An Analysis of the Opportunities for China's Transmission and Distribution Equipment Manufacturers to Develop Overseas Market

“China's power transmission and distribution equipment manufacturing industry will face four major trends of intelligence, integration, complete set and overseas. In the next five years, China’s smart grid will enter a comprehensive construction phase, and will drive a leading company in the equipment industry to lead active and secondary equipment. Enterprise cooperation breaks down the fragmented industry structure and forms a clear integration of primary and secondary equipment.At the same time, China's power transmission and distribution industry is facing the trend of upgrading from stand-alone to portfolio and complete equipment supply, and EPC demand will also increase in the future. With the saturation of industrial market capacity and pressure from overcapacity, it is imperative for China's power transmission and distribution equipment manufacturers to develop overseas markets."

In the next five years, the global and China's power transmission and distribution equipment market will be the key five years. According to Roland Berger’s forecast, while the global market growth is slowing down, China can still maintain a higher than average global growth rate. With regard to growth, for the Chinese companies that have not yet had a competitive advantage in the Chinese market or in the global market, opportunities and challenges will coexist in the next five years.

Chinese enterprises should accelerate the penetration of overseas markets due to the lagging of power supply construction relative to power supply construction. Under the influence of the country’s active investment in power grid construction policies, 2005-2009 is a period of rapid development of China's power transmission and distribution industry, with an annual average compound annual growth rate of market size. More than 20%. In 2010, due to the drastic drop in equipment prices, the cost of project construction decreased, and the scale of centralized bidding for equipment decreased (in 2009, the number of equipment tenders decreased by approximately 20%), resulting in a slight decline in the size of China's transmission and distribution market.

The power transmission and distribution industry in China has grown rapidly in recent years and is in a golden period in the next five years. The potential for development is huge. In 2015, the scale will be close to RMB 320 billion, reaching a record high. However, as the lagging part of the power grid construction has gradually been made up, and the industrial scale base has become increasingly large, the growth rate has gradually slowed down. After the peak of the market from 2015 to 2020, it gradually shrinks, and the average annual compound growth rate of the market scale is -0.3%. In terms of market segments, the market share of the power customer market will continue to decline in the three major customer segments of transmission and distribution equipment, while industrial customers will occupy a more important position in the future.

China's power investment will decline year by year, and investment demand will not increase in the next 10 years. The power grid investment will continue to grow rapidly before 2015, and will decline after 2015. The demand of industrial customers will continue to grow rapidly with the manufacturing industry and will become a power transmission and distribution industry. The future pillar of the industry.

From the analysis of secondary and secondary equipment structure, with the development of smart grid construction, digital and intelligent investment will increase the demand for secondary equipment and systems, and the proportion of secondary equipment and systems will increase significantly. It is estimated that secondary equipment and systems will be implemented in 2015. The proportion of investment will reach 12%.

From the analysis of the subdivided product structure, the growth of the medium voltage switch market will be higher than the average growth rate of the industry, and the proportion of market scale will steadily increase in the future.

The growth of medium voltage switch was mainly due to the strong investment in power supply and the strong demand for medium voltage switches in the power grid field; the steady increase in railway and highway construction investment; and the growth in the new energy industry. However, there are still certain pressures on the future development of medium-voltage switches. Medium-voltage switch barriers are low, and there are too many small and medium-sized enterprises. Integration is extremely difficult, and disorderly industry competition will continue to drive down prices.

From the analysis of regional markets, Sanhua has a share of more than 60% in the national power grid and will continue to be China's most important target market in the future.

The convergence trend of primary and secondary equipment is obvious. Primary equipment companies actively cooperate with secondary equipment companies to break down the fragmented industry structure and quickly seize the market opportunities brought about by the first-and-second integration. In June 2010, China Xidian and Guodian Nanjing Automation Co., Ltd. jointly established Jiangsu Xidang Nanzi Intelligent Power Equipment Co., Ltd.; in June 2011, TBEA and Beijing Sifang Jibao Automation Co., Ltd. jointly established a four-party special change. Electrician Intelligent Electric Co., Ltd., in July 2011 the State Grid of the third batch of smart transformer tender, the Quartet special transformer intelligent component equipment bid rate reached 80%.