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CC-Link white paper explores strategies for entering the Chinese market

19 June 2012

Doors that open to commercial opportunities in China are explored in a new White Paper from the CC-Link Partners Association (CLPA). China is set to be one of the major growth engines for manufacturing for decades to come, and many European companies are keen to access this vast market. It is also likely to prove to be a ‘hub’ from which neighbouring countries will also develop global manufacturing capabilities.

The White Paper, entitled: “Gateway to China – Opening doors for manufacturers in the world’s fastest-growing economy”, has been published by the CLPA to help manufacturing companies and those that support them to formulate ideas on how to approach the Chinese market. It can be downloaded here.

The CLPA is an organisation of over 1,600 companies who use, support and promote CC-Link, an open network technology for industrial automation. The CLPA operates globally, with offices throughout Europe, the Americas and Asia. Open networks have developed over the last 20 years to overcome the issue of non-compatibility between different makes of control equipment. They allow control engineers to mix and match equipment for many different manufacturers in their systems, rather than having to confine themselves to a single brand.

CC-Link was developed in Japan in the late 1990s by Mitsubishi Electric, which donated its IP rights to the CLPA in 2000. This placed the technology into the public domain, allowing anyone to make compatible products. CC-Link quickly spread to China and neighbouring countries to become a de-facto standard for many industries and is now one of the leading global choices for open networking. In October 2011, the CLPA’s European operation launched an initiative called Gateway to China (G2C), aimed at helping manufacturing companies to establish a foothold in China and to develop their business interests in this fast-growing economy.

The CLPA has extensive support in the Chinese market, with some 20 locations across all China’s industrialised areas. It participates in exhibitions, organizes roadshows, conferences etc, and offers advertising opportunities both in print and on-line. Members can tap into this as a first step, and then be supported as they establish their presence on the ground.

“G2C is designed to make it easier for companies to penetrate the Chinese market and to strengthen their prospects for growth by taking advantage of CC-Link’s reputation as an established, respected provider of enabling technology for the Chinese manufacturing sector,” explains John Browett, acting general manager of CLPA Europe.

The White Paper examines the size of the opportunity in China. It notes that China has experienced a 90-fold increase in economic activity since 1978, an average annual growth rate of over 10 percent, and is now the world’s leading marketplace for many consumer products. Rapid growth is expected to continue into the future.

It also points out how China offers specific opportunities for European automation companies. For example, a key consumer of automation is the automotive industry. It is expected that by 2025 China will become the world’s largest automotive market. This has not been lost on the global automotive industry, which is rushing to meet this demand with new factories throughout the nation. CC-Link’s position as a de-facto standard in this industry translates to a wide-ranging demand for all types of automation devices and equipment. This is only expected to increase as CC-Link specifications continue to spread from the auto makers themselves to the local parts suppliers and machinery OEMs.

The flat panel display industry holds an even stronger position for CC-Link. John Browett comments, “CC-Link dominates the Asian flat panel industry. Our current market share is estimated to be in excess of 80%. This means that there is a very good chance that most of the LCD screens you use everyday – your PC, phone, TV, car navigation system, etc. were manufactured on lines run by CC-Link. All the major companies in this industry are already expanding in China, meaning additional CC-Link opportunities as time goes on.”

Finally, the support of the Chinese government for CC-Link is also examined. CC-Link is a Chinese “GB/T” national standard, meaning that companies are encouraged to use it in their systems. Further, the Chinese government has just embarked on its 12th “Five Year Plan”. This is focussed on increasing the capability of Chinese manufacturing industry through the development and upgrade of manufacturing capacity. This clearly translates into further CC-Link opportunities.

John Browett concludes: “There are overwhelmingly compelling reasons for European companies to push into the Chinese market, especially with the current euro problems. However, it is a big step to take with many different issues having to be addressed. Manufacturing and commerce are globalising, and many companies have no option but to follow this trend.

“Our White Paper has been carefully structured to highlight the opportunities and offer practical advice on how to realise them. Critically it shows the need for support structures and fast-track strategies, both of which are available from the CLPA”.

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