Optimistic and disorderly competition in the domestic valve industry brewing industry consolidation

According to a well-known supplier in the industry, the total annual demand in China's valve market is no less than 10 billion yuan. This huge market is a huge business opportunity for any internationally renowned valve manufacturer. At the same time, in order to ensure the coordinated development of the economy in the future and the need to improve people’s lives, China will inevitably put infrastructure construction such as water, electricity, gas, and heat in the top priority. This is precisely where the valve comes into play. Therefore, as a Chinese valve market that is still a new type rather than a replacement type, the potential and explosiveness of its demand will be staggering.

Valve application prospects are optimistic

China's South-to-North Water Transfer Project and other key projects are not only huge but very concentrated. For example, the South-to-North Water Diversion Project is only 70 kilometers away from the outskirts of Beijing to the urban area. The amount of money used for valve purchases is as high as tens of millions of yuan. Then the demand for the entire South-to-North Water Transfer project for the valve can be imagined. Secondly, in order to solve the problem of power shortage, the large-scale hydropower project is not only a top priority for the Chinese government, but also a long-term task, not to mention the West-East Gas Pipeline, the transformation of old industrial bases, and the construction of urban pipeline networks. Residential project, sewage treatment, farmland water conservancy and many other projects.

Foreign brand products located in the market "top" have begun to gain domestic users' preference

To refine the demand for valves in the Chinese market is like a pyramid structure. The spire is all imported products, with high quality, high price, and small quantity, which dominate the high-end users. The middle part of the tower is the site of wholly foreign-owned and joint-venture companies, and it corresponds to high-end users who require high-quality valves and moderate prices. As for domestic-funded enterprises, they are basically at the bottom of the tower, competing for low-end users in the way of quantity and price. With the increasingly rationalization of Chinese users' purchasing behavior, brand and quality have become more and more important, and the products of sole proprietorships and joint ventures are increasingly favored. At the same time, sole proprietorships and joint ventures continue to erode the market share of imported products by improving quality and reducing costs.

In the past two years, China's valve users have a special liking for the world famous brand, which has made foreign brands a little more investment impulse. According to the 2005 China Control Valve Market Survey of "Control Valve Information" magazine, the quality and technological innovations of foreign brands such as Fisher (Emerson), Keystone (Tyco), Neles (Metso), SAMSON, and Masoneilan (Dresser) are all domestic users in China. The higher evaluation of the surveyed users stated that the ultimate reason for choosing an imported product is quality. Quality is the key to brand decision-making. As long as the price is within the acceptable range, Ning can choose a more expensive product with guaranteed quality. Because users generally think that this will not only save maintenance costs, but also reduce unnecessary trouble and time waste.

"There must be a big rule after the chaos" Valve market brewing industry integration in disorderly competition

The “small door and small household” of China's valve companies and the “mixedness” of China's valve products have created a golden opportunity for integration of foreign brands into the Chinese market. Because the barriers to entry into the valve industry are too low and the access mechanism is not perfect, more than 3,000 valve manufacturers have sprung up after the rain in China in more than ten years. Looking at the more than 3,000 valve manufacturers, there are less than 500 companies with annual sales revenue of 5 million yuan, and only a dozen companies with annual sales revenue of over 100 million yuan. In accordance with internationally accepted market standards, a well-regulated and mature market, where 20% of the companies in the industry should have an 80% market share, the top 3 must have the power to control market share by more than 50%, and the top 10 in China's valve industry. The market share of the company only accounts for 8%-9% of the domestic market. In other words, such a large Chinese valve market has not yet had a real name brand. Without China's valve market with world-renowned brand names and no heavyweight companies, it will inevitably lead to regional fragmentation and disorderly competition in China's valve market.

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