Abstract
Flourishing Chinese Markets Compel Automation Companies to Adopt an
Integrated Approach
China?fs brisk economic growth in recent years is mainly attributed to the
government?fs progressive withdrawal from direct management of the economy
while encouraging competition. Foreign direct investment continues to burgeon at
an astonishing pace and multinational corporations (MNCs) now have unprecedented
freedom to establish operations, acquire Chinese companies, and access domestic
capital markets. However, the Chinese Government has made sure that these MNCs
make certain commitments to transfer technology, train local manpower, and
develop local manufacturing capabilities. This has forced automation solution
providers to adopt an integrated approach encompassing design, technology
transfer, engineering, local equipment sourcing, warranties, and project
management practices. The downside of this strategy is that it could prove to be
time-consuming and resource intensive besides having the potential threat of
local partners emerging as future competitors intent on taking advantage of
inept intellectual property protection regulations.
This Frost & Sullivan research examines the demand for automation
solutions in the following industries of China: power generation, oil and gas,
metal, automotive, chemicals, cement, pharmaceuticals, pulp and paper, power,
and others (such as food and beverages, textiles, packaging, machinery, and
mining). It also evaluates the various buying criteria of end users and provides
strategic recommendations for market participants.
China?fs WTO Entry Increases Demand for Automation Solutions among Local
Companies
China?fs entry to the World Trade Organization (WTO) implies a steady
reduction in tariffs barriers, improved compliance with environmental
regulations, and reduction of domestic subsidies. This also means the arrival of
competition from overseas. State-owned industrial enterprises–providing a
protected environment that promoted national self-sufficiency–are no
longer efficient and are ridden with surplus labor, antiquated technology, and
inferior products. These companies will require more access to capital market
funding and innovative technologies to remain competitive. "Having realized
this, local industries are proactively seeking state-of-the-art solutions and
application expertise from multinational automation companies," says the
analyst. "Only such energy-efficient, advanced control strategies can
transform the perilous state of local companies and help them increase their
focus on core competencies."
Changing Focus of Spending Emphasizes the Need for Value-added Services
The changing profile of operational spending in the process industry is
creating the need for value-added services. Vendors are increasingly receiving
requests for bids for process optimization, asset management, and advanced
process control software systems rather than for ordinary automation solutions.
"This is a great opportunity and automation companies are geared to offer a
multitude of services related to maintenance, calibration, software upgradation,
and asset management."
Revenue contribution from value-added services alone is likely to increase
from ten percent in 2003 to over fifteen percent in 2010. "In fact, profit
realization in services is significantly higher than the product sales or
earnings from projects," notes the analyst. "Those automation
companies that have realized this potential are likely to reap rich benefits by
quickly establishing sales leads into projects where the scope for providing
value-added services exists," he concludes.
Table of Contents
- EXECUTIVE SUMMARY
- Market Overview
- Executive Overview
- Introduction
- Market Segmentation
- Major Research Findings
- Competitive Analysis
- Revenue Forecasts
- Strategic Market Directions
- TOTAL AUTOMATION MARKETS IN CHINA
- Introduction
- Market Overview & Definitions
- Market Segmentation
- Primary Challenges
- Secondary Challenges
- Market Drivers
- Market Restraints
- Market Analysis
- Total Automation Market in China: Growth Rate and Revenue Forecast
- Total Automation Market in China: Industry Segment Analysis
- Competitive Structure
- Frost & Sullivan Awards
- Market Leadership Award
- Customer Service Innovation Award
- Customer Value Leadership Award
- AUTOMATION CUSTOMER AND INDUSTRY ANALYSIS IN CHINA
- Introduction
- Customer Segmentation
- Customer Buying Criteria
- Industry Segment Analysis
- Impact of WTO on Industry Segments
- Degree of Automation Adoption in Industry Segment
- End-User Ratings of DCS Vendors
- End-User Ratings of PLC Vendors
- REGULATORY & ENVIRONMENTAL TRENDS ANALYSIS FOR CHINA
- Regulatory Trends Analysis
- Introduction
- Regulatory Trends Analysis
- Environmental Trends Analysis
- Introduction
- Environmental Trends Analysis
- AUTOMATION COMPANY STRATEGIES IN CHINA
- Introduction
- Country Strategic Analysis Snapshot
- Key Success Factors in China
- Company Profile and SWOT Analysis of Major Market Participants
- Automation Company Directions
- Industry Strategy Snapshot
- Industry Directions and Strategic Recommendations
- APPENDIX
- Decision Support Database Tables
- Gross Domestic Product
- Coal Production
- Steel Production
- Aluminum Production
- Hydraulic Cement Production
- Electricity Generation
- Crude Oil Production
