Exports of machine vision products from Germany to Asia outstripped those to the rest of Europe for the first time, according to a recent VDMA report. Greg Blackman analyses the opportunities and threats posed by the Asian markets
The latest market study from the machine vision arm of the VDMA, the German engineering federation, announced that, for the first time, the volume of machine vision exports from Germany to Asia exceeded those to the rest of Europe in 2012. This may come as no surprise, especially with China on the verge of becoming the world’s next superpower, but it is still significant and gives an indication of the opportunities for machine vision suppliers in Asia.
Exports to Asia outstripping those to Europe is due, in part, to low demand for automation products in Europe as well as to the growth in Asia, according to Dr Olaf Munkelt, chairman of the VDMA Machine Vision Group. ‘There is still a need for automation [in Europe], but on a very different level compared to Asia,’ he said, speaking to Imaging and Machine Vision Europe.
China represented the largest export market in Asia, with a reported turnover of more than €70 million in 2012, a 29 per cent increase compared to exports in 2011, according to the VDMA report. Japan was second with just over €20 million turnover, followed by South Korea, Taiwan, and India.
China still ranked second to North America for vision exports, but, in terms of robotics and integrated assembly solutions, China has been the number-one importer from Germany since 2010, driven largely by the automotive industry. The International Federation of Robotics (IFR) puts China as the second largest robotics market in the world in 2012, following Japan – sales of industrial robots have increased 25 per cent on average per year between 2005 and 2012 in China, according to the IFR.
‘My impression is that China has a solid production base; however, most of this is still manual and, in order to stay competitive, they must increase the level of automation,’ Munkelt commented.
In a recent visit to Shenzhen, the area in China where many electronics manufacturers have factories, Munkelt remarked that several of his hosts estimated that only around 10 to 15 per cent of manufacturing in their plants is currently automated. ‘The levels of automation are still low and the outlook [for European automation companies] is promising. Because there is this production base, you don’t need to build that. Everything that helps to automate a production process has a good growth potential, especially in China,’ he said.
Manufacturing growth in China actually slowed in 2012 compared to 2011, according to data from the China Machine Vision Union (CMVU) presented earlier in the year at the AIA business conference. Nevertheless, the CMVU figures predicted a 20 per cent growth in the Chinese machine vision market in 2013.
Isabel Yang, general manager of Luster LightVision Tech and director of the CMVU, suggested at the AIA conference that the growth in the vision market was a result of increased demand for higher quality products and the need for quality control in manufacturing. She said that machine vision was also being installed to increase safety in industries like food and pharmaceuticals, and as a result of policy decisions by the Chinese government. The CMVU data put the Chinese machine vision market at being worth around 1,225 million RMB (€151.15 million) in 2012.
The two main markets for machine vision in China are electronics and semiconductors, with automotive representing a big growth area.
‘China is now learning and they are learning very quickly,’ said Munkelt. ‘They are learning that they simply can’t run production the way they did in the past 10 to 15 years. Simply producing cheaper doesn’t work anymore. They also understand that they have to get better, and getting better very often means to automate production processes.
‘You have to educate workers from the perspective of automation,’ he added. ‘It’s not so much about laying people off, because there is such a high demand for manufacturing in China; it’s more about training the existing workforce so that they are able to work in a production world which is automated.’
Exports of machine vision from Germany to India, while much lower in volume, have been growing steadily year on year. Dr Ganesh Devaraj, CEO at Soliton Technologies, an automation and machine vision company based in Bangalore, India, commented that while growth in the manufacturing sector in India slowed during the last year, automation is growing at a faster rate.
The two main markets in India, according to Devaraj, are pharma and automotive, but other industries like printing, food processing, and textiles are also integrating vision, although not as complete systems. ‘In these areas you see machines supplied with integrated vision systems,’ Devaraj said. ‘We still don’t have the required number of system integrators in India that could integrate machine vision components like cameras, optics, and lighting, develop the image processing software, integrate with mechanical systems and deliver a complete solution.’
Devaraj feels that one of the main bottlenecks for faster adoption in India is the shortage of competent system integrators, which, he said, is also related to the fact that most Indian manufacturing companies have yet to fully appreciate the investment required to engineer a good machine vision solution. But the growth of multinational companies setting up manufacturing operations in India is definitely increasing the rate of adoption, he added.
Returning to China, the VDMA’s Impulse Foundation released a report last year on the implications of China’s 12th five-year ['12-5'] plan for German machinery manufacturers. China’s five-year plan scheme is a series of social and economic development initiatives implemented by the government, the 12th edition of which runs from 2011 to 2015. Seven strategic industries will be targeted – clean vehicles, renewable energy, high-end equipment, IT infrastructure, material science, biotech, and conservation – and supported with an economic programme of CNY 10 trillion (€1.2 trillion). If everything goes to plan, in 2015 these strategic industries will be as large as the total GDP of South Korea or Mexico in 2010, according to the report. It states: ‘The magnitude of this programme will change the face of some industries and will have a strong effect on the sector of machinery and engineered products.’
The report suggests that there will be opportunities for mechanical engineering companies as a result of the programme, but there will also be some threats as well. It gives the example of a machine tools company, Shenyang, which is undergoing a major development, firstly to satisfy local demand, but also geared towards exports. Chinese manufacturing companies could therefore begin to compete with European companies in the future.
However, Dr Munkelt feels this won’t happen in the near future. ‘There is such a high demand for automation components in China that they literally have no time to export them. The demand has to be satisfied inside the country first, before they can export to other countries,’ he said.
‘The companies in the automation industry working in China are the first companies that will come under pressure from Chinese competitors inside China.’
The authors of the report on China's 12th 5-year plan feel that groundbreaking innovation will keep German firms ahead of Chinese competitors, at least in the high-end segment of mechanical engineering. However, the report says that R&D will play a role in capturing export markets and that China will triple its R&D spending during the next five years. The other likely outcome, according to Munkelt, is that ‘Chinese investors will simply selectively pick out companies here in Europe and buy them’.
China might represent a threat to European machine vision companies in the more distant future – but, for the moment, with demand so high in the country for automation in manufacturing, the opportunities are substantial.
