Process automation set to thrive in China
20 Oct 2004
The rapidly growing investment in industrial production in China is about to spread to the automation and control markets, as the major projects under construction near completion.
A report from IMS Research predicts that China will become the world's largest market for PLCs by 2007, while the ARC Advisory Service states that the Chinese control valve market is set for double-digit growth over the next five years.
The IMS report says that the Chinese PLC market will grow by more than 20% between 2003 and 2008, leapfrogging Japan, Germany and the US to become the world's largest.
'China is currently the number one choice for OEMs wishing to build factories or relocate existing facilities,' says the report's author, Don Tait, with high economic growth rates, and the large, low-wage labour force strong attractive factors.
'In addition, China's accession to the World Trade Organisation has helped to liberalise and modernise China's trading activities,' he adds; this has had the effect of stimulating the economy and encouraging investment in machinery and equipment.
The fastest growing market sectors for PLCs are building automation and food and beverage. 'This reflects the fact that construction and consumption-based industries are expected to perform well during this period,' he explains.
The ARC report marks China as the world's fastest-growing market for control valves, growing from $212 million in 2003 to $350 million by 2008. Moreover, it's set to become a manufacturing hub for the products, it says.
'Most control valve suppliers in China are thinking beyond the short-term opportunity of obtaining low-cost labour,' says senior analyst David Clayton.
'Despite concerns over such issues as intellectual property protection, fair business practices, and regulatory mechanisms, a number of suppliers are pushing ahead to set up technology transfer alliances, joint ventures and wholly-owned subsidiaries in China.
The most important market for control valves is power generation, with 30 new plants, to generate a total of 22GW, under construction as part of a government strategy plan drawn up in 2002.
'The demand for electric power continues to grow as the country's economic and manufacturing industries prosper,' says Clayton.
Meanwhile, environmental concerns are now beginning to drive investment in upgrades and future-proofing at China's older thermal power plants, which still account for three-quarters of its generating capacity.
'Growing realisation that adopting new technologies and improving plant efficiency as an effective way of lowering capital expenditures are creating vast opportunities for control valve suppliers,' Clayton comments.
