Seven Factors Affecting the Non-standard Automated Equipment Industry

The following are seven factors affecting the non-standard automated equipment industry, as introduced by the editor of a non-standard automated machinery equipment manufacturer:

The formation of anything has its subjective and objective reasons, and the mechanism of formation is intricate. The current state of non-standard equipment is also the result of the interaction of various elements. Although the non-standard equipment industry is currently relatively healthy, these seven obstacles are increasingly affecting its development.

(1) Non-standard equipment cannot be mass-produced, large enterprises are unwilling to do it, and small-scale enterprises can easily gain a foothold.

Non-standard automated equipment is equipment that is tailored to the specific production situation of an enterprise without any standards. Equipment from Company A is often only applicable to Company A and cannot be mass-produced and replicated to Company B. Typically, a piece of equipment costing several hundred thousand RMB takes two to three months from the customer providing requirements, the non-standard equipment manufacturer providing a design solution, both parties discussing and determining the solution, signing a contract, producing design drawings, processing parts, to equipment assembly and acceptance. Because the input-output ratio is too low, large enterprises disregard such trivial and long-cycle small orders. However, such projects are quite attractive to small enterprises with only a dozen or so employees. A small business with a sales team and a few mechanical and software engineers experienced explosive growth.

(2) The non-standard equipment market expanded, but the larger the pie, the more people wanted a slice.

In 2000, only a few well-known Taiwanese companies in the Pearl River Delta and Yangtze River Delta regions were known for their non-standard equipment, totaling about 30 companies. According to statistics, the market size for non-standard equipment that year was estimated at around 600 million RMB, with these 30 companies accounting for about 70% of the market share. By 2012, there were nearly 70 non-standard automation equipment companies in Dongguan alone, and countless small-scale non-standard equipment companies nationwide, numbering in the tens of thousands; the market size was estimated to have grown to around 60 billion RMB. In short, while the market size increased 100-fold, the number of manufacturers increased a thousand-fold. The newly added market was dominated by numerous small manufacturers, failing to create large-scale enterprises.

(3) The non-standard automation equipment industry had low barriers to entry, resulting in a wide disparity in the quality of its workforce.

Why are there so many non-standard equipment manufacturers in the market? The reason is that the initial investment cost of non-standard equipment manufacturers is relatively low, with the total investment estimated at around tens of thousands. Typically, the startup model for non-standard equipment manufacturers involves two or three shareholders: one responsible for sales, one for technology, and one for after-sales service. Large capital and large enterprises are not required. This situation leads to a relatively closed non-standard equipment industry, preventing industry consolidation, hindering the elimination of inferior products, and resulting in a mixed bag of companies.

(4) Adopting a "take-it-as-it-is" mentality, with little innovation and R&D.

Domestic non-standard equipment companies rarely produce new inventions, creations, or applications. A major purpose of domestic companies attending exhibitions at home and abroad is to discover new applications, new processes, and new technologies. This practice has many positive aspects. It has narrowed the equipment gap between my country and developed countries, improved the level of industrial and agricultural modernization, and thus reduced the labor intensity of the general public. However, it is undeniable that this kind of plagiarism under the guise of learning has severely reduced the enthusiasm of companies to develop new technologies and applications; over time, it has affected the technological capabilities of my country's automation equipment industry, ensuring that the core technology remains in the hands of European and American companies. For long-term development, we must attach great importance to the protection of intellectual property rights, ensuring that enterprises obtain long-term and stable benefits from R&D. The non-standard equipment industry, in particular, needs to protect intellectual property rights.

(5) Enterprises' requirements for automation are still relatively basic, hindering the development of the non-standard automation industry to a higher level.

Manufacturing enterprises, under pressure from a shortage of human resources, have opted for automation. However, from the perspective of saving human resources, automation can be roughly divided into three stages: semi-automation, full automation, and the integration of automation and information technology. Based on cost considerations, many enterprises have chosen semi-automated equipment, with slightly more complex processes still completed manually. For such semi-automated products, a person with a good understanding of mechatronics can independently complete all the design. This large number of low-level automation demands hinders the development of the non-standard industry to a higher level.

(6) The industry is fragmented and lacks organizational advantages.

No industry association has been established for non-standard equipment. Without an industry association, the government finds it difficult to hear the voices of the non-standard industry, and manufacturers often remain isolated. Non-standard equipment companies are highly wary of each other, fearing that their technology will be learned by others, that their customers will be stolen, and that their key personnel will be poached. This lack of interaction and cooperation has led to non-standard equipment companies increasingly being mired in price competition. A non-standard equipment company should be selling technology and solutions; however, many are currently discussing material costs and management fees with their clients. We should focus on explaining how our non-standard equipment can save clients costs and improve efficiency, and how we can justify our intellectual labor.

(7) The advantages of large-scale enterprises are not obvious.

While small businesses are the mainstream in the non-standard equipment industry, some medium-sized enterprises with over 100 employees have emerged. These medium-sized enterprises have annual output values in the tens of millions, but due to management issues, their designers and equipment personnel have not demonstrated sufficient responsibility, resulting in unsatisfactory product quality. Over time, many companies have turned to smaller non-standard enterprises to purchase relatively cheaper non-standard products.

Currently, my country has a large number of non-standard automation and mechanization enterprises, but they are generally small in scale, technologically backward, and characterized by homogeneous competition. How to participate in this industry's competition has become a challenge! Difficulties bring opportunities. The promising market prospects and development potential are what make this industry so attractive. Companies that have survived the initial stage of survival will inevitably usher in rapid development for the industry.