India faces Chinese challenge in building equipment market
Thursday, 15 November 2007, 20:30 IST
Printer Print Email Email
Bangalore: The fledgling Indian earthmoving and construction equipment (ECE) industry will face a real threat in domestic and export markets from Chinese companies. A study conducted by the global consulting firm McKinsey has cautioned the industry against complacency, which is currently growing at 30-40 percent a year. "The ECE industry faces a real challenge from low-cost countries (LCCs) such as Brazil, China, South Korea and Thailand in domestic and export markets. Increasing cost pressures in developed markets are forcing customers in the construction industry to source components, aggregates and equipment from cost-competitive suppliers in LCCs," the study pointed out. Highlighting key findings of the study called "ECE Vision 2015: Scaling New Heights" at the Excon 2007 exposition currently underway here, McKinsey Managing Director Adil Zainulbhai told IANS Thursday the export opportunity for LCCs was about $24 billion in the next 7-8 years, of which $10 billion would be in equipment alone. "The off-shoring of engineering and design services to LCCs will also accelerate, contributing about $3 billion by 2015. In such a bright scenario, these LCCs pose a threat to 'made in India' products on home turf and export markets," Zainulbhai noted. LCCs have more than doubled their sales in the Indian market to $108 million from $47 million in 2005-06. "Competition from China is set to intensify after Beijing Olympics in 2008, when more Chinese ECE firms will set up distribution and after sales networks in India to hard-sell their products. Chinese and Korean firms will also give stiff competition to Indian exporters in developed markets," Zainulbhai asserted. While the projected target of $8 billion by 2015 is achievable owing to higher spending by end-use sectors of earthmoving and construction equipment, the industry "will have to move up the value chain, expand product portfolio and pitchfork into the global market to realise its full potential," McKinsey partner Rajeev Dhawan affirmed.
Source: IANS
siliconindia