China: automation is booming

In China, automation business is growing three times faster than the GDP. The Chinese economy is headed for a banner year despite the earlier disruption caused by SARS.

Never before have there been so many executives saying that their business is up 20, 30, or in some cases, 40 per cent in one year. Most major automation companies claimed to have landed at least one 'mega' order in the range of US$20-40 million this year, with several landing a couple of these large projects. Some companies are having a tough time finding qualified local people to handle the business.

Simply put, China needs a lot of everything. Construction is going on everywhere you look. A good example is the Pudong New Area in Shanghai. During the past 10 years, it has been transformed from farm land to a sprawling landscape with many five star hotels, numerous high-rise office and residential complexes, a convention centre and a brand new airport. There is no end in sight for the building boom across the country.

In general, infrastructure-oriented process industry projects still dominate in China, but this will soon change as most major automotive companies are now aggressively investing in new plants. China now produces more than 1.7 million vehicles per year and this number is likely to double over the next few years.

Even though China has numerous local automation and instrument companies, they don't have the technology or know-how to run large sophisticated power plants, refineries or steel mills. All large and export-oriented Chinese companies also like to buy the latest technology. They want to make sure they can compete on a global basis and their products are well accepted around the world. As a result, all large projects typically go to the foreign automation companies. And they are all aggressively trying to build market share. In the automation business, market share is a powerful thing leading to ongoing business for years to come.