Chinese AC drive market grows

It took China's manufacturers 20 years to begin trusting ac variable-speed drives, but since then most Chinese iron and steel firms have switched to ac drives because they're more reliable, easier to maintain, better automated, and more energy efficient. These and other multiplying applications eventually caused skyrocketing growth and have now given China's ac drive sector a majority of...

08/01/1999


It took China's manufacturers 20 years to begin trusting ac variable-speed drives, but since then most Chinese iron and steel firms have switched to ac drives because they're more reliable, easier to maintain, better automated, and more energy efficient. These and other multiplying applications eventually caused skyrocketing growth and have now given China's ac drive sector a majority of the nation's overall electrical variable-speed drive market (see chart). AC drives are expected to gain an even greater share over the next five years.

Besides early reliability concerns, high prices for ac drives also slowed their initial acceptance in China. However, intense competition from dc drives inspired ac drive manufacturers to cut prices so smaller end-users could afford them.

In China, the most-used ac drives are in the 2.2-22 kW range. Nearly all ac drive manufacturers serving China have a presence in this market segment, which makes it crowded and even more competitive than other segments. As a result, prices in the 2.2-22 kW range have decreased for the past five years and the segment's revenues have also slowed over the past two years.


Major players shifting

Ten years ago, three Japan-based companies, Fuji Electric, Mitsubishi Electric, and Sanken, dominated China's ac drive market. However, in a dramatic shift over the past decade, their market shares have been seriously eroded by U.S. and European competitors, such as Siemens and ABB.

Sanken, for example, lost its market leadership position because it reportedly focused too much on low-end application fields, such as widely used average industrial pumps and blowers, and missed opportunities in China's precision control and automation sectors.

Meanwhile, ABB found its ac drive products were priced far above Japanese competitors when it first entered China's market. To overcome this obstacle, ABB opted for a localization strategy and set up a China-based manufacturing venture, Beijing ABB Electrical Drive Co. Most of ABB's ac drives are now priced comparably to their Japanese counterparts. Fuji and Mitsubishi have not yet established local manufacturing facilities, and still rely on exports from Japan.

Besides ABB and Siemens' gains, it's expected that several other suppliers will also secure more of China's ac drive market in the future because of their strong R&D, marketing, and distribution capabilities. These include Danfoss, Lenze, Schneider Electric, and Yaskawa.

Future prospects

The pace of China's ac drive market is determined by how fast the nation's larger economy grows. To curb soaring inflation, China's government recently established a tightened monetary policy that slowed gross domestic product (GDP) and reduced infrastructure investment. Growth was also hindered by 1997's Asian financial crisis.

However, with inflation coming under control, China's government is expected to spur development by loosening some monetary controls over the next two years. This is expected to increase industrial investment and perhaps ignite the ac drive market, which is expected to grow 15% per year in the future, reaching US $960 million in 2005.

To succeed in this future, ac drive manufacturers serving China will have to produce more customized solutions, such as motor and drive packages, and set up more cost-effective sales and distribution systems. Perhaps most importantly, ac drive companies will likely have to set up manufacturing, R&D, and/or marketing capabilities in China to deliver competitive prices and needed support services.

For more information, contact Beijing Consultech at +86 10-65872446; fax: +86 10-65872443.





No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
Each year, a panel of Control Engineering editors and industry expert judges select the System Integrator of the Year Award winners.
Control Engineering Leaders Under 40 identifies and gives recognition to young engineers who...
Learn more about methods used to ensure that the integration between the safety system and the process control...
Adding industrial toughness and reliability to Ethernet eGuide
Technological advances like multiple-in-multiple-out (MIMO) transmitting and receiving
Virtualization advice: 4 ways splitting servers can help manufacturing; Efficient motion controls; Fill the brain drain; Learn from the HART Plant of the Year
Two sides to process safety: Combining human and technical factors in your program; Preparing HMI graphics for migrations; Mechatronics and safety; Engineers' Choice Awards
Detecting security breaches: Forensic invenstigations depend on knowing your networks inside and out; Wireless workers; Opening robotic control; Product exclusive: Robust encoders
The Ask Control Engineering blog covers all aspects of automation, including motors, drives, sensors, motion control, machine control, and embedded systems.
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
News and comments from Control Engineering process industries editor, Peter Welander.
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
This is a blog from the trenches – written by engineers who are implementing and upgrading control systems every day across every industry.
Anthony Baker is a fictitious aggregation of experts from Callisto Integration, providing manufacturing consulting and systems integration.
Integrator Guide

Integrator Guide

Search the online Automation Integrator Guide
 

Create New Listing

Visit the System Integrators page to view past winners of Control Engineering's System Integrator of the Year Award and learn how to enter the competition. You will also find more information on system integrators and Control System Integrators Association.

Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Control Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.