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China is causing a ‘shakeup’ in the pneumatics market

16 August, 2013

A “teeming mass” of Chinese manufacturers of pneumatic valves and actuators is expanding aggressively into the US and European markets, causing a competitive shakeup, according to a new report from the market analyst, IHS.

At present, the worldwide pneumatic components market is dominated by a handful of large manufacturers, led by SMC from Japan and Festo from Germany, which together accounted for slightly more than 45% of the global revenues of nearly $8bn in 2012.

“However, just below the surface is a teeming mass of up-and-coming suppliers, many of which are based in Ningbo, China,” warns Alex Chausovsky, IHS’ principal analyst for motors and mechanical power transmission. “These companies are expanding into new markets in the West, a development that is expected to trigger intensified competition for established suppliers.”

The Chinese suppliers are focusing on standard legacy pneumatic valves and actuators and are competing “very aggressively” on price. They are turning their attention to the large markets in Europe and North America, which they are addressing through local distributors.

To protect their dominant positions in these massive markets, the incumbent manufacturers are focusing on complex, sophisticated and high-end products and services that are much harder for the low-cost foreign manufacturers to offer.

Because modern factory operations and processes have been increasing steadily in complexity, engineers in these facilities value the control, feedback and condition monitoring properties that the higher-end products can offer. Therefore, a key focus area for the established players has been pneumatic valve blocks that incorporate networked communications capabilities. IHS predicts that sales of pneumatic valve blocks will grow nearly three times faster than those of single valves during the next five years.

In what initially appears to be a flat market for established and simple technology components, there are some key product replacement trends that will influence the future development of the market, the analyst adds. “The way that suppliers address these trends will shape the competitive environment in the years to come,” says IHS.

It predicts that the pneumatic components market will grow in parallel with demand for industrial machines.

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