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Large investments in infrastructure and manufacturing during the past few years in China have created significant demand for high power AC drives, according to a new study by the ARC Advisory Group. China''s high power AC drives market will grow at a Compounded Annual Growth Rate (CAGR) of 11.1 percent over the next five years. The market, over $225 million in 2003, is expected to exceed $380 million in 2008.
A growing economy, expanding manufacturing base, increasing middle class growth, and an investment-friendly climate for industrial expansion are creating a huge impetus behind the growth of the high power AC drives market in China.
"The collective effect of this environment is creating an enormous demand for more power generation, oil and chemical production, consumer goods, and infrastructure. These factors are fueling growth in industries which use high power AC drives," according to Senior Analyst Himanshu Shah, the co-author of ARC''s High Power AC Drive China Outlook.
Market Developments and Trends
Large investments in infrastructure and manufacturing during the past few years in China have created significant demand for high power AC drives. This trend is expected to continue over the next five-year period. While this report identifies industries that will propel the growth of the high power AC drives market, it also presents other underlying currents that will restrict market growth. However, recognizing the huge growth potential, major global suppliers are flocking to China to benefit from rapid growth in virtually all industries.
Global manufacturers have established new plants in China to focus on producing goods and equipment not only for the domestic market but also for global markets. The need for modern manufacturing technologies to produce consistent and quality products at the lowest costs is creating demand for a wide range of automation products including AC drives
Suppliers Increase Value Proposition
Users typically prefer proven technologies and value suppliers'' competence in providing vertical industry-specific drives systems and China is no exception. Additionally, many large projects require a broad range of automation products or systems which must be tightly integrated. Global suppliers with this capability will experience a much greater acceptance.
Commission and installation costs of high power AC drive systems represent a significant portion of the total cost of ownership (TOC). Currently, only a few suppliers offer users a good value proposition that includes these services.
"Suppliers who are capable of providing a total package including products that meet user requirements and the services to support them will dominate the market, " according to Shah.
Valuable pre-sale and post-sale skills of suppliers'' personnel are crucial, but hiring and retaining quality and tech-savvy employees is difficult in China. This issue could pose a serious challenge if suppliers are unable to recruit competent technical support personnel.
For more information, go to www.arcweb.com/res/acdrivehi-chi