China's Accelerating Economy Propels Low Power AC Drive Market

China's rapid industrialization and strong GDP growth go hand-in-hand with increased capital expenditure by global and domestic manufacturers, resulting in the expansion of the country’s manufacturing industry.

This rapid development is accelerating the growth of the low power AC drive market in China. China’s low power AC drive market exceeded $700 million in 2005 and is expected to grow at a compounded annual growth rate (CAGR) of 15.6 percent over the next five years, according to a new ARC Advisory Group study, “Low Power AC Drive Outlook for China”.

The escalating industrial growth in China has increased the demand for electric power well beyond its ability to provide, resulting in an acute shortage of power. This situation has forced China’s government to launch an energy conservation program which recommends various energy saving measures.

“As manufacturers appreciate the energy saving benefits of AC drives and realize the need to reduce energy costs, the low power AC drive market in China will continue to experience rapid expansion. Implementation of the government’s energy conservation program, which includes state level incentives, will spur the extensive use of low power AC drives in the country,” according to Senior Analyst Himanshu Shah, co-author of the study.

While the energy conservation requirement and cost savings are the paramount factors contributing to the growth of the AC drive business, other key growth drivers include the concern for reliability, the growing machinery industry, and product-related issues such as size, low prices, user-friendly features, and new technologies.

China has become a hunting ground for global suppliers, domestic suppliers, and startup companies in the low power AC drive market. With numerous suppliers targeting the marketplace, competition is intense among them. Suppliers, under pressure to differentiate their offerings and outperform their competitors, are adopting various strategies including establishing local manufacturing facilities, acquiring domestic companies, expanding the distributor network, and leveraging relationships with OEMs.

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