China’s transport system has grown from an all-but-non-existent state in 1949, to a string of superlatives today: biggest car producer, highest spending on rail transport, most number of new civil airports, biggest shipping nation, and so on. The country is also in the middle of a colossal amount of infrastructure spending (see our Building & Construction practice), indicating that growth in the transport sector has a long run ahead of it. But bottlenecks and inefficiencies still riddle the system. Around Spring Festival (Chinese New Year), a company typically looses two to three employee-days per worker, as people are forced to queue for their travel warrants.
Units of Vehicle Sold 2005-2009
Source: GCiS, China Automotive Industry Yearbook
Accessibility to this sector is mixed. On the one hand, foreign companies have been successfully selling complete knockdown (CKD) vehicles such as busses and trucks; foreign automakers, too, have seen spectacular success. However, some markets, such as rail, remain restricted. There are some constraints in the system, too. Trucking costs, due to road tolls, are higher than in the US and many of China’s inland waterways have fallen into unnavigable disrepair.
But the overall perception is that transport is a major source of opportunities for a wide range of market participants. Recently, investment in air travel, high speed rail and shipping has been very high. The estimated 2,000 passenger planes in the market will double over the next decade, according to projections. High speed rail is being groomed by the government as one of China’s future high-tech exports. The nation’s shipbuilding is also poised to overtake Japan and Korea in the next few years.
Below is a list of products that GCiS have experience in. Target products are not limited to this list.
- Actuators for use in commercial aircraft
- After-market for automotive fluids
- Air springs for transport applications
- Automotive electronics
- Consumption of plastics in auto applications
- Engine seals & gaskets
- HEV engines for buses
- Lithium-ion batteries
- Marine propulsion systems
- Suspension systems for buses & trucks
- Tier 2 auto components
Client Needs & Project Background
The client here was a leading North American supplier of marine propulsion systems, with a strong position globally, though limited in China. The company produced propulsion systems (with a diesel engine core) within a limited power range, making its systems appropriate for certain kinds of ships but not others, both by size and type. The company needed to understand its best opportunities in this market, as well as total market figures, technical customer requirements, and the precise purchase process by diverse customers.
Although the client had some presence in China from the onset, this study was in part a comprehensive market assessment and in-part a market-entry study. In-depth interviews were done with a range of market participants, including notable international suppliers, customers and influencers. Customers here meant ship builders that specialize in vessels with <12,000 kW drawing power, while influencers referred to both marine architects as well as ship owners. The research showed that while this scope of the market contains strong domestic competition, there is still room for foreign suppliers that are able to work the purchase process effectively. Opportunities were seen as best among cargo and tug craft as opposed to vessels with smaller engines such as ferries. Moreover, certain ship builders have higher demands for quality, and GCiS provided insight on who these are and how best to access them. Recommendations also focused on how best to meet technical requirements of Chinese ship building customers, as well as service issues and establishing a local presence.