Frbiz.com Reports Current Situation Of China's FA Product Channel Partner Market

By: Tian Li


The 21st century featured by high profits and huge demand witnessed a shortage of automation products in China. The profits of channel partners are also rather considerable. As the market tends to be more matured, automation products grow more and more simple to be used, and accordingly the existence and competition stress channel partners face are inclined to be increasingly tremendous.
Currently, distributors, whether large or small, dispersed in the automation market exceed 10,000. The distributors with the sales revenue over one million RMB are very few, while those with the sales over one billion RMB are even scarcer. For channel partners, their gross profit margins range from 5% to 20%, and some even less than 5%.
With an eye to their own development, channel partners of FA products have started to shift their business from simple trade at the initial stage to diversified technology-based business.
At present, channel partners in the automation segment can be broadly classified into distributors, system integrators, technology-based channel partners, logistics-based channel partners, channel partners serving special customers, and complete plants. However, business integration among channel partners tends to be more obvious.
The financial crisis 2008 results in the shrinkage of related industries, the decrease of the demand, and the increase of the sales stress of channel partners. However, meanwhile, we note that a shuffle of the market pattern will certainly come after the financial crisis, small channel partners with no distinction will be gradually withdrawn from the competition and large channel partners will have more right of speech in the future market.
The development trend for channel partners in the future can be mainly manifested in the following three aspects: polarization will become more apparent, market concentration will be higher, and more attentions should be paid to value competition.
In the future, the role played by channel partners will be more distinctive. Technology- and logistics-based channel partners will become the mainstream trend. Channel partners serving special customers, as they have been keeping the long-term cooperative relationships with large OEM users, will also be the major market participants that will not be ignored.
Polarization tends to be more remarkable for channel partners. Few large distributors will become more powerful through business alliance with others and by self-development, while those of smaller size or of weaker finance will be gradually eliminated from the market. And the entry, merger and acquisition of international giants will have a certain impact on the pattern of Chinese local channel partners as well.
From the perspective of the development of the channel policy, the policy no longer only focuses on the channel, but more on customers. In some sense, it deems to be a collaborative relationship existing between channel partners and distributors in the market exploration, yet competition in the distribution of profits.
The current policy remains to shelter the interests of intermediate channel partners, however, in terms of long-term development, large logistics- as well as technology-oriented channel partners rich in industrial experience will dominate the market. Once manufacturers win some key customers, other minor customers will be taken by channel partners. In this way, the role played by channel partners will be confined to mere system integration and logistics trade.
According to the survey made by gongkong, it is generally believed by FA product channel partners interviewed that the segments of machine tools, textile machinery, plastic machines, metallurgy, real estate and so forth have slightly shrunk since 2008, while food ... beverage, tobacco machinery, packaging, municipality, mining and other segments still maintain steady growth.

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