Aftermarket Automation Services in China Increasing in Importance

As the "new normal," continued economic slowdown will have a negative effect on China's automation market for the next several years. Many asset owners will invest more carefully or even postpone or cancel capital projects. Industrial organizations in China are shifting the focus of their main activities from new project construction to operating, maintaining, and upgrading their existing assets. This creates tremendous opportunities for aftermarket automation service providers.

Major users seek automation services that support key business objectives such as improving return on assets (ROA), enhancing overall equipment effectiveness (OEE), and implementing lean manufacturing. ARC Advisory Group research indicates that the operations phase of plant lifecycle, where these all come into play, involves the highest amount of expenditures for services.

While capital projects still largely drive the automation market in China, most automation products -- including project engineering services -- appear to becoming commoditized, with contracts often going to the lowest bidder. In contrast, automation suppliers have many opportunities to differentiate their aftermarket, lifecycle-based services offerings. ARC believes that, by using a customer-centric approach that focuses on specific end user requirements and challenges to reduce operating and maintenance costs and attain operational excellence, aftermarket services will provide automation suppliers in China with the greatest growth opportunity over the next several years.

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Keywords: China Market, Aftermarket Services, Plant Lifecycle, Operation and Maintenance, Contract Services, Value-added Services, Migration Services, Inventory Management Services, Windows XP End of Life, Cybersecurity, ARC Advisory Group.