China Machine Vision Market Experiencing Rapid Growth in Selected Sectors

Author photo: David Cao

Overview

The China Machine vision market started about 30 years ago.  While, initially, there were very limited applications for the technology, the market has grown steadily over the past 10 years, growing to over $175 million annually based on ARC Advisory China Machine visionGroup estimates.  Even in 2015, during the economic downturn, the market still maintained good growth, driven by demand from industries such as electronics and semiconductors, food & beverage, pharmaceuticals, and – to a lesser extent – automotive.

ARC believes China’s machine vision market will continue to grow over the next five years driven by several factors.  These include the newly launched, “Made in China 2025” strategy, an initiative to upgrade China’s industries, inspired by Germany's Industrie 4.0 initiative.  This involves revamping and upgrading processes and automation solutions in many of the key industries served by machine vision technology to help meet requirements for improved quality and mitigate the impacts of gradually rising labor costs and the general lack of experienced workers in China.

The continuing market growth is partially attributable to the fact that machine vision solutions are particularly well suited for many industries that continue to do well, even in today’s softening economic environment.  These include electronics, semiconductors, food & beverage, pharmaceuticals, logistics, and robotics. As a result, machine vision is well-positioned within today’s larger automation world.

China Machine Vision Needed for Improved Quality and Productivity

The most important end user industries for machine vision in China, electronics and semiconductors, represent roughly half of the total domestic machine vision market.  China has emerged as one of the largest manufacturing centers for these two industries globally, which are experiencing increasing pressure to improve quality and productivity, reduce time-to-market, and upgrade production and automation systems more frequently.  What’s more, many electronics and semiconductor products are simply becoming too small and require too much precision to manufacture with human hands. 

The Apple iPhone provides a good example.  Apple typically introduces a new iPhone series every two years; requiring the manufacturers in the iPhone supply chain to upgrade even relatively new production lines and equipment, including their machine vision systems.   In its annual report, one Apple supplier, Cognex, reported that 18 percent of its revenues in 2015 were attributable directly or indirectly to Apple.

Considering that China is the most important manufacturing base for Apple products, it’s easy to understand the importance of Apple (and many other electronics companies) to the country’s machine vision market, as well as its broader discrete automation market.

Other key industries served including automotive, food & beverage, and pharmaceuticals also face increasing pressure to improve product quality from both domestic and global customers and more stringent regulatory requirements.   Machine vision solutions are often key to improving quality control and quality management in these industries.

Mix of Global and Domestic Suppliers In China Machine Vision Market

China’s growing machine vision market is served by a mix of global and domestic suppliers.   The major global suppliers include Cognex, Keyence, Omron, Dalsa, Baumer, National Instruments, and Banner Engineering.  Some offer complete machine vision solutions; others are niche suppliers.

There are also many local players, with the majority being distributors or system integrators for the international players.  As they have accumulated experience in this space over the years, some of the local players have introduced their own machine vision solutions, products, or components.  These include suppliers that provide both standard, application-specific vision inspection systems and those that provide broader offerings.  Domestic companies with specific industry application expertise and/or systems integration capabilities often serve as channel partners for the global automation suppliers.  Daheng-image, Luster, and Microvision are three domestic machine vision solution providers that come to mind.

ARC observes that in recent years, a large number of new players have entered the machine vision market, obviously attracted by its growth potential.  Many of these are publicly traded companies that prefer to enter the market by acquiring companies that, unlike them, already have extensive domain knowledge.

Machine Vision and “Made in China 2025”

Launched in 2015, Made in China 2025 has become a national strategy to increase China’s manufacturing competency by leveraging the latest technologies. ARC believes that Made in China 2025 will be one of the key drivers for China’s machine vision market over the next five years.

Machine vision technology and solutions can support the Made in China 2025 goals in several different ways.  These include improving product quality and reducing defects; reducing the need for domestic manufacturers to hire, train, and pay highly skilled production workers to produce increasingly complex and high-precision components and assemblies; and increasing overall manufacturing productivity; all of which would contribute to improved profit margins. 

Recommendations

As machine vision solutions become increasingly important to manufacturers in China spurring continuing growth, the machine vision market will become increasingly attractive over the next five years for machine vision suppliers; both international and domestic.

In this environment, ARC recommends that, if they haven’t done so already, manufacturers and other enterprises in China should look carefully at the available machine vision solutions and evaluate their potential to help them improve product quality, improve manufacturing productivity, and reduce the growing need for highly skilled production workers who are in high demand.   Machine vision solutions could also provide safety and/or operational benefits for companies in logistics, agriculture, and other industry sectors.

For machine vison suppliers that would like to successfully enter or expand their business in China, ARC recommends:

  • Focus on high-potential industries, such as electronics, pharmaceuticals, and food & beverage. Today, manufacturers in these industries have more motivation to invest in machine vision solutions, but the current penetration rate is still very low.
  • Offer customized solutions. With the wide applications across multiple industries, manufacturing customers need more customized and industry/application-specific solutions to better match their unique requirements versus standard products.
  • Explore target markets in non-manufacturing areas that could potentially benefit from machine vision solutions.  These include agriculture, logistics, medical devices, and transportation.

 

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Keywords: China Automation Market, Machine Vision, Electronics, Semiconductors, Made in China 2025, ARC Advisory Group.

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