In the changing global economic landscape, the automation industry is facing unprecedented challenges and opportunities. On the one hand, the economic downward pressure, the demand for industrial upgrading and the restructuring of the global supply chain have brought uncertainty to the automation market. On the other hand, technological progress, domestic substitution trends and industrial geographic transfer have also opened up new development space for the automation industry. In such a complex and changing environment, insight into market trends and grasp the dynamics of the industry have become the key to success.

NSB202-501W 2023 has already passed, MIR Rui industry through the industry data on the overall automation market and future development trends have made a summary and forecast, the future automation market mainly has the following development trends:
1. The automation market is becoming mature, and the market is moving from rapid growth to stability.
2. Domestic substitution shows signs of acceleration and is forming a echelon effect.
3. Industrial transfer has been irreversible, and automation manufacturers are in danger.

01 The automation market is maturing

The market is moving from rapid growth to stability

Over the past two decades, China’s automation market has experienced rapid growth. From 2002 to 2022, the compound annual growth rate (CAGR) of the market exceeds 15%. However, in the first three years of the 14th Five-Year Plan (2021-2023), the compound annual growth rate of the market suddenly turned negative, falling by 0.22%. This change indicates that 2023 will become an important turning point in the development of China’s automation market, and the overall market growth rate will show an “L” curve development after 2023. After this decline, it is expected that the growth rate will slow down after entering the end of the “14th Five-Year Plan” in 2024-2025.

In 2023, the main automation products PLC, inverter, servo have declined to varying degrees:

However, in the context of the declining environment, the DCS and SIS product lines in process automation benefit from the project-based market (chemical, power, petrochemical) and show an upward trend.

2020-2026E Overall market size and growth of SIS in China

From 2024 to 2025, the growth rate of the automation market will slow down, and some OEM markets may pick up

1) Faced with such a market environment, we expect the growth of the automation market to slow significantly between 2024 and 2025, with a conservative forecast that the growth rate may only be between 0% and 5%.

2) However, even amid such challenges, there are still new business opportunities in the automation market.

NSB202-501W The fields of new energy, semiconductors and 3C electronics have become new growth points in the automation market due to their technological innovation and continuous growth of market demand. In addition, The State Council has just issued a policy to encourage the renewal of domestic equipment, the meeting pointed out that to promote all kinds of production equipment, service equipment update and technological transformation, encourage cars, home appliances and other traditional consumer goods to replace the old for new, and promote durable consumer goods to replace the old for new. The traditional OEM market is likely to get a boost in 2024, including machine tools, food and beverage equipment and other industries.

02 Domestic substitution shows signs of acceleration

And an echelon effect is forming

Before 2022, foreign-funded enterprises will benefit from their technological advantages, brand influence and global operating experience, and occupy a more comfortable position in the Chinese automation market. However, in recent years, domestic enterprises have gradually risen and begun to form direct competition with foreign enterprises in some market segments.

1) The domestic automation manufacturers led by Huichuan and Zhongcong have formed the first echelon and made rapid development and great progress in the past five years

Taking domestic Huichuan as an example, general automation as its main business, the main products are PLC, servo, frequency conversion, including low voltage, high voltage frequency conversion. In the past five years, the development speed of Huichuan has increased rapidly, among which PLC, servo, frequency conversion has developed relatively fast in the past two years, especially frequency conversion and servo, and its market share has increased significantly.

In the field of general servo, in 2021, Huichuan overtook foreign investment at a super high development rate, and maintained the first market share in China for three consecutive years, and it is still continuing to expand; In 2023, Huichuan still sits firmly in the first position of general servo, the annual growth rate is as high as 20.9%, and the market share increases by 5.8%, while most European and American manufacturers show negative growth in 2023.