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Growth factors in China’s machinery market

Agricultural and Industrial Robotics
Agricultural and Industrial Robotics

Production of agricultural machinery and industrial robotics in China is projected to expand at a strong rate in the coming years with average yearly growth of 18.1 percent and 18.8 percent, respectively-making these areas the two fastest-growing segments in the Chinese machinery business.
The robust performance of both the agricultural and robotics segments comes in stark contrast to most other areas of the machinery business, which are struggling with a downturn and overcapacity, according to the new report entitled "The Machinery Production Yearbook - China - 2013" from IMS Research.

"The increasing price of agricultural products, rising consumption of food, surging labor costs and expanding government subsidies are the main drivers for growth in the production of agricultural machinery in China," said Jay Tang, automation market research analyst at IHS. "Meanwhile, amid a continuing expansion in car manufacturing and a widespread push for automation, China has become the fastest-growing market for robots in the world, spurring a rapid increase in domestic production."

Since the end of 2011, because of weak export demand and a shortage of investment, China's machinery production seems to have lost some momentum. Although some signs of recovery began to surface at the end of 2012, the Purchasing Managers' Index, released by National Bureau of Statistics of China, fell to 50.6 in April, down from 50.9 in March, indicating that economic recovery was not on expanding.
While the PMI disappointed most machine builders, some companies-such as those that make agricultural machinery or industrial robotics-remain optimistic about the prospects for future growth.

As the key element to enable urbanization in China, the Chinese government is paying much more attention toward mechanizing agriculture by introducing more agricultural machinery. According to the 12th Five-Year Plan and the government's stated objectives, agricultural mechanization should rise from 52 percent in 2012 to 60 percent in 2015, then to 70 percent in 2020 and to 82 percent in 2030. Benefiting from the Chinese government's incentive policies and purchase subsidies, the production of agricultural machinery in China was estimated to be worth $57.9 billion in 2012, 19.1 percent higher than in 2011.

IHS forecasts that production of agricultural machinery will continue to grow quickly from 2013 to 2017 at a compound annual growth rate (CAGR) of 18.1 percent, faster than the average for all Chinese machinery production.

Posted on June 19, 2013 - (143 views)
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