Frost & Sullivan Finds Attractive Investment Opportunities in Chinese Test & Measurement Market
has showed tremendous growth potential reflected not only in terms of revenue
but also in technological advancements. The Chinese T&M market still kept a
high growth rate of above 10.0 percent in 2008 while the number was about 7.1
percent in the rest of the world.
New technologies are overshadowing old ones with the phasing out of stand-
alone instruments and the move towards PC-based equipment. Specific
applications such as telecom testing, semiconductor testing, data acquisition,
and electronics functional application testing require automatic test
equipment, making automation of the existing equipment trends that can hardly
be ignored. The Chinese T&M market is highly concentrated with multinational
manufacturers dominating the market with long-term efforts, complete product
lines and advanced technologies.
According to Frost & Sullivan’s China Research Manager for Measurement &
Instrumentation Practice David Ren, the global financial crisis has its impact
on the Chinese economy. The GDP annual growth rate for 2008 is predicted to be
at 9.8 percent in
market, the Chinese stock market has lost half of its value in 2008. The
nation’s consumer price index (CPI) had decreased to 2.4 percent in
“In view of the current economic situation, the Chinese government has
announced that it will take
2010 to stimulate domestic consumption and growth as it turns to an ‘active’
fiscal policy and ‘moderately easy’ monetary policy. In the future, the
Chinese economic growth is expected to be built on a balanced structure of
consumption, domestic investment and export,” he said.
He continued to say that the stimulus package announced by
enough to cushion the downturn in the domestic economy and ensure that the
country’s economy continues to grow above 8.0 percent in the next two years.
“It covered 10 main aspects, and most of them will directly or indirectly
stimulate the development of end-user industries such as transportation,
healthcare and education, environment in the Chinese T&M market. T&M suppliers
will benefit the latest government’s stimulus plan in terms of increasing
spending and lower cost,” he added.
The major challenge faced by the Chinese T&M industry is the processing
precision and speeds. Furthermore, end users always demand better price-
performance ratio with lower profit margins for T&M vendors. T&M vendors are
forced to maintain technology innovation in order to remain competitive in the
“Key market drivers are reflected by end user and regulation. In the
following years, government’s investment will still be the most important
drive for the market growth.
economy for key end-users in the T&M market. On the other hand, increase in
demand from major end-user industries such as communication, automotive, life
science, industrial electronics industries will drive the growth of the
Chinese T&M market,” says Ren.
However, he adds, many advanced instruments can not be made by the local
which incur high expenses every year. Yet, a lot of clients cannot afford the
high price. The limited budgetary combined with high price, restraints the
demands of the T&M products. Another key market restraint includes integrated
instruments. Increasing preference for integrated instruments over standalone
equipment restrains the revenue growth.
According to Ren, five technology trends are expected to influence the
Chinese T&M industry over the next few years; increased use of multicore or
parallel test systems, growth of software-defined instrumentation, the growing
popularity of field-programmable gate arrays (FPGA)-enabled instrumentation,
the explosion of wireless standards, and emulation-based ATE for System-on-a-
Chip (SoC) and System-in-a-Package (SiP) Testing. “All of these trends
fundamentally tie back to a need to reduce test costs while looking for ways
to keep up with increasing design complexity,” he says.
He continues, “Current stimulus plans make attractive investment
opportunities in the Chinese T&M market. T&M giants find it’s a good
opportunity to continue industry consolidation and mergers and acquisitions
tide will come soon. In addition, with the development of the Chinese economy,
the government pays more attention to hot topics such as and food safety, DTV,
and environment protection.”
Since 2004, the Chinese government has released a series of regulations
and laws on food safety, presenting the seriousness of the situation in food
safety and giving the situation great attention. The demands on inspection and
testing centers and food supervision management departments to improve test
capability from national level to prefecture level are expected to stimulate
the food safety T&M market. “The melamine incident brings about a revolution
on the Chinese food safety T&M industry. The Chinese government has announced
comprehensive nationwide tests for melamine on every dairy product by every
producer,” Ren adds.
Moreover, he continues, factors such as the Cable TV digitalization, the
Satellite TV penetration rate climbing, and the IPTV explosive growth, has
promoted the Chinese DTV industry to increase since 2003. With the advent of
2010, Cable TV digitalization process is expected to witness acceleration.
Policy and supervision is expected to make progress in the early 2009,
decreasing the uncertainties in standards, and supervision responsibilities.
This is likely to stimulate the DTV business, in particular IPTV to grow
rapidly since 2008.
Current stimulus plans to boost domestic consumption will also provide
development opportunities for the environmental protection T&M industry. The
Chinese government will invest about
environmental protection by 2010. The government still has a long way to go to
protect key rivers and lakes from pollution such as
and the Three Gorges reservoir. Environment protection T&M market shows great
growth opportunities, which is a huge market for T&M suppliers.
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