For the construction machinery industry, price wars are a quagmire that is mentioned every year, harshly criticized every year, yet never escaped.

In 2025, the national level repeatedly mentioned anti-involution. In March, the Government Work Report included "governing involution-style competition" for the first time; in June, the revision of the Anti-Unfair Competition Law (implemented in October) explicitly prohibited dumping below cost; in July, the meeting of the Central Financial and Economic Affairs Commission further proposed a "anti-involution" competition orientation.

Specifically in the construction machinery industry, many enterprises have also responded to the call, repeatedly urging an end to price wars. Some leading enterprises even took the lead in "ceasing fire," raising prices on some low-priced products, but judging from current market performance, the effect of "stopping the war" is not obvious.

So, when everyone clearly knows that price wars are a "pit of fire," why do they still rush in one after another?

Why price wars cannot stop

1 The temptation of market share

Back when foreign brands occupied most of the market share in China, domestic construction machinery brands won back considerable market share from foreign brands through price wars. Coupled with later improvements in equipment performance and service quality, the market share of domestic brands gradually expanded, and today their market share has completely surpassed that of foreign brands.

However, this successful counterattack led many domestic enterprises into a misconception: they believe that "as long as the price is low, market share can be gained, and quality and service can be improved later." This deeply rooted notion has led to the situation today where, in the stock market, quite a few Chinese construction machinery enterprises still believe they can gain market share through price wars. In fact, the market is constantly changing, and each stage has its own way of playing. Blindly relying on price wars not only harms the enterprises' own interests but also destroys the ecological environment of the entire industry.

2 The push of overcapacity

During the industry's peak, construction machinery enterprises expanded production capacity on a large scale to meet market demand. However, as market demand rapidly shrank, this expanded capacity has now become a heavy burden for enterprises.

Today, in order to recover funds and reduce inventory pressure, enterprises have no choice but to adopt price-cutting sales strategies. Even when prices have approached or even fallen below the cost line, they have no alternative. This practice of "losing money to make a noise" alleviates inventory pressure to some extent, but it has led to the collapse of the entire industry's price system. Corporate profits have fallen sharply, with some even incurring losses, making survival increasingly difficult.

3 Lack of corresponding institutional constraints

A certain degree of price competition helps market development, but excessive, bottomless price wars only destroy the market.

Currently, in the market, there are no suitable institutions to constrain vicious competition behaviors such as bottomless price wars—neither clear punitive measures nor positive guidance mechanisms. Relying solely on policy calls and industry appeals, whether enterprises comply depends entirely on their own moral self-discipline. Although in 2025 multiple important central meetings at the national level continued to signal the rectification of "involution-style" competition, there are still no specific laws, policies, or industry standards to constrain corporate behavior. Leading enterprises raising prices on some products to exit price wars is also much ado about nothing, creating no ripples in the industry. To truly counter involution, specific rules and regulations still need to be implemented in detail.

The long-term aftereffects of price wars

1 Reduced profits make enterprises increasingly miserable

The practice of sacrificing profits in exchange for revenue growth through price wars is no different from drinking poison to quench thirst or draining the pond to catch all the fish. If an enterprise engages in low-price sales over the long term, its profits will decrease, and correspondingly its investment in R&D, technological transformation, marketing, management, and other areas will be reduced, resulting in insufficient development momentum. Insufficient development momentum will in turn further affect the enterprise's business performance, trapping it in a vicious cycle.

2 Reduced customer loyalty

Under the influence of price wars, customers attracted by low prices often have little loyalty, which brings great trouble to enterprise development. If customers are attracted mainly because your product is cheap, they will also be lost to other brands with even lower prices. This means that while enterprises acquire new customers, it is difficult to retain old ones, leading to an unstable customer base and making it hard to effectively consolidate market share.

3 Declining brand value

Frequent price cuts are extremely damaging to brand image. It is unwise for an enterprise to frequently use price reductions as a means to open up the market. If prices are cut every few days, and customers who have worked hard for a year find that the money they earned is less than the price drop on the equipment, they will feel deceived by the enterprise and will never trust the brand again.

In addition, just as foreign brands entering the Chinese market represent not only themselves but also the corporate image of their home countries—we are accustomed to calling them American enterprises, Japanese enterprises, German enterprises, etc., to distinguish foreign brands from different countries—overseas markets also tend to view Chinese brands from the perspective of "Chinese enterprises." At this point, if Chinese enterprises adopt bottomless price war strategies in overseas markets, what will be damaged is not only the brand value of individual enterprises but also the value of the overall "Chinese brand."

The future of price wars

Some may ask: Can we just stop waging price wars?

No! As a means of commercial competition, price wars have their own advantages, so prices will certainly still be fought over. However, given the current stage of market development, price wars can no longer be the primary commercial competitive behavior of Chinese construction machinery enterprises. They can only serve as an auxiliary competitive means, working in coordination with quality wars, service wars, and technology wars as the main battlefields to compete for market share.

There is an idiom called "good quality and low price." Good quality comes first, low price second—this is the way for Chinese construction machinery enterprises to gain market share in the global market. In the upcoming global market competition, we need to prioritize product quality, product performance, after-sales service, and customer satisfaction, placing price advantages in a secondary position. Only in this way can sustainable development be achieved.

In the future, although price wars will not disappear, I hope that through the efforts of all construction machinery people, when people think of domestic construction machinery equipment, their first impression will no longer be low prices, but excellent quality, outstanding performance, good service, and great satisfaction!