Why China’s Automation Market Declined So Dramatically in 2015

In 2015, the entire automation market in China experienced a significant and largely unanticipated downturn. While the automation market had been fluctuating a bit in recent years, most industry participants had maintained a cautiously optimistic outlook for 2015; with the major multinational automation suppliers dialing back their expectations to single-digit growth. But, the final negative results exceeded all previous forecasts.

ARC Advisory Group estimates that, in 2015, the total automation market in China dropped approximately 5 to 7 percent compared to the previous year. While business overall saw a gradual, if steady decline in the first half of the year, the rate of decline increased in the third quarter, and then dropped precipitously in Q4. Overall, the process automation market fared worse than the discrete automation market due to a number of major challenges and constraints.

The product markets for industrial PCs, general motion control, machine vision, and manufacturing IT showed somewhat positive growth year-on-year. The markets for PLCs and operator panels declined, but less so than the overall automation market. In contrast, the DCS, CNC, AC drives, field instruments, and control valve markets all experienced a big drop in 2015. In general, automation products markets that rely heavily on the process and energy-related industries saw the worst declines in China. Automation product markets related to infrastructure fared relatively better.

ARC has identified several factors for the steep decline in the overall automation market in 2015. We discuss some of the more important of these below.

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Keywords: China Automation Market, Process Automation, Discrete Automation, Machinery, ARC Advisory Group.