Hydraulic Components in China
‘Hydraulics’, (from the Greek words ‘hydor” meaning water and “aulos” meaning pipe) in the contemporary sense refers to the applied science and engineering of fluid mechanics; where the properties of fluids are used for the generation, transmission and control of power by use of pressurized liquids.
The use of older hydraulic systems has a long history in China. As far back as the Eastern Zhou Dynasty, imperial court minister Sunshu Ao was praised for his engineering of China’s first recorded dam, reservoir and irrigation system. Perhaps the most famous example of early hydraulics in the middle kingdom is the Turpan water system, located in the Turpan depression in Xinjiang, Western China. The water which came from this ancient system of wells and underground canals was the life blood and most precious resource of the oasis city of Turpan, which serviced the many caravans travelling a section of the old Silk Road skirting the Taklamakan desert. Nowadays, when we think of hydraulic systems, entirely different feats of engineering come to mind; from large earth moving equipment with brightly polished hydraulic cylinders to powerful hydraulic rams and lifting machines, as well as highly refined complex breaking and suspension systems found in racecars and automobiles.
In modern times, China has become an important global manufacturing base for the types of hydraulic systems and components used in all kinds of machinery. Most of the major international hydraulics companies have supply bases on the mainland, and domestic Chinese components suppliers export all over the world. Previously focusing on cost effective components for a variety of customer types, Chinese producers now have their sights on raising the quality of their products to an international standard so as to compete with internationally established brand names such as Bosch Rexroth, Parker Hanifin and Eaton Hydraulics.
This article takes a cursory glance at the current state of the hydraulics industry in China, covering development trends and influencing factors, with a focus on the major components of hydraulic systems: pumps, cylinders, valves and motors.
End-User Market Segments
Hydraulic Components Market Share Breakdown by End-User Type - 2011
It could be said that there are seven main user groups for hydraulic components. The largest of these is the engineering and construction industry, which each year has consistently the highest volume requirements for various different hydraulic components, including the four main components mentioned above. Construction and engineering equipment has a broad spectrum of usage for heavy duty hydraulics. These types of components are used in earth moving equipment, such as diggers and bulldozers, as well as cranes and other lifting equipment. The second largest end-user industry is the metallurgy and mining sector, which also uses very heavy duty hydraulics for earth moving, drilling, conveying and processing ore. Agricultural machinery is the third largest end-user group, with hydraulics used in combine harvesters, ploughs, hay bailers and other farming equipment. Petrochemicals and shipping follows agricultural machinery, with hydraulics essential for numerous marine application, as well as in loading bays around ports and docks. Machine tools application includes industrial mills and presses, while the automotive industry requires hydraulics for suspension and breaking systems. Plastic production machinery uses large scale hydraulics for injection and blow molding of plastic forms, such as bottles, containers and various packaging products.
Each of these industries has their own requirements, many distinct from one another, however one common factor is that all are more intently seeking products with elevated qualities when compared to those of previous years. Among hydraulics customers, quality is defined as a combination of durability, reliability and product life. The main aim of the leading domestic suppliers is to bring their product quality up to the levels of leading international brands. The 12th 5 year plan clearly indicates the hydraulics industry as a critical strategic industry field requiring ongoing attention and development for continued national growth, thus domestic suppliers receive significant aid from government sources in the form of project allocation and tax breaks.
The level of technology applied to hydraulic systems and components comes down to the nature of the materials used in their construction and the level of precision used in the machining, sealing and finishing of such components.
Typically, international firms use more expensive, stronger, higher quality alloys to produce the types of hydraulic components which are likely to come under significant stresses. Machining of these components is also done to a very low level of tolerance, ensuring reliable products. In recent years, Chinese producers have been focusing their efforts on competing with the foreign multinationals in terms of product quality. Although they are not on the same level yet, there are differing opinions in the industry as to how soon domestic leaders will truly rival the quality of foreign hydraulic products. Depending on who offers an opinion on the matter, different suggestions are made; Chinese experts believe that in 5-8 years, product development will have advanced significantly among domestic suppliers, whose products by then should begin to remove significant market share from foreign companies; however foreign experts think differently, suggesting that the time period needed for this to occur is closer to 15-20 years, citing ongoing improvements of foreign manufacturer technology as a further potential challenge for domestic producers to overcome.
One area of significant focus among domestic suppliers is hydraulics for heavy vehicles such as those used in and around construction sites, these are vehicles such as cement mixers, HGVs, dump trucks etc. The hydraulics used in these types of machinery is notoriously unreliable, to the point of being a serious safety concern in the eyes of ever more responsible and accountable authorities. Pressure is on suppliers to come up with safer solutions for these kinds of applications whilst remaining cost effective.
One of the greatest barriers to faster development of hydraulic technology in China, (one that is unrelated to raw materials pricing), is the lack of official regulation and standardization governing the use of hydraulics. In the USA and Europe, stricter regulations govern the testing and certification of hydraulic components. In China where emphasis in the past has been on facilitating business and the development of new companies, regulation has been more lax with the aim of creating a more inviting environment to do business and lower barriers for market entry. The needs of the industry are more nuanced now however, with a greater degree of emphasis on high quality suppliers’ development. There is likely to be consolidation at the low end of the market, amongst the lower quality, low cost suppliers who have seen their margins hurt recently by an increase in the cost of raw materials.
About GCiS China Strategic Research
GCiS (www.GCiS.com.cn) is a China-based market research and advisory firm focused on business to business markets. Since 1997, GCiS has been working with leading multinationals in sectors ranging from technology to industrial markets, medical, chemicals, resources, building and constructions and a few others.