According to a recent IMS Research (recently acquired by IHS Inc. (NYSE:IHS)) study, The Chinese Market for Low Voltage Motor Drives - 2012 Edition, revenue growth in this market slowed considerably in 2011 from an abnormally high 2010. Revenues from motor drives (excluding software and services) are projected to grow at a compound annual growth rate (CAGR) of 13.7 percent from 2010 to 2015.
The total Chinese market for low-voltage AC & DC motor drives (including software and services) was estimated at $2.68 billion in 2010. The Chinese Government's RMB 4000 billion stimulation policy and other domestic consumption policies enabled healthy growth in the market to continue from 2009 to 2010.
"In the first half of 2011, the markets for low-voltage drives were still growing strongly. In the second half of 2011, as the Chinese Government tightened monetary policies and imposed strict lending conditions; this caused delays in numerous large projects, such as high-speed railways, city metros, highways, and factory renovation projects. These policies are also causing financial strain for both end users and machine builders", commented Wilmer Zhou, senior analyst and report author. In June 2011, the market went into a precipitous decline. The bad news first came from local small and medium machine builders in South and East China; many reported no new orders during the second half of the year and many small machine builders went bankrupt and closed. The low-voltage motor drive market has been more affected than that for the medium-voltage drives, because of its greater dependence on machine builders. Nevertheless, with $3.1 billion in revenues in 2011, China still accounted for 25 percent of the world market for low-voltage motor drives.
The new report found that ABB and Siemens were the market leaders in the Chinese low-voltage motor-drive market in 2011, with 16 percent and 13 percent share respectively. Market leadership is concentrated, as the top five suppliers accounted for nearly 46 percent of the total. However, there is a large tail of suppliers, each with less than 1 percent of the total revenues. Wilmer states, "Because of the Japanese earthquake, component shortages, and other reasons such as the appreciation of the Japanese Yen in 2011, European and local Chinese suppliers are taking share from several Japanese suppliers."
Growth in the Chinese market will continue, because of implementation of policies regarding motor efficiency and energy-saving renovations in various industries. But market growth will be at a lower rate than in the past few years as investment is reduced in the near future, with concerns over high inflation in China.