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Industrial & Capital Goods

China is following the mercantilist path beaten by Japan and Korea 30 years ago; namely, using cheaper labor to reproduce, refine and then perfect existing products and technologies. The major difference today is the scale at which this is happening in China. Manufacturing companies are increasingly investing in China, not for the cheap labor and market access (these are still big draws), but because no other location offers the complete industrial ‘ecosystem' of components.

Industrial markets, which are defined as capital goods and industrial products sold to other businesses are in any good year growing at least five percentage points higher than GDP. There is a high beta however, and the downturn in late 2008 saw a large drop in industrial activity in China, before the state’s stimulus package was injected. While a highly diverse sector, common characteristics of China’s industrial markets include high capacity building, commoditization of new technology, grouping of producers of the same products in the same areas and, recently, state industrial policies to groom domestic industrial giants.

Index of Interest Rates* and Industrial Automation Growth (2005-2010)
China interest rate and industrial automation market growth - GCiS
Source: GCiS
*People's Bank of China overnight rate

Markets Covered

Below is a list of products that GCiS have experience in. Target products may not limited to this list.

  • Air pollution and emission control
  • Bearings
  • Bulk materials handling equipment
  • Cables
  • Centrifugal, submersible, screw and other pumps
  • Food & Beverage machinery
  • Gas and diesel engines
  • Gas distribution equipment
  • Gas processing equipment
  • Hand tools and mechanical tools
  • HVACR
  • Industrial controllers, including DCS, PLC & SCADA
  • Industrial fans
  • Industrial gas and liquid filtrations
  • Industiral gearboxes
  • Motion control
  • Motors (LV-HV)
  • Variable speed drives
  • Various compressors
  • Various valves
  • Welding machines
  • Worker safety equipment

Case Study

Client Needs & Project Background
The supplier here was a leading supplier of a range of industrial products, including pumps. In particular, the client needed to understand its market for the kind of water pumps used in HVAC and other applications. The client had a strong position in this market, though the needs of customers were changing, and the company did not want to become complacent. In particular, the company needed to understand how both the technical and application as well as purchasing needs of customers were changing, and how the company could proactively address these.

Research Solution
While this project did contain some element of competitor research, it was at heart a voice of the customer (VOC) study, with a strong qualitative emphasis. The focus was both on existing customers of the client as well as potential customers in the HVAC sector, also including refrigeration. The research looked at factors such as changing needs, customer purchase decision-making, unmet needs, pricing thresholds, and specific feedback on the client’s product line compared to that of leading competitors. Extensive customer interviews were conducted. The most notable insight to come from the research was that driven by several factors, application needs of many leading customers were changing, and product functionality or even entire product models needed to change to meet these needs. The specifics of these were provided in great detail to the client. Another important insight was that in some market segments customers were willing to pay a premium for a higher quality product- quality here defined mainly as reliability. GCiS pointed out to the client how to best identify and target these segments, as well as other pertinent recommendations.

 

 


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