Keywords: China, Automation, Aftermarket Services, Maintenance Outsourcing, Installed Base, Operating Expense (OpEx), Migration and Upgrade Projects, Value Added Services
The automation aftermarket services market in China saw fast growth in 2014 despite an overall slowdown in the country’s economy. Many industries have found more opportunities in aftermarket service-related areas such as energy conservation, emissions reduction, strategic maintenance, and upgrading existing production units.
According to ARC Advisory Group’s new market research study, “Automation Aftermarket Services for China Market Research Study”, aftermarket services is one of the fastest-growing segment of the automation market today. More and more, China’s manufacturers have invested in the critical operations and maintenance period of their plants’ lifecycles to maintain their market competitiveness.
Trend toward Increased Outsourcing of Previously Captive Activities
Historically, owner-operators have preferred to use internal resources to perform activities such as project management, equipment operation, and equipment maintenance. However, most industries today are clearly becoming more mindful of customer needs, forcing them to develop new and creative ways to reduce costs, improve quality, and ensure the best possible customer service. ARC believes there is a significant shift in both the interest of manufacturers to outsource these previously captive activities and the capabilities of automation suppliers to satisfy these needs. Many automation suppliers share this view and perceive this area of spending as the future for their companies, and they believe this future looks bright, considering the enormous size of expenditures in this area.
According to Rex Sun, ARC Advisory Group China and principal author of this study, “Migration and upgrade projects gradually become the main reasons why new projects are shrinking, and this is creating a boom in business for automation service providers. In addition, factors such as continued reduction in end users’ internal engineering staff, increased outsourcing of many previously captive activities, increased complexity of automation and enterprise systems, and aging of automation systems and infrastructures will lead to growth in this market.”
Value-Added Services Are Emerging
Value-added services are very helpful for manufacturers. As the experts, automation providers can often provide a customized service package to help customers increase operations and maintenance productivity. Many offerings can be bundled, including spare parts management, cyber security, on-site engineering, training, remote services, and others. While, today, the number of manufacturers in China that are willing to pay for these aftermarket services remains limited, this is growing rapidly and ARC sees big potential for suppliers.
For more information on this study, please visit our Market Research section.