Production and Sales of China’s instrument industry becomes stabilized, Net profit increased
“Production and sales of China’s instrument industry has increased from the low point at the beginning of the year, and now the sales increase rate is stabilized around 15% to 20%. The increase rate of the industry this year is predicted to be about 18%.” Says Xi Jiacheng, honorary chairman of the China Instruments Manufacturers Association.
He says, if the economics on a whole is stable, the instrument industry’s major economic indicator can meet the target set at the beginning of the year. He predicted that the yearly profit increase rate of the instrument industry would be slightly lower than 13%; the importation increase rate would be about 5%, and the exportation rate would be about 18%.
Production and sales stabilized
The production and sales increased in May and June, the increase rate is around 17% for three consecutive months, in the 15% to 20% range predicted at the beginning of the year.
Xi says, the overall increase rate is not high, because one of the major subindustries, the industrial automation control instrument subindustry has a relatively low increase rate (3% to 4% lower than average of the entire industry); other subindustries, such as measuring and analyzing instruments have high increase rates of over 20%.
“This means the instrument industry is affected by the poor economy,” says Xi, “but the effect is relatively small, and the instrument industry still has a bright future, especially with the support from the government.”
However, at the beginning of the year, the increase rate of profit is -14%, the lowest in the century. This was improved over the course of 2013. Xi analyzes that this is because the cost of raw materials and personnels has increased, but the market is still expanding relatively slowly.
“Manufacturers that focus on low-end products, or companies that expand too quickly will face difficulties in the coming years.” Xi notes.
Low import increase rate
Because of the poor economy, the industry’s import increases slowly. Policy that encourages importation is weaker, but in many fields such as food safety and environment monitoring, some institutions still want most, if not all instruments to be imported products even if there are domestic instruments.
“The over-emphasis on imported products is severe and calls the attention of government officials, and they are taking steps to direct the institutions.” says Xi, “we must admit that in some industries, the longevity and stability of domestic products is still not as good as foreign products, and even if they are as good, it still takes time for companies and institutions to accept domestic products.”
The increase rate of exportation of domestic instruments is falling slowly. In the first half of the year, the increase rate is still over 10%. The association believes that there are four reasons: a) large number of low-end products for the basic needs of small foreign companies; b) most exportations are to developing countries; c) domestic products’ performance to price ratios are still high and d) exportation of high end products has increased.
Xi says, this year, the situation of the subindustries are largely different from that of previous years.
Previously, the industrial automation control instruments subindustry has a high increase rate of over 30%. This year, this rate has dropped to 13%; on the other hand, scientific instruments, such as analyzing instruments or measuring instruments subindustries have high increase rates of over 20%. At the same time, minor subindustries, such as instruments related to education, weather, agriculture and so on, have fairly high increase rates.
This year there is a noticeable polarization between instrument manufacturers. 10% to 15% of the manufacturers have high increase rates of over 20%; 50% of the manufacturers have low increase rates, while about 1/3 of the manufacturers have negative increase rates.
Xi says, this year, manufacturers with high increase rates are ones that have high technology content, and low surplus product capacity expansion. Because of the poor economy, the need for their products have not increased significantly, but their market occupancy has increased because of technical advantages.
High-end exportation has increased
Xi says, unlike previous years, many companies increased exportation hoping to compensate for the decrease of domestic market. For example, the industry of watt-hour meters has 14.5 million instruments sold abroad, its increase rate is 40.39%.
Exportation of gas meters has also increased, with an increase rate of over 10%; industry of optical instruments has high increase rate because of the rapidly developing smartphone market. Currently, 80% of the world’s smartphone camera lens are produced in China.