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[TOKYO] Hitachi is facing pressure to lower the prices of its products in China as growth in the world's second- largest economy slows.
"We are concerned about the outlook of the Chinese economy," said Toshiaki Higashihara, Hitachi president, during a New Year party in Tokyo on Friday. "If the situation is unchanged from now, the price of our products won't be kept as it used to.
Our construction machinery and elevator businesses in China will face tougher situation because we won't be able to avoid this." China's economic growth is set to slow as the government attempts to restructure the world's second-largest economy, streamline bloated state-owned enterprises and confront a rapidly aging workforce. The country's excavator market, excluding local suppliers, is set to contract to less than one seventh of the 2010 peak in the business year through March, according to an estimate by Tokyo-based Hitachi Construction Machinery Co.
After peaking at 600,000 units in 2014, sales in China may drop to about 500,000 next year amid a surplus of apartments and slowdown of people moving to big cities, Otis Elevator Co. President Philippe Delpech, who heads the world's largest maker of elevators, said in November.
Tokyo-based Hitachi has a market value of US$26 billion. Asia is the second-biggest source of revenue for the company after its home market of Japan, according to data compiled by Bloomberg. Social Infrastructure & Industrial Systems is the biggest business for the company, accounting for 35 per cent of revenues in the year ended March 2015.
Chinese buildings had been leap frogging each other for the title of the country's tallest building over the past two decades. The 88-story Jin Mao Tower was the highest building when it was completed in 1999, only to be overtaken by the Shanghai World Financial Center in 2008. That was beaten by the Shanghai Tower earlier this year.
The global elevator industry is under threat from China's slowing property market, Bloomberg Intelligence analysts Johnson Imode & Mustafa Okur wrote in a report last month. In 15 years, the country's new equipment market grew 10 times in unit terms.