China’s Automation Market Could Face Some Challenges in Upcoming Quarters

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ARC Report Abstract

Summary

Since the strong rebound starting late in 2016, China’s automation market has remained healthy over the last seven quarters.  As explained in an earlier ARC Advisory Group report, this has largely been due to the macroeconomic cycle and, to a somewhat lesser degree, to the supply-side reforms initiated by China’s government.  The latter include reducing excess capacities in the coal, iron & steel, alumina, cement, and other industries by shutting down many inefficient, outdated, and/or non-compliant operations and strictly controlling the approval of any new capacity expansion projects.

This policy supported price increases for many raw materials and basic industrial products, driving increased profitability in these industries. Other drivers including the Made in China 2025 initiative, stricter environmental protection policies, industrial upgrading, machinery upgrading, and the China’s Automation Market dcchinaautomation.jpgexplosive growth of some emerging industries (photovoltaic, lithium batteries, etc.).

In general, the market demand for automation has remained strong throughout most of the first half of 2018 with double-digit growth year over year.  However, ARC research indicates that the year-over-year growth rate has started to decline. This trend is likely to continue, potentially signaling renewed challenges for automation suppliers to China’s industrial markets in the upcoming quarters. 

China’s Automation Market Facing Challenges In Key Industrial Sectors

The stable GDP released by China’s government often does not accurately reflect what’s happening in the automation market in any given quarter.  Often, it’s better to look at the individual industrial sectors that make up China’s overall automation market.   

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Keywords: China, Process Automation, Discrete Automation, Machinery Automation, Electronics, Automotive, PLC, CNC, DCS, ARC Advisory Group.

 

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