China Market Trends

China Market TrendsJuly 23th 2010 T k

China Market TrendsJuly 23th 2010 T kJuly. 23th, 2010, TokyoJuly. 23th, 2010, Tokyo

Jason DongCountry Manager

ARC Advisory Groupy [email protected]

Outline - ChinaOutline - China

China’s Economy A t ti E dit i Chi Automation Expenditures in China Some Key Industries Analysis

2© ARC Advisory Group

Economic Crisis Vs China EconomicsEconomic Crisis Vs China Economics

China’s economy recovered strongly from global economy crisisglobal economy crisis• GDP and Manufacturing PMI recovered by V-

shaped curvep• Manufacturing PMI stood over 50% again since

March, 2009


Source: National Bureau of Statistics of China Source: China Federation of Logistics & Purchasing

The Main Drivers of Economy GrowthThe Main Drivers of Economy Growth

Loose monetary policy is the major factor of economy recovery from crisiseconomy recovery from crisis• Real estate, automotive and enterprise asset

investment benefit directly from laxer lending y gstandards

The stimulus package (4 trillion RMB) is a big engine to promote infrastructure investment engine to promote infrastructure investment and related industries

Exports resumed to growth since March 2009 p g


2010 Economy Trend2010 Economy Trend

Strong Economy Growth was maintained in H1, 20102010• Combination contribution from investment, exports

and Consumption But the signs of slowdown are emerging

• GDP Growth rate dropped to 10.3% from 11.9% in Q2M f t i PMI h d d f th 2 d th• Manufacturing PMI has dropped for the 2nd months

14

China GDP Growth RateQ1, 2009‐Q2, 2010 55.8

52 55.1 55.7 53.9 52.150

60

H1, 2010 China Manufacturing PMI%

6.17.1 7.7

10.711.9

10.6

468101214

10

20

30

40

50


02

Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 20100

10

Jan/10 Feb/10 Mar/10 Apr/10 May/10 Jun/10

Source: National Bureau of Statistics of China Source: China Federation of Logistics & Purchasing

Automation Expenditures in 2009Automation Expenditures in 2009

Automation Expenditures firstly decline in 2009 T t l k t i t t d d 6% Total market size contracted around 6% However recovery was strong in Q4, about 2

months lagging behind economic recovery months lagging behind economic recovery


Source: ARC Advisory Group

Automation Expenditures in 2010Automation Expenditures in 2010

Benefited by users’ inventory falling and economy recovery many automation economy recovery, many automation providers achieved sales growth by 25%-50% in H1, 2010

Yet uncertainties and risks are emerging. High market growth might not last the whole year

H2 will be moderately optimistic H2 will be moderately optimistic. We are expecting double-digits growth in

2010


Process Vs DiscreteProcess Vs Discrete

Government Policies are key drivers in process growth; consumption and exports are process growth; consumption and exports are secondary factors

Discrete benefits more directly from economy y yrecovery


Source: ARC Advisory Group

Electric PowerElectric Power

Investment in electric power keeps flat in 20102010• 660 billion RMB will be invested in electric power

in 2010 (Estimated by China Electric Council)( y )• Goes fifty-fifty in generation and grid (much

more investment in generation in past) • About 30% growth in power generation in H1,

2010



Smart grid moves gather momentumTh Fi Y Pl (2011 2015) ill tli th • The Five Year Plan (2011-2015) will outline the detailed plan for setting up smart grids

• Smart Grid should be likely to be set up in the Smart Grid should be likely to be set up in the country by 2020

• China Smart Grid Standard was drafted by State Grid Corporation

• Some key issues will be encompassed in smart grid program such as non fossil fue energy grid program, such as non fossil fue energy, power storage, smart power meter and electric vehicles



Clean Electric power has bright prospectsN l S l

Windpower, 13,000

Nuclearpower, 1,080

Solarpower, 200

2010 New Generation Capacities

2008 Power Source Segment 2030 Power Source Segment Planned

Thermalpower, 55,000

Hydropower, 15,000

g 2030 Power Source Segment PlannedNatural gas, Solar and Biomass


Source: China Electric Power Association

AutomotiveAutomotive

The Biggest Auto marketChina became the biggest ehicle ma ket in the o ld• China became the biggest vehicle market in the world

• Vehicle sales topped on 13.64 million units in 2009• In H1 2010, vehicle sales reached 9 million units, and In H1 2010, vehicle sales reached 9 million units, and

targets 16 million units whole year’s sales in 2010 Alternative Energy Vehicle

d ll h f• Drives and Motors will the core components of vehicle, not only for production lines. It is a huge market opportunity for automation providers.

• By the end of 2010, more than 10 domestic carmakers will launch their E-Car.

• China government targets to sell 500 thousands E-car


• China government targets to sell 500 thousands E-car in 2011. (According China Automotive Industry Development Outline)

Water & Waste WaterWater & Waste Water

Urbanization & Environmental Protection are two major drivers for Water & Waste Watertwo major drivers for Water & Waste Water

In coming decades, Water & Waste Water will In coming decades, Water & Waste Water will keep high speed growth, because China urbanization will last decades

Conventional PLC providers are major solution providers in this areaproviders in this area

Energy saving is getting a more crucial issue


Energy saving is getting a more crucial issue

Glass & CementGlass & Cement

Recovered to pre-crisis levelO t f t f id ti l l • On account of strong recovery of residential real estate, Glass & Cement market recovered to pre-crisis level in H1 2010

• Many brown field projects aim at energy conservation


Thank YouThank YouFor more information, contact the author at [email protected] or visit our web pages at

www arcweb comwww.arcweb.com

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