on their own. During a trip to Fenhu, a NewsChina reporter found that, with the exception of the few large companies who manufacture an elevator’s main components, many enterprises use a business model that is similar to that of cell phone manufacturers — they outsource the production of many core parts, including machinery and control systems, and only
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The first things people see as they approach Fenhu are tall, thin buildings that tower over the factories — testing towers that are used to check the finished products. Before installing elevators in their final locations, enterprises are supposed to give them a trial run. The height of the tower is often viewed as a sign of the strength of the company that manages it. Yao said that as a matter of fact, in order to cut costs and increase productivity, many enterprises rarely use their test towers to test elevators. Instead, their main function is to display products for potential customers. In 2013, AQSIQ stipulated that every whole-unit elevator enterprise can only earn a necessary manufacturing license after it has constructed a testing tower. “A company needs at least 20 million yuan (US$3.14m) in capital to apply for an A-level elevator production permit, and at least 6 million yuan (US$940,000) to build a testing tower,” Yao said. “As a result, many enterprises have less to spend on management, quality improvement and after-sales service.” He added that this has led to a new phenomenon: As long as an enterprise has the money to erect a testing tower, it can most likely also get a production permit.
Competition
According to official statistics, 600 domestic elevator manufacturers exist across the country, but the nine foreign brands with outlets in China produce two-thirds of the market share. At present, there are four listed domestic enterprises that hold a quarter of the market, while the remaining companies vie for the scraps. The average sales volume for those smaller enterprises is 200 units per year. The smallest one sold 20 sets in 2014. In Yao’s opinion, this year is a turning point for China’s elevator and escalator industry, because of slowdown in the real-estate industry and the well-publicized elevator- and escalator-related accidents. Big enterprises will become bigger and smaller ones will struggle to survive. It is expected that at least 50 of these manufacturers will shut down by the end of 2015. “There are at least 77 significant elevator businesses in Suzhou, but in fact, seven would be enough,” said one Fenhu factory director. “This year, a lot of the small ones are doomed to be knocked out.” NEWSCHINA I November 2015