Category Archives : Manufacturing

China’s quest to grow its electric vehicle market relies on heavy-handed policy intervention

China’s booming electric vehicle market is driven mainly by generous government subsidies

China is saying goodbye to double-digit growth in its domestic car market, but one segment stands out for its phenomenal growth. Electric Vehicles (EVs) and New Energy Vehicles (NEVs) have caught on in a big way in China, making it the largest EV market in the world with 37.7% of global sales in 2016.

The Chinese government is throwing its considerable weight behind the EV segment, a fact which was reaffirmed in Beijing’s 13th Five-Year Plan released in 2015. This important policy roadmap set a goal to have five million NEVs, including cars and buses, on the road by 2020. Beijing’s strong commitment to become a dominant player in this market is driven by two political risks: its over-dependence on oil imports and the severely polluted air in its cities.

Beijing’s commitment has manifested itself in very favorable policies for both NEV manufacturers and consumers. The central government provides subsidies to manufacturers that invest in NEV production and Chinese consumers purchasing an NEV can receive the equivalent of USD 6,740 in subsidies. The value of NEV subsidies for consumers provided by the central government in China reaches a similar level to those in other countries such as the UK, France and Japan. Many local governments also provide incentives on top of those from the central government, including cash subsidies, free parking spaces and free license plates (no small sum considering the fact that license plates can cost as much as USD 12,000 in cities like Shanghai).

The government has also ramped up its efforts to add more charging stations to overcome buyer “range anxiety”, an issue which has long plagued the adoption of NEV vehicles. At last count there were more than 85,000 public charging stations in China, up 65% from the end of 2015. Local governments have set an ambitious target in this area as well. For example, Beijing’s government has plans to install 400,000 charging points in its megalopolis by 2020.

So far, surveys show that satisfaction among NEV owners in China is high—the majority say they would purchase NEVs again and interest from Chinese consumers in NEVs has tripled since 2011. Although Chinese consumers have generally preferred foreign car brands over their Chinese counterparts, this does not seem not the case for the NEV market. This gives Chinese brands the opportunity to cement a strong position in the market as it further develops.

Government incentives have generated overcapacity

There is more to this growth story though, and not every aspect of China’s NEV market is as rosy as the figures make it out to be. China’s extensive financial support to the NEV market has undoubtedly created strong incentives for both consumers and suppliers, but the Chinese NEV market is not on track to reach government growth targets set out in the Five-Year Plan. Instead, downsides to China’s supportive policies are beginning to emerge in the form of overcapacity and imperfect competition.

More than 200 Chinese NEV manufacturers have entered this market to date, producing over 4,000 licensed NEV models. Some of these manufacturers only sell several hundred cars per year, far from the scale necessary to generate returns on investment in the automotive industry. To provide a glimpse of just how quickly this sector has expanded, there were only 140 manufacturers accounting for 1,300 licensed models in 2015.

Another hurdle to a mature market is that low-cost NEVs dominate—66% of market share belongs low-cost cars, which utilize basic technology and require lower R&D costs. Less than 20% of China’s NEV market share belongs to high-end NEVs backed by heavy investment in advanced technology and R&D. Time will tell if low-cost, low-quality NEVs produced by tiny outfits surviving on government largess will continue to account for such a large part of the market in China.

Battery shortage and protectionist policy crimp NEV production

The push for five million NEVs on China’s roads by 2020 is limited by scarce battery supply. And the scarcity of lithium-ion batteries is not just an issue in China. In fact, the price of lithium-ion batteries rose 300% from 2015 to 2016. If China’s NEV market grows as its current rate to an annual production volume of 2.2 million in 2020, the demand for batteries would reach 84.8 GWh,  far higher than the global output of 15.7 GWh produced in 2015. This scarcity has prompted a flood of investment in battery manufacturing operations in China. In fact, ninety percent of new lithium-ion battery manufacturing projects in the pipeline are expected to be located there, a big victory for government planners with designs to dominate the market for this critical technology. However, demand for batteries by Chinese NEV manufacturers will likely still far exceed supply.

China’s NEV manufacturers have long favored batteries from Korean and Japanese manufacturers due to their lower cost and better performance, especially in larger vehicles such as SUVs and buses. However in June 2016, the Ministry of Industry and Information Technology, China’s government agency responsible for NEV subsidy policies, left some prominent foreign companies off a list of battery manufacturers approved to receive government subsidies. Samsung and LG, two Korean industry giants which manufacture batteries for many of China’s NEV producers and have extensive operation in China itself, were left off. The upshot of the policy move is that producers of NEVs hoping to sell cars in China will think twice about using batteries from non-approved suppliers like LG & Samsung in cars. The announcement of this move encouraged at least one Chinese manufacturer to scale down production of one of its larger SUV models over concerns that its eligibility for subsidies may be at risk. Exclusion from the list means that from January 2018, manufacturers of electric vehicles using batteries made by manufacturers not included on the approved list will not be eligible for government subsidies.

Subsidy reduction could ruin the party

 Government subsidies in 2016 stood at 30 billion RMB (USD 4.5 billion). Not surprisingly, local governments and manufacturers have jumped at the opportunity to cash in, leading to the fragmentation and overcapacity we see in China’s NEV market today. In the period from January to October 2015, the sales volume of NEV was 174,000. However, the number of vehicle registration plates issued for NEVs was just 108,000. This means as many as 70,000 EV cars were produced but not sold to consumers. This unintended consequence of government interference in China’s NEV market is an open secret in the industry.

The central government reacted to the situation by enacting a new subsidy policy in August 2016. Under the new policy, only qualified manufacturers will be eligible to receive NEV subsidies moving forward. This is expected to leave out more than a third of Chinese manufacturers which fail to meet the policy’s qualification standards. Vice Minister of Finance Song Qiuling said that the government subsidy policy will be adjusted further in 2017. And while the subsidy amounts are not expected to be reduced significantly, today’s high levels are not sustainable, according to Song, because they will put pressure on government finances and continuing heavy-handed government intervention in the NEV market is also not seen as beneficial to the its long term competitiveness and development. This delicate balance between government support and market forces raises questions about the viability of NEVs in China over the long term. Without generous subsidies, Chinese consumers may no longer want to purchase NEVs. According to a recent survey, only 38% of consumers would be willing to buy NEVs without the government subsidy. China’s government planners have a remarkable record of meeting their stated targets, but the ambitious goal for NEV use requires a careful balance of policy support, fair competition and customer demand. So far, it is clear that China has work to do in all three areas to realize ambitions of its 13th Five-Year Plan.


New Possibilities with Smart HVAC Systems: Helping Businesses and the Environment Alike

The emergence of the Internet of Things (IoT) is revolutionizing the way consumers interact with their products, enabling connected devices to accumulate and act on data to make proactive decisions that maximize efficiency. One sector poised to be affected the most by this technology is the heating, ventilating, and air conditioning (HVAC) industry. HVAC systems account for about half of the energy consumption of residential and commercial buildings in the U.S. and 20 percent of the country’s total energy use. As governments and businesses across the globe increasingly seek to address the dire threat of climate change, the development and adoption of smart HVAC systems has the potential to dramatically cut emissions while significantly reducing costs at the same time.

Greater control of energy use can eliminate wasteful usage of HVAC systems

Most existing HVAC systems are highly inefficient. According to Irisys, approximately a third of commercial HVAC units are oversized for the areas they serve, and over 95 percent of all HVAC systems use single-speed fan motors. This leads to glaring problems, as HVAC systems lack the flexibility to accommodate the dynamic needs of a given environment, such as reducing fan speed when a building’s occupancy is low.

In contrast, IoT-enabled HVAC systems are able to compile vast amounts of data that can be leveraged to create highly customized and efficient usage methods. Smart HVAC systems are an integral component of smart homes and buildings, where appliances and systems share information and learn from each other to provide more comfortable and sustainable lifestyles. These products range from security systems to lighting arrangements to refrigerators, all of which become tailored to individual user habits and preferences and can be controlled from a smartphone.

Whereas an ordinary programmable thermostat might be set to turn up heating or cooling after standard work hours, users with a smart HVAC system can remotely adjust regularly scheduled temperature changes for any individual room in a house. If, for example, the user decides to have dinner with coworkers after work and delay his or her return home, the user would be able to change pre-programmed heating and cooling from a phone instead of a manual input. Temperature schedules can also be synced to calendar appointments on a user’s phone or automatically activated by geofencing when the user enters a certain distance from home. With smart HVAC systems, users are able to control their energy use more precisely and easily with an app.

Additionally, as smart grids – electric grids and their associated networks that deliver electricity – become more prevalent, they will be able to work alongside smart HVAC systems to give users even greater control of their energy usage and awareness of their consumption habits. Smart grids are better able to integrate alternative sources of energy, including employing customer-owned power sources when needed. In the future, the IoT will allow energy providers to employ time-of-use pricing – a concept similar to Uber’s surge pricing based on supply and demand. Users would be able to monitor their electricity consumption in real time rather than be surprised by a monthly statement, creating greater transparency of how energy is used and priced and leading to reduced waste as a result.

Data and machine learning detects patterns and provides optimal settings for further efficiency gains

While smart HVAC systems will provide users with improved control, their biggest utility is in automation. By equipping buildings with sensors, smart thermostats, and smart vents, smart HVAC systems can monitor usage patterns and determine optimal heating and cooling. A smart HVAC system might decide that a crowded office space requires relatively constant heating during normal work hours, while a seldom frequented storage area might not warrant much energy. Similarly, if a user is throwing a party at home, sensors would identify a far larger than normal number of occupants and adjust the heat accordingly. The data that smart HVAC accumulates allow for algorithm-based machine learning:  systems learn precise usage patterns and react automatically, becoming increasingly efficient as more data is gathered.

Smart thermostats can also track temperature variations between rooms to proactively adapt to a changing environment. The airflow that a room receives, its humidity levels and other variables are analyzed alongside weather forecasts for smart HVAC systems to automatically adapt to ideal lifestyle use. For instance, a system could reduce air conditioning flow during a cooler than expected summer night while the homeowner is already asleep, or increase heat in anticipation of a blizzard.

HVAC manufacturers may experience disruption, but can seize opportunities of IoT-enabled systems

Changes in technology will invariably transform the way businesses operate. Sensors can alert building managers or homeowners when a unit is blocked or in need of repair, thereby proactively addressing irregular energy consumption and extending the system’s longevity. As many HVAC providers rely on replacement parts and repair services for a significant part of their profits, the greater longevity of their systems means they need to find new revenue streams to remain profitable. The electrical equipment company Emerson envisions a subscription-based model, where users pay a monthly fee for ongoing maintenance and services, while also selling the data that their devices collect.

Adapting to the realities of climate change has been slow, though it is not difficult to envision smart HVAC systems eventually becoming mandatory for new buildings as the creation of sustainable communities becomes a necessity rather than a choice. Though changes in the way smart HVAC systems operate may be subtle at first glance, widespread adoption of such devices could be essential to curb energy consumption and mitigate the effects of climate change.


Manufacturers Must Strategize to Incorporate the Industrial Internet of Things (IIoT)

Recent breakthroughs in a number of advanced technologies are making the Industrial Internet of Things (IIoT) a reality today. Gartner predicts that by 2021 one million IoT devices will be purchased and installed every hour. Given the vast scale of this trend, manufacturing firms need to strategize for this new normal or risk becoming targets for digital disruption. After revolutionizing other areas of the economy, digital disruption is now making waves in manufacturing, forcing manufacturing firms to get serious about information technology. Recent innovations allowing for economical application of information technology in factories are changing industrial production all over the world. Rapidly advancing technologies such as predictive analytics, machine learning and cloud computing are converging to form the IIoT.

Industrial Internet of Things IIoT - Top Applications and Value Adds

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Predictive Maintenance Boosts Factory Uptime, Lowers Costs

By collecting equipment usage data from device sensors, maintenance teams can more efficiently schedule equipment repairs and replacements. Changing the dynamic of equipment repair from a reactive one to a proactive one, where problems are anticipated and prevented, can significantly increase the uptime of production lines. Analyzing diverse and complex data sets with advanced algorithms and cloud connectivity makes this possible on a large scale today for the first time. Lower maintenance costs, increased uptime for production lines and a safer work environment are some of the tangible value adds achievable through applying this technology. The resulting gains in operational effectiveness can be significant as these solutions are spread across the enterprise. Bosch contracted with Cisco to connect their industrial tools to an IIoT architecture to improve production quality and worker safety. The solution has enabled Bosch to automate routine tasks, such as replacing worn out drill bits, and usage data from connected tools is used to measure and track things like torque applied, or even whether or not the right tool is being used, leading to higher levels of quality and safety.

IIoT Leader General Electric: Fostering an Industrial App Economy

GE has made significant investment into IT development due to its wide ranging application across its business units. It opened the Global Software Center near San Francisco and now employs 1,200 developers there. Approximately 10,000 more developers are employed in GE’s business units, which highlights industrial software’s strategic importance there. In 2015, GE launched its primary initiatives into IIoT, a platform called Predix, and a cloud-based developer ecosystem, predix.io, to support the development of IIoT applications. This IIoT solution has recently been made available to external parties such as Boeing, claiming to deliver the same 10-20% bump in productivity that GE itself has realized with internal IIoT applications. GE’s Chief Digital Officer, Bill Ruh, has talked of an “emerging industrial app economy” which poses an unprecedented opportunity to transform industries. GE’s transportation facility in Grove City, PA has reduced unplanned downtime by 10-20% by equipping machines with sensors to monitor operating conditions and relaying and analyzing that data to improve performance.

Rich Opportunities Loom for Optimizing Production with IIoT

Today’s factories produce enormous amounts of data, but many data streams aren’t sufficiently integrated and, therefore, aren’t as useful as they could be. Combining available production data in an integrated software solution and developing the right analytical tools to make those data streams useful for decision making is critical. Optimizing production with an IIoT solution first requires firms to identify what type of data they need, and second, to identify from where it can capture that data. The next step is to develop or outsource IIoT infrastructure and associated software applications to bring those data streams to life. Of course, internal support of IIoT efforts from pilot stage to later stage scaling up is necessary to capture the full value of optimization. Identifying areas to improve production in the average manufacturing facility and crafting an IIoT strategy must be a collaborative effort, combining the process expertise of manufacturers with the IT expertise of IIoT supplier firms to achieve best results.

IIoT Leader Intel: Accelerating IIoT Development by Linking Legacy Equipment to the Cloud

Intel’s position as a leading chip maker, and a founding member of the Industrial Internet Consortium, has prepared them to make a strong push into the IIoT supplier space. In fact, the company formed an IoT business group in early 2015 to focus on strategy and initiatives. Its latest offering is the SmartLink Technology platform—a hardware/software stack specifically designed to be used with any type of machinery—announced in March 2016. It acts as a management and security proxy for unconnected, legacy devices, does light analytics and data transformation. The platform is fully customizable through a Java-based software developer kit.

Intel deployed an in-house IIoT solution in one of their semiconductor plants in Malaysia to troubleshoot its IIoT infrastructure before making it commercially available. The factory was fitted with sensors to collect data, gateways to transmit it and analytics software to deliver real-time insight from their CPU modules, devices used in the final steps of the assembly process. The result was a reduction in the number of machine failures and an increase in assembly line uptime, which have resulted in higher yields.

Opportunities to Unlock Value with Supply Chain Optimization Abound

Gains in productivity by streamlining inventory management and distribution processes can quickly add up to sustainable competitive advantage in a manufacturing industry where tiny performance margins can be the difference between success and failure. Companies are collaborating with third party vendors to design innovative systems leveraging IIoT to automate and optimize critical parts of their supply chains in an effort to achieve crucial gains in operational efficiency. Wurth USA, an automotive parts supplier, implemented a system called “iBins” that uses smart camera technology to monitor supply levels to inform an inventory management system which automatically reorders supplies as they are depleted. Such IIoT-enabled inventory tracking systems can save on costs associated with inventory management and storage.

IIoT Leader Cisco: Betting Big on IIoT With Acquisition of IoT Firm

Cisco’s strength in networking equipment and architecture has solidified their position as an IIoT supplier, however they are actively pursuing a strategy to become more a competitive one. In early 2016, it acquired Jasper Technologies, an IoT services firm with a large customer base and experience managing and automating the lifecycle of IoT services solutions. Cisco’s IIoT offering is comprised of the Connected Factory, Connected Machines and the Connected Supply Chain, all of which leverage Cisco’s proficiency in network connectivity and security. With the addition of their recent acquisition, expect Cisco to improve and expand their service offering in the IIoT space in the near future. Stanley Black & Decker fully connected an entire production line in Mexico with the help of Cisco and AeroScout Industrial. They developed a Real Time Location System by attaching small Wi-Fi Radio Frequency Identification Devices (RFID) tags to materials, tools or virtually any object, giving workers real time information about location and status of critical materials. The system has allowed Stanley Black & Decker to gain more insight into how to increase efficiency and lower storage and inventory management costs.

Conquer IIoT Strategy Development Armed with Information

Adjusting operations to the digital era requires an informed strategy, supported with insights into the competition and the IIoT services market. If the IT world is any indicator, expect this market to evolve quickly. Manufacturers with the foresight to utilize the power of information have the opportunity to change their businesses for the better. An investment in IIoT is a smart bet on technology with myriad uses, but making sure that bet pays off is a more complicated matter. Considering challenges of digitizing operations, selecting the right partner firms and targeting investment where it will have maximum ROI are important factors for any manufacturer venturing into an IIoT implementation in the era of Industry 4.0. For more insight into IIoT implementation strategy, download our complimentary report.


Comparing and Assessing the Medical Devices Industry in India and China

Medical devices are a dynamic segment of both the Indian and Chinese economies. With the growth rate of the industry in both countries now surpassing the global average, each market has been experiencing an uptick in interest from foreign investors in recent years. However, the way in which medical devices investment is structured in India and China differs significantly, with vastly different regulatory frameworks and market entry vehicles for foreign companies to navigate. Understanding how each functions is therefore essential prior to making the decision of where to invest.

Overview of India’s medical devices industry: a massive growth market

A recent report by Deloitte forecast that India’s domestic medical devices industry would grow organically by 15 percent a year. This is significantly higher than the global average of just 4-6 percent per year. If these estimates prove correct, India will have a medical devices industry worth US$ 8.6 billion by 2020.

The Indian government has recognized the latent potential of the country’s medical devices market and has accordingly attempted to boost the industry’s development through various plans. The most relevant among these is the amendment to the foreign direct investment (FDI) rules for medical devices. In 2015, the central government passed a law to permit 100 percent FDI in the industry through the automatic route, removing the need for companies to seek government approval prior to making their investment. This drove a substantial increase in FDI into the industry, with shares in Indian medical device manufacturers such as Opto Circuits (India) Ltd and Siemens India rising by 16 and 2.2 percent, respectively.

Favorable market conditions and government policies have made the Indian medical devices industry highly competitive. The past two years has seen a number of medical device startups mushrooming across the country. For instance, Remedio, an eye-care technology startup, has launched two products and installed machines in around 300 hospitals and health centers in the past two years. Similar startups have helped diversify India’s medical devices market, while several established companies, such as Hindustan Syringes & Medical Devices, Opto Circuits (India), Wipro GE Healthcare, have continued to expand.

Overview of China’s medical devices industry: somewhat opaque but hugely profitable

China is currently the world’s second largest medical devices market. A report commissioned by the China Association of Medical Device Industry (CAMDI) states that the industry is expected to grow at a rate of seven percent per year until 2019, again higher than the global growth rate of the industry. Despite China’s recent economic slowdown, the country’s medical devices market is expected to be worth US$ 50 billion by 2017, underlining the industry’s huge potential.

The Chinese policy framework related to medical devices is slightly more complex than that of India.  Unlike India, China does not classify how foreign investment is structured in medical devices as an entire industry. Rather, it separates the industry into individual categories, which can be classified as being encouraged (foreign companies can form wholly foreign owned enterprises), restricted (a Chinese partner is required), or prohibited. As of 2015, the vast majority of categories relating to medical devices are classified as encouraged, but this is subject to change.

China’s medical devices industry also has an opaque registration process and classification system that differs significantly from other countries. For example, a medical device considered Class II in the U.S. or Class II-a/II-b in the EU may be considered Class III in China, meaning its registration process will be longer and more costly. However, there are targets contained in China’s 13th Five Year Plan (FYP 2016-2020) that, if realized, will assist the development of the medical devices industry. Programs such as “Healthy China” aim to prioritize healthcare innovation, which will likely have a knock-on effect on the classification of medical devices.

 

The medical devices industry in China is distinctly divided into two parts: domestic manufacturers that supply low- to mid-range products, and international medical device giants such as GE, Philips, and Siemens that supply higher-end products. Both have done well in the market in recent years. They maintain their performance mostly through market consolidation strategies – as of 2014, there were 17,800 domestic medical device manufacturers and 180,000 distributing companies. Interestingly, non-traditional players have recently been looking to enter the industry. Alibaba, for instance, is looking at an online-to-offline (O2O) platform for an e-pharmacy. Such developments are expected to catalyze the development of the industry.

 

India Outlook: Economic growth and favorable investment policies will continue to spur growth

India’s medical devices industry is projected to grow exponentially in the next five years. Several factors will contribute to this growth. The country has both a growing middle class and, importantly, a growing working population. India’s appetite for high-class medical goods and services is expected to grow in conjunction with these increases, and is seen as a key demand driver that will contribute significantly to the industry’s growth.

The demand for medical services in India has also spurred the creation of several new hospitals and medical centers. Such centers often sell their services at extremely high profit margins, which in turn has incentivized more players to enter the market. In addition, the large profit margins in the Indian medical sector and the liberal FDI policies attached to it are driving up the quality of medical services.

China Outlook: Preference for foreign brands continues to drive high profit margins, but local competition is rising

According to the China Medical Pharmaceutical Material Association, imported medical devices tend to sell in China at prices 50-100 percent higher than in the countries where they are produced, making China an attractive market for foreign producers of medical devices. Foreign manufacturers also benefit from a general perception among Chinese consumers that foreign products are of better quality and worth paying a premium for. Additionally, imported devices typically enjoy higher brand recognition, with even public hospitals often deciding to purchase them despite the higher costs.

 

This trend led the China National Health and Family Planning Commission to announce the launch of a policy favoring local producers of medical devices as a means of bringing down rising health care costs. The policy includes a list of locally produced medical devices that are specifically recommended by the

Commission and are to be given preferential treatment by public hospitals.

 

The new policy is especially focused on getting the larger “Tier-3” hospitals to strengthen their procurement of locally produced products. Notably, these larger hospitals also frequently handle purchasing for smaller hospitals. In this light, the latest trends in Chinese state policy for the medical devices industry may dissuade foreign investors from a purely distribution-based approach to the Chinese market.

 

Observations

Eric Skuse, Research Manager at Emerging Strategy, comments: “The medical devices industry in both India and China has strong growth potential. However, while each can be characterized by strong domestic demand and dynamic growth potential, foreign companies need to recognize that the investment landscape of the industry in both countries is nuanced. Companies that want to access either market will need to address the various regulatory and market differences that exist. Equipped with a comprehensive due diligence report and an understanding of the idiosyncratic nature of each market, foreign players will be able to make informed decisions that will ensure a faster return on their investment.”

Emerging Strategy is the essential provider of on-request and deep-dive market intelligence services across global B2B markets. For further information about Emerging Strategy and our services, please contact us at info@emerging-strategy.com


The Adoption of Advanced Robotics in Manufacturing: a Reality Today, or a Revolution for the Future?

Enormous breakthroughs in advanced robotics are making a new industrial revolution a fast-approaching reality. Advanced robotics is introducing a new generation of machines capable of executing dexterous and delicate tasks: recognizing, computing and acting on information, and even collaborating and learning from humans. These advancements offer reduced labor costs and increased efficiency, generating new competition for the traditional bastions of low cost manufacturing.

As technology continues to progress, manufacturers in industries historically reticent to the use of industrial machines are increasingly adopting advanced robotics and altering their production methods in kind. However, the present-day practical use of advanced robotics varies by industry, and the high costs and technical obstacles involved in remodeling manufacturing processes can be prohibitive. Nevertheless, the question ultimately isn’t whether or not manufacturers should adopt advanced robotics, but when.

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Case Study: Niche B2B Manufacturing Market Landscape of China

Client Situation:

Our client was a global manufacturer of flexible packaging used by leading food, consumer products, medical, pharmaceutical, and other companies worldwide. In 2013, they entered the Chinese market by acquiring a local specialty film manufacturer and were looking to increase their market share in protective films in the APAC region. The company sought to inform their internal strategy with analysis of the external commercial environment – the market landscape, competitors, customers and suppliers.

Methodology:

We proposed analyzing the competitiveness of various protective film markets through the lens of Porter’s 5 forces analysis framework. We also agreed that deep dive profiles into key competitors, customers and suppliers that were of interest to the client would also be beneficial. We conducted a funnel type market landscape analysis to evaluate the upstream product demand directly impacting the nature and scope of demand for downstream components such as protective film.

Emerging Strategy utilized primary research to gather information and compiled data to fill in the gaps in available secondary sources. Our target primary sources for this study composed industry experts and regional chambers of commerce where the local specific industry hubs were located. These sources provided us the hard to find data we required to complete this project.

We provided information about size, drivers and expected growth of upstream and downstream markets by product application, material structure and complementary profit driving markets. We also provided an enhanced understanding of the competitive landscape in China and all the value chain players, together with identified unmet customer needs and opportunities.

Result:

The insights generated by Emerging Strategy provided a clear picture of the protective films market in China, giving our client the market intelligence they needed to help develop a growth strategy for the region. These insights facilitated a leaner utilization of resources and targeting of emerging opportunities for scaling up. Our project also provided insight on how aggressively they should pursue expansion in this market and the required capital expenditure to support their growth strategy.


Strength in Numbers: the Application and Advantages of Cluster Manufacturing

Earlier this year, Northeastern University in Boston was awarded a US$ 3 million grant to set up an Advanced Nanomanufacturing Cluster for Smart Sensors and Materials. At the same time, the Indian government is funding the development of an electronics manufacturing cluster (EMC) in the Shendra Five Star industrial area. These are just two examples of the simultaneous expansion of cluster manufacturing in both developed and developing economies, but what is cluster manufacturing, and what is its importance in modern manufacturing?

Cluster manufacturing, referring to a geographic concentration of interconnected entities that operate along an entire value chain, is generally seen as the future of advanced manufacturing. Clusters typically include companies engaged in a particular industry or area that share infrastructure and distribution networks, featuring common characteristics such as physical proximity, collective growth potential and a coordinating mechanism. A strong cluster may also cover suppliers, distributors, primary producers, specialized service providers, and even government agencies and trade associations.

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Making it Green: Utilizing Energy Efficiency in Manufacturing

Manufacturing consumes one-third of the world’s total energy. This high level of dependence underlines the need for developing energy efficiency in the manufacturing process. Combined with the associated wastage of energy in manufacturing – which can significantly impact a company’s profit margin – and growing national and international efforts to develop alternative sources of energy, leading manufacturers around the world are now increasingly looking to integrate energy efficiency into their operations.

Manufacturers use energy at various points of their production cycle. Electricity, natural gas and transportation fuels all include various channels of energy utilization. Energy efficiency in manufacturing works at various levels – the replacement of hardware, automation of manual processes, and skills development for technical processes all contribute to building an energy efficient manufacturing unit, which in turn can develop an energy efficient manufacturing sector.

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Understanding the Internet of Things and its use in the Manufacturing Process

Built on cloud computing and networks of data-gathering sensors, the Internet of Things (IoT) is focused on increasing machine-to-machine (M2M) communication and is set to become the next mainstream of the technology world over the next five years. But how exactly does IoT work?

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The China Plus One Model and the Competitive Advantages of Manufacturing in Vietnam

By Dezan Shira & Associates

The China Plus One Model

China’s cheap land and labor, huge market, and preferential investment policies long served as the main driving force behind foreign investment in the country. However, China is gradually losing its cost advantage and competitiveness in comparison to other Asian countries. As a result, many companies in China are looking to diversify their operations by adding another location in Asia. This strategy is known as the ‘China plus one’ model.

Businesses adopt the China plus one model to reduce operating costs, diversify workforces and supply chains, as well as access new markets. Businesses that adopt the strategy become less vulnerable to shocks like supply chain disruption, currency fluctuations or tariff risks. Businesses can quickly scale up one country if market or operating conditions deteriorate in the other.

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