Frost & Sullivan: Uninterruptible Power Supplies Market Spells Both Disaster and Opportunity for Competitors in China
BEIJING, Sept. 9 /PRNewswire/ -- In our imperfect world, glitches in power systems are unavoidable. Fortunately, the advent of uninterruptible power supplies (UPSs) has minimized the damage caused to systems, and in the mean time, has spawned a lucrative market. In China, the UPS market has boomed over the past few years. However, groundbreaking strategic marketing research performed by Frost & Sullivan, an international marketing consulting firm, uncovers new market trends that reveal a full-fledged battle likely to kill off most competitors in one segment, whereas the other segments indicate positive signs of continued prosperity.
According to new research by Frost & Sullivan (www.frost.com), Asian Uninterruptible Power Supply Markets: Focus on China, in 1997 the total UPS market in China was worth approximately $402 million, with a revenue growth rate of an impressive 28% over that of 1996. The primary force driving this increase continues to be the computer industry. The increasing dependency of the Chinese market on the information technology and telecommunications industries has resulted in the need for constant, high-quality power. Currently, it is estimated that one-third of all computers in China need UPS protection. In addition, the quality of power in China is not as good as that in more developed countries, which increases China's need even further.
Competitors in the low-end segment must prepare themselves for a war. Competition is expected to heat up fiercely. There are too many competitors in the standby market whom all offer similar products, while demand is projected to remain constant. The number of competitors in the Chinese standby market is actually larger than most people believe because there is a plethora of low-end Chinese companies catering to their market by specializing in standby units. These companies go virtually unnoticed by larger, international companies. Frost & Sullivan analysts anticipate that the intense competition will drastically reduce the number of competitors to only a few companies surviving in two or three years' time. The core issue that competitors must address is price.
In addition, the reputation of standby UPSs has been suffering due to many small, domestic companies inundating the low-end market with cheap, poor quality products. Consumers will be searching for prestigious, well-known brands or new products that make standby units function more like line-interactive UPSs. Technology is key for survival. Smaller manufacturers without strong research and development and appropriate funding will soon be shut out of the market.
Growth in the UPS market will come primarily from the line-interactive and online segments. Frost & Sullivan research reveals that the line-interactive (middle) segment will grow the fastest and enjoy the biggest boom in growth. However, competition in this segment is expected to increase and price will become a more important factor than it is today. In addition, it is especially important that line-interactive companies address the need to educate their clients about the necessity to use UPSs and the new technologies in UPS in order to advance.
Frost & Sullivan research also reveals that advertising is key to success or failure. For example, APC entered the Chinese market less than three years ago and advertised extensively. Today, the company has grown its revenues in the Chinese market to $17 million. In contrast, many domestic companies, such as Shenzhen Sichuang, have experienced dwindling sales due to an insufficient effort in advertising and technical support.
Key technology trends include the growing popularity of using IGBT (intergate bipolar transistor) in the manufacture of online UPS. In addition, power management software has become a standard component for UPS and the software has become exceedingly powerful.
Projected growth for the entire UPS market will be about 20% annually towards the end of the forecast period 1994-2004. The online and line- interactive segments will contribute primarily to the total growth of the UPS market while the standby segment is expected to shrink.
Market participants include: American Power Conversion, Beijing Hengsheng Electronics Industrial Corporation, Exide Electronics Group, Foshan Tongce Technology Development Company, Fuden Beijing Representative Office, Guangdong Kepu Equipment Corporation, Guangdong Upsonic Electronics Co. Ltd., Hongrui (Tianjin) Precision Power Supply Co. Ltd., Jiangsu Wujin Xinbao Power Supply Factory, Liebert Guangzhou Representative Office, Merlin Gerin Schneider Beijing, Qingdao Chuangtong Electronics Co. Ltd., Power King Electronics Beijing Office, Santak Electronics Co. Ltd., Sendon Beijing Representative Office Shanghai Forward Industrial Development Corporation, Shenzhen Huada Electronics Co. Ltd., Shenzhen Nanfang Information Enterprise Co. Ltd., Shenzhen Sichuang Electric Co. Ltd., Shenzhen V-Speed Electronics Co. Ltd., Suzhou Andian Electronics Co. Ltd., Suzhou Electric Equipment Factory, Suzhou Nanjiang Electronics Co. Ltd., Zhangzhou Kehua Electronics Co. Ltd., Beijing Fukang Weiye Technology Group, Beijing Gaoli Electronics Engineering Co., Beijing Globe Electro-mechanic High Technology Corporation, Beijing Hongji Electronics Technology Development Corporation, Beijing Liyang Technology Corporation, Beijing University Founder Group Corporation, Dept. of Power Supply of Stone Electro-mechanic Corporation, Jet Link Beijing Representative Office Information Technology Products of Heguang Group, Shanghai Huahong Electric Equipment Co. Ltd., Shenzhen Aegis Technology Industrial Development Co. Ltd., Shenyang Shiyun Power Supply Co. Ltd., Shenyang Zhanxun Technology Co. Ltd., Shenzhen Hefa Industrial Development Co., Shenzhen Xitong Electronics Co. Ltd., Sichuan Huitong Industrial Corporation.
This study forms part of the Asian strategic marketing consulting series, with valuable information gathered from Frost & Sullivan's Asia-based analysts through in-depth, face-to-face interviews with executives from key market participants.
Frost & Sullivan is an international marketing consulting company that continually monitors the power supplies and batteries industry for market trends, market measurements and strategies. Recently published Asian reports include #4808-27 Indian UPS Markets, #4809-27 Singapore, Malaysia, & Thailand UPS Markets, #5192-27 World UPS Markets.
Visit Frost & Sullivan's web site at: frost.com
Report: 4810-27 Date: September 1998 Price: $2,450
Special series price: $5,900
SOURCE Frost & Sullivan
CO: Frost & Sullivan
ST: California, China
IN: PUB CPR
SU:
09/09/98 08:49 EDT prnewswire.com
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