Wilmer Zhou, senior analyst with Ims Research's Factory Automation Group, comments, "The market for medium-voltage motor drives is closely related to large projects and capital investment. As the Chinese government tries to transform the economic growth model from investment to consumption, the investment in mines, oil and gas fields and infrastructure expansion will continue, as will energy-saving renovations in factories, which will help to maintain the steady growth of the market for medium-voltage motor drives."
The Chinese market for medium-voltage motor drives continued to grow steadily in 2011, increasing 15.8 percent to nearly $700 million, because most industries continued to invest steadily in "green" products. Growth will slow slightly in 2012, as municipality spending and investments are slightly lower in 2011 and 2012.
"In China, users of medium-voltage motor drives have the backing often of being in strong, state-owned groups. These key industries are dominated by the Government, and procurement has always been heavily tinged by politics. Suppliers with good government relationships and those with the backing of state-owned groups have more opportunities in the market", added Zhou.
Overall, the leading suppliers LD-Harvest, Siemens and Hiconics are capturing a greater share of the market share while the smaller suppliers are holding or losing market share. Siemens and LD-Harvest, the market leaders, each accounted for an estimated 15 to 17 percent of total 2011 revenues. With an aggressive market strategy, Hiconics is estimated to have increased its market share to 11.5 percent in 2011.
For small companies looking to enter the medium-voltage drive market the three largest barriers to entry are: having to bid at an unreasonably low price, extended payment terms, and no service fees. However, the higher profit margin in high-end markets (mining hoists, traction, rolling mills, and applications with high power rating) is attracting new suppliers. There are just over 30 suppliers to the market for medium-voltage motor drives in China. Supply is very concentrated, with the top three suppliers accounting for an estimated 45 percent of the total revenues in 2011, and the top 10 suppliers accounting for 77 percent.
IMS Research forecasts that growth from 2013 to 2015 will ramp up. The reasons for this are that investment into infrastructure is expected to come back after a short downturn in 2012, the number of retrofit projects for power saving will increase, and there will be increased installation of high-efficiency motors.
