Feature Machine Building & Frameworks Reacting to a changing market place


The developing economies of Asia and China are opening up an enormous market to UK machine builders and automation engineers. At a recent UK Machine Builder conference, hosted by Mitsubishi Electric, strategies for entering Asia and China, and building sustainable business, were explored


lthough business in Asia has been underway for some years, the call for manufacturing automation and production machinery has been relatively modest. However, with local labour rates increasing and domestic consumption growing, things are changing. In addi- tion, China now has leaders who have been charged with growing and devel- oping the internal economy of the country - and where China leads, its neighbours are likely to follow. As people have begun to leave agri- culture (and the practice of growing their own food) to work in new manu- facturing industries, they have begun to move into urban environments which has quickly led to a rise in the con- sumption of other goods and services. Thus demand for manufactured goods and consumables develops alongside the export side of the economy. In these Asian economies wage levels have also increased. It was also inevitable that as industry developed it would be impossible for these countries to produce enough engineers, other professionals and skilled workers. In this way, Asia’s eventual need for auto- mated production was predictable and put simply, its time has come. It is also worth noting at this point that the vast interior regions of China are now developing too. They are some years behind the more developed coastal region but their development will be quicker and more assured, so over time they will catch up.


A Slowdown


There has been some worry that Asian growth has slowed in recent years. However, to put this into perspective, the main engine, China, has slowed to eight percent. In the well developed coastal centres growth is down to five percent and 65% of its economy is now service - an indicator of a maturing economy, and an increasing need for automation. In a developing country there is inevitably some resistance to importing goods and services, and a culture of ‘buy local’. The amount of help available to companies for translations, currency exchange, tariffs, visas etc will also be low. So, in order to win business in Asia and China, overseas companies must


12


that many UK companies think only of China and forget its expansive neigh- bours, which also need the goods and services of international machine builders. The ten or 12 nations south of China form a significant sized market. Also in the region are Japan, Korea and Hong Kong. Collectively Asia has a GDP comparable to the US or the EU. Another speaker, Stewart Ferguson, from the China-Britain Business Council, focussed on China’s vast economy. He pointed out that it is not a unitary market, but that the different regions are


have a strong USP (unique selling point). Robert Doak, a conference speaker from UK Trade & Investment (UKTI), stated that British companies may have their own technical USP but that collec- tively they are also very good at com- bining products and service/support. He said, “Some countries can supply excellent goods, others sell intellectual expertise. But few can achieve the goods and service mix of the UK. This is a tremendous strength for machine builders, whose goods will probably need commissioning, regular servicing and frequent redevelopment to adapt to changing end user demands.” Doak also stressed that exporting halfway around the world is not the sole preserve of big companies. “There are many opportunities for SMEs, and once established in China a steady stream of work is likely to develop. Getting set-up initially can seem complicated, but good initial research and exploratory visits are the first steps. Then there are layers of help available from UKTI, trade associa- tions, business councils and export agencies - all of which are invaluable.” Another point raised by Doak was


Below: UK machine builders and automation


engineers have an enormous opportunity within the growing


economies of Asia and China


semi-autonomous, and often culturally very different in terms of language, atti- tudes and manners, and that these need to be taken into consideration. Most Chinese companies will only pay in the local currency and will make no effort to help suppliers import their goods. However, the country also has many resident non-Chinese companies, so UK machine builders may find it easier to deal with or through these rather than setting up their own distrib- ution arrangements. UK companies also need to think about how they are going to repatriate their money out from Asia and to make sure they are able to cope with currency fluctuations.


Another speaker was Grant Collier from the PPMA Group of automation- focused trade associations. His organi- sation is very pro-active in helping companies set-up in China and has formalised procedures into its three- tiered Dragon Service.


He said, “Our Silver Dragon provides support services, such as market overview research, translations and media contacts. With Gold we make introductions, arrange business tours and build contact networks. With Platinum we run an office in Shanghai and will recruit and employ people for clients. They have tenancy in our office and we manage their activities. Thus we remove just about all the risks from that initial setting-up period.”


CC-Link


Asia has been quick to adopt open stan- dards for data communications (i.e. field devices from many different manufac- turers connected to a common network). The preferred solution for this in the region is CC-Link, which has a dominant market share throughout Asia (not sur- prising as it was developed in Japan), so it is seen as the local choice. However, it now also has support from many global sensor and device manufacturers. Mitsubishi’s Chris Evans also offered an insight into the way many UK-based machine builders are thinking, “We are having conversations with many machine builders who maybe have not used our products as their first choice in the past but now realise the potential for business in China and throughout Asia and understand that partnering with Mitsubishi and having a Mitsubishi offering for their machines is very important to succeed in this region.”


Mitsubishi Electric


automation.mitsubishielectric.co.uk T: 01707 276 100


Enter 201 OCTOBER 2013 Automation


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72