Distributed control thrives in Asian expansion

Edited by the Engineeringtalk editorial team Aug 20, 2004

The distributed control systems (DCS) market in Asia is expected to grow at an average annual rate of 6.3% through 2008, according to a new study.

The distributed control systems (DCS) market in Asia is expected to grow at an average annual rate of 6.3% through 2008.

The market was $2612 million in 2003 and it will exceed $3,540 million in 2008, according to the new "DCS outlook for Asia - market analysis and forecast through 2008" by ARC Advisory Group.

In Asia, and in particular China and India, new plants come up even in core sectors like cement, chemical, power and steel.

These new plants, coming up to meet the regional and global demands, spur the demand for DCSs and create excellent opportunities for control system suppliers.

According to ARC Research Director Larry O'Brien: "The high levels of growth in the Asian DCS market are primarily tied to the basic infrastructural development and capital projects occurring in China, and, to a lesser degree, India and Southeast Asia".

"There is still significant growth potential in basic industries such as refining, chemicals, power, and pulp and paper".

Asia, the home for almost 60% of the world's population, is going through an economic transformation with China and India emerging as the twin engines of economic growth.

Close to a billion people and a burgeoning middle class means that the appetite for a whole range of manufactured goods and energy is spurring growth of the Asian manufacturing industry.

With the manufacturing industry thriving and with manufacturers extensively applying control systems to gain sustainable competitive advantages, the DCS market will continue to experience strong growth over the next five years.

The region's thriving manufacturing activities ensure a growing market for DCS.

O'Brien added: "While an expanding market assures business growth for suppliers, the challenge is to gain a good understanding of the uniqueness of the Asian DCS market and developing appropriate strategies that will give you an edge".

Although local suppliers dominate the Japanese DCS market, the European and North American companies capture the majority of the Asian DCS market outside of Japan.

Both in China and India, some home-grown DCS suppliers are beginning to challenge the dominance of the global suppliers.

Suppliers are finding it a challenge to keep up with demand in Asia, and the sheer volume of new plant and factory construction will continue at a healthy pace through the next five years, barring any unforeseen actions by local governments, particularly China, to cool down growth.

At the same time, users in Asia are demanding many of the latest technologies and are investing heavily in education and training of their workforce to be able to use these advanced technologies effectively.

Conversely, Asian users are known for being very price conscious, making it difficult for suppliers to actually make money off many of the large scale projects they are bidding on in Asia.

Many automation suppliers lament that while the majority of revenue growth for their DCS business comes from Asia, they still make most of their profit in developed markets such as North America and Europe.

India, Southeast Asia, and South Korea lead the way in growth for the rest of Asia.

These economies continue to expand as their infrastructure grows to meet rising demand.

Although growth in the rest of Asia will exceed that of the total market, it will still not meet the levels driven by the economic expansion of China.