Instrumentation industry entered a slow recovery period

Wu Jiacheng, a special advisor of China Instrument Industry Association, said that the instrumentation industry is entering a slow recovery period.

The growth of profits faster than the growth of production and sales is affected by the financial crisis. China's instrumentation industry, like other manufacturing industries, has entered its lowest level since the beginning of reform and opening up in September of last year. "Before 2007, the industry has maintained an annual growth rate of 20% to 30%. However, since the beginning of last year, the number of enterprises' orders has decreased sharply, and production and sales have dropped significantly. The growth rate of the industry at the beginning of this year was only about 2%. This is The lowest growth rate since the reform and opening up,” said Jia Jiacheng while reading the statistics in his hands. The "cold wave" of the financial crisis began to recede from March of this year. The instrumentation industry has also come from the cold winter and gradually entered the recovery period. "According to the latest statistics released by the National Bureau of Statistics, the growth rate of the instrumentation industry reached 6% as of October. In the equipment manufacturing industry, this figure is obviously at a relatively low level." It is expected that the industry growth rate is expected to reach 10%, but from the current situation, it is difficult to achieve this goal.

Statistics also show that the growth rate of instrument and meter industry profits is obviously faster than the growth rate of production and sales. At the beginning of this year, the industry’s profits showed a negative growth of 13.7%, which was also unprecedented in more than 30 years of reform and opening up. It can be seen that the financial crisis has hit the industry tremendously. By August of this year, the profit growth rate has risen to 4%.

The growth rate of profits is faster than the increase in production and sales. Yan Jiacheng believes that this is rare in the equipment manufacturing industry. In his opinion, there are two main reasons.

The first is stemming from the more stringent measures of expenditure reduction and income generation that companies generally adopt. The openness of the instrumentation industry is very large. 40% of the profits are created by foreign-funded enterprises. Many foreign-funded enterprises have adopted energy-saving measures commonly used in Western countries. In addition, some companies have also taken measures to reduce expenditures, including salary cuts. At the same time, from the process began to strengthen management, a large number of reduced costs and reduce inventory.

Second, compared with the same period of last year, the cost of raw materials and components decreased, and labor costs also dropped significantly.

It is precisely because of the above two reasons that the instrumentation industry has seen profit growth faster than growth in production and sales.

The three major reasons that led to the slow recovery of the industry: Jia Jiacheng stated that the growth rate of 6% indicates that the recovery of the instrumentation industry is still very slow, which is mainly determined by the characteristics of the industry itself.

One of the reasons: The growth of the industry's development demand is slow. The development of an industry depends on the pull of the industry's three major needs. "Every industry needs development, and it cannot do without rigid demand, development demand and export demand." Jia Jiacheng explained that rigid demand refers to the maintenance of basic production and life; development needs refer to the need to expand the reproduction. The export demand is the product export situation. For the instrumentation industry, the rigid demand accounts for a small proportion of the total demand, because the vast majority of instrumentation has a long service life and does not need to be replaced frequently; the development demand accounts for a large proportion of the entire industry demand, mainly Reflected in the energy, chemical and other industries, the demand for instrumentation and the state, the company's investment in science and technology, quality aspects. If the investment in technology and quality increases, the demand for instrumentation will also increase. Conversely, if the degree of emphasis on technology and quality is reduced, the demand for instrumentation will also be reduced. In the context of the financial crisis, the country’s investment in energy and chemical industries declined significantly. At the same time, due to the economic downturn, companies’ investment in science and technology and quality have also declined. The reduction in investment in these two areas directly led to a drastic reduction in the demand for instrumentation and instrumentation; in terms of exports, the export rate of 30% of products determines that the industry is greatly affected by the fluctuations in the international market and also determines the recovery of the industry. The speed will not be fast.

The second reason is that the measures taken by the country to stimulate the economy are of little benefit to the instrumentation industry. The country’s 4 trillion yuan in investment has brought development opportunities to many industries and companies. However, compared with home appliances, automobiles, and other industries, the instrumentation industry’s financial support is indirect and lagging far behind.

The third reason is that the industry itself is less adaptable to economic adjustment. The product structure that has been formed for a long time determines that the instruments and meters industry must combine with economic structural adjustment in this recovery. Jia Jiacheng, for example, said: “Now the wind power industry in China is developing rapidly, but the control systems of wind turbines are all imported. In addition to wind power, nuclear power and other new energy industries, there are many traditional instruments and meters imported from abroad. Now many companies are working on the issue and will strive to make energy conservation, emission reduction and new energy a new growth point in this round of adjustments.