China Factory Automation and Industrial Controls Market - Growth, Trends, and Forecasts (2022 - 2027)

The China Factory Automation and Industrial Controls Market is expected to grow by registering a CAGR of 10.1% over the forecast period. The evolution of technological advancements and innovations across various manufacturing units has encouraged the adoption of automation technologies.

Key Highlights

• Digitization and Industry 4.0 initiatives in China have significantly stimulated the growth of automation among industries by necessitating more innovative and automated solutions, such as robotics and control systems, to improve production processes. China's economy witnessed impressive growth due to its manufacturing capabilities and the government's investments in factories, infrastructure, and machinery.
• China has led the industrial robot market, which has driven its way to factory automation in the region. The country is also one of the leading manufacturing countries in the Asia-Pacific region and globally. The increase in shipment of industrial robots in the country and the adoption of various Industrial Control System software across the country facilitates factory automation at scale.
• Automation in China is expected to be augmented by the uptake of intelligent manufacturing. According to the Ministry of Industry and Information Technology, the country initiated over 100 intellectual manufacturing pilot projects in the past few years. Also, in March 2021, the National People's Congress (NPC) approved the outline of the People's Republic of China's 14th Five-Year Plan for National Economic and Social Development and Long-Range Objectives for 2035. The design highlights China's intention to advance its core manufacturing competencies, such as high-end new materials, smart manufacturing, and energy vehicles.
• Government incentives and targets have advanced the potential of the Chinese market to dive into factory automation. Made in China 2025 plan encourages domestic players to decrease their dependency on foreign players. The rapidly soaring labor costs and declining manufacturing labor force supply in China are also helping in the penetration of industrial robots and factory automation.
• The strong support of the government in the acquisition program has helped the country to move towards Industry 4.0. For instance, Siasun, a China-based industrial robot maker, has affiliations with the Chinese Academy of Sciences, which is further linked to the government.
• With the rising cost of production in China and the strengthening of the Yuan against the Dollar, investors have been looking at alternate manufacturing destinations. However, for that, manufacturers need to focus on quality production and environment-friendly manufacturing regulations. A fully automated facility takes years to adjust and evolve with the growing technology. Meanwhile, unfavorable or delayed initiatives on active automation adaption have limited growth on a regional basis.
• China held a monopoly for many years, and supply chains were severely disrupted worldwide as COVID-19 impacted China since the global outbreak. Disrupted supply chains and squeezed revenues led many businesses to realize that their manufacturing needs to be more innovative. Technologies such as artificial intelligence (AI) and the Internet of Things (IoT) are crucial to cutting costs, increasing efficiency, and broadly de-risking manufacturing processes. Once cash builds up, industrial robotics will likely get a tremendous boost.

Key Market Trends

Distributed Control System is Expected to hold a Significant Market Growth

• DCS are process-oriented platforms that depend on a network of interconnected sensors, controllers, terminals, and actuators to act as a centralized master controller for a facility's production operations. Thus, a DCS focuses on controlling and monitoring processes and offering facility operators the ability to see all facility operations from one place.
• One of the significant benefits of the DCS system is that the digital communication between distributed controllers, workstations, and other computing elements follows the peer-to-peer access principle. To achieve greater precision and control in process industries, like the petrochemical, nuclear, and oil and gas industries, there is an increasing demand for controllers which offer specified process tolerance around an identified set point.
• Moreover, many requirements have driven the adoption of DCS, as these systems provide lower operational complexity and project risk, as well as functionalities like flexibility for agile manufacturing in highly-demanding applications. The ability of DCS to integrate PLCs, turbomachinery controls, safety systems, third-party controls, and various other plant process controls for heat exchangers, feedwater heaters, and water quality further drives the adoption of DCS in the energy sector.
• The growth in electric power generation in China is developing demand for distributed control systems (DCS). According to China Electricity Council (CEC), China's overall power consumption reached 7,510TWh, increasing by 3.1% during 2021 and by 5.7% over the average annual growth rate during the 13th Five-Year Plan.
• Various end-users are adopting DCS systems to automate their operations. For instance, in January 2021, Northern Copper Industry Co. Ltd (NCI), a part of the prominent producer of raw material copper stock in North China, announced that it had selected ABB to supply and install a complete electrical and automation system for its new cold rolling mill, which is scheduled for start-up in 2021.

Oil and Gas Sector to hold a Significant Market Share

• The geographically dispersed oil and gas platforms require proper communication systems. Growth in solutions like PLC, SCADA, DCS, and safety automation is attributed to the enormous development of industries in China. It is also expected to create a massive demand for automation products that include DCS systems.
• In August 2021, Sinopec, China's state-owned energy company, announced the discovery of a new 100-million-tonne oil and gas field in the Tarim Basin's Shunbei area in Xinjiang province. The company's Northwest China unit drilled an exploration well that produced 865 tonnes (6,315 barrels) of crude oil and 590,000 cubic meters of natural gas per day.
• Moreover, the oil and gas industry is subject to several government regulations for safety, reliability in the plant, and efficiency, owing to which ICS finds applications in remote terminal units (RTU) and pumping and compression stations for ensuring safety.
• The industry is increasingly adopting ICS solutions to maintain safety and environmental integrity without compromising production efficiency. Automation helps integrate information and control, power, and safety solutions to meet the requirement of affordable energy and stringent government regulations.
• Moreover, owing to the high demand for automation in the oil and gas industry, Seeq expanded its support for the oil and gas industry by introducing new connectors to CygNet enterprise Supervisory Control and Data Acquisition (SCADA) Wellsite Information Transfer Markup Language (WITSML) data storage systems. This enables advanced analytics and faster data-based decision-making in the current challenging environment in the industry.
• Over the past few years, oil and gas companies have invested heavily in cybersecurity technologies, such as incident response solutions and software capable of collecting logs in ICS environments to enhance visibility and segmenting networks, prevent lateral movement, and eliminate imminent threats.
• The industry is increasingly adopting ICS solutions to maintain safety and environmental integrity without compromising production efficiency. Automation helps integrate information and control, power, and safety solutions to meet the requirement of affordable energy and stringent government regulations.

Competitive Landscape

The China Factory Automation and Industrial Control Market are moderately consolidated, with the presence of a few prominent companies. The companies continuously invest in strategic partnerships and product developments to gain more market share. Some of the recent developments in the market are:

• July 2022 - Honeywell announced that Honeywell Ventures, its venture arm that invests USD 198M in early-stage, high-growth companies with emerging and disruptive technologies, has contributed to Electric Hydrogen's Series B round financing. The funding will support the scale-up of EH2's high throughput electrolyzer and manufacturing technology and the deployment of pilot projects at a large scale for industrial and infrastructure applications.
• May 2021 - Emerson announced the PACEdge industrial edge platform, which allows customers to efficiently construct and scale-up performance-improving applications to assist manufacturers in speeding digital transformation projects. The PACEdge platform makes application creation easier by combining open-source technologies into a versatile, integrated, and secure platform for using machine data.
• April 2021 - Youibot, a start-up company that makes industrial robots, closed an investment of USD 15.47 million in the funding round led by SoftBank Ventures Asia alongside others. The company generates 80% of its annual revenue in China and has plans to spend the raised funds on research and development.

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