By Chen Nan Yang
China’s machine-vision market is far from mature. As the world’s factory, the country’s official gross output value was $1 trillion in 2007 and is growing each year. At the same time, its addressable market for machine-vision products was only $178 million, according to the Automated Imaging Association (AIA). But immaturity sometimes indicates potential.
The AIA has forecasted that the addressable market in China’s machine-vision industry would rise 142% to $431 million between 2007 and 2012. While the actual penetration of the market is not currently known, machine-vision companies have been enjoying rapid growth. For example, Wang Hongbiao, head of Cognex operations in China, says that the company’s sales of machine-vision products in the Chinese market doubled in 2007 and will increase another 100% in 2008. And DALSA expects that its sales in China will keep growing annually at more than 30% in the next few years.
The growth is being driven by several markets that began to accept machine-vision products in the last few years. Among them the packaging market contributed significantly to the growth of machine-vision business in China.
Point of entry
The total value of the packaging market will reach 390 billion yuan (US$57 billion) this year, according to the Chinese National Development and Reform Commission. Benefiting from the booming packaging business, the total sales of packaging machinery in the Chinese market was $4.5 billion in 2007 and the machine-vision industry took a share.
Since 2004, Chinese tobacco producers have been integrating machine-vision technologies with their production lines to detect the flaws on cigarette packages. Machine-vision companies have seen a breakthrough in this market for two reasons:
First, Chinese customers have a tradition of using the best packaging machines from all around the world, and they would like to accept advanced products and technologies from foreign countries. In the past decade, more than half (in value) of the packaging machines used in China-and most of the advanced ones-were imported.
Second, the highly profitable tobacco industry can afford to try new and expensive (in comparison with the low cost of labor) machine-vision products.
Initially, the machine-vision components used in China were all from foreign companies. For example, system integrator Port Union uses Siemens’ Simatic Vision Sensor VS725 Color for its PU-VCS and PU-VC cigarette box inspection system. In 2005, Port Union sold 50 sets of PU-VC to Yuxi Cigarette, the biggest cigarette producer in China. Currently, machine-vision systems based on the Siemens VS720 series or Cognex 545C have been widely used for checking small cigarette boxes, and systems based on Cognex In-Sight visual sensors are used for checking outer cigarette cartons.
As profits from the cigarette packaging business have increased, more Chinese machine-vision companies have stepped in. To offer more technologies at lower prices, they began to develop their own machine-vision components. For example, Microview, a machine-vision component producer and system integrator, has offered a cigarette box inspection system using its own MVC610DAM-GE110 industrial camera at a price of $20,000 since 2007. The system can check 600 to 800 cigarette boxes per minute; the false detecting rate is less than 1%.
Generally speaking, the Chinese systems and components have high performance-to-price ratios, while their stability and reliability are not considered as matching up to products from their foreign counterparts. Now 20 to 30 Chinese machine-vision system integrators, whose components are from more than 50 foreign and domestic producers, are focusing on the tobacco packaging market.
The success seen in the cigarette industry has encouraged Chinese machine-vision companies to promote their products to other packaging markets. For example, Daheng Image, a machine-vision system producer, offers products for inspecting medicine bottles. Second2None, a machine-vision system integrator, sells a system for detecting packaging tapes. And Cognex has partnered with four of the biggest Chinese packaging machine suppliers to promote its In-Sight vision sensors in the market: The company announced that it made a $200,000 deal with a Chinese packaging company through this kind of cooperation earlier this year.
What Chinese customers need
Dashu Group, a machinery company and machine-vision system integrator, listed the top six questions Chinese companies ask most frequently before choosing machine-vision products for the packaging business:
- How do the components in this system perform? Could they outperform what we desire?
- How about the brand of the products? Is it well known?
- Do you have any successful cases of these products being used in the same industry, especially in the Chinese market?
- What are the failure and false detection rates of your products?
- Could you provide different solutions at different prices?
- How much does it cost?
From these questions we can see that what concerns the Chinese customers most are the performance and reliability of the products. At first, the most difficult question for the machine-vision companies to answer is number five. Chinese customers usually like to try machine-vision products at a low price because they are not familiar with machine vision and do not understand the benefits of implementing it. They doubt it-and they want to avoid major losses if their trial fails or proves valueless. To them, most of the foreign machine-vision equipment is too expensive to explore on a trial basis.
The availability of low-cost Chinese machine-vision components in the last two years makes the trial much easier. Now Chinese customers can choose inexpensive domestic components for part of their production lines to see what machine vision can really do for them.
Different solutions available
Shen Ming from Daheng Image offers an example of how different solutions work in the market. Daheng Image offers two systems for checking medicine bottle packaging. Both of them can deal with dimensions (for example, height, outside diameter, inside diameter) and defects on bottle body, bottle shoulder, and bottle mouth (see figure).
The differences between the two systems are that one has a larger field of view (20 × 20 mm to 180 × 180 mm) than the other one (20 × 20 mm to 120 × 120 mm) and can deal with more bottles in the same amount of time (300 bottles/min vs. 120 bottles/min). The former incorporates the Basler 631f, with a frame rate of 17 frames/s under full resolution (1392 × 1040), and the latter uses Daheng Image’s own inexpensive camera DH-HV1300FM, with a frame rate of 15 frames/s under full resolution (1280 × 1024).
Shen Ming/Daheng Image
“The performance of the DH-HV1300FM is similar to the Basler 631f, but its price is much lower,” says Shen Ming. Though the two cameras have similar performance, Daheng Image still tends to choose the Basler 631f when dealing with more challenging situations.
So a customer who produces both molded vials and tube vials, for example, has two systems from which to choose. The system with the DH-HV1300FM cameras can handle tube vials, with production lines that go much slower than the molded ones-so he buys this system. After he finds the system can really help to improve the quality of the company’s products, he buys the system with the Basler 631f for molded vials. This is the way different solutions work in China.
Hurdles in the market
Foreign machine-vision companies face many hurdles when doing business in China. For example, they should know how to adapt to the Chinese rules, which means that a deal with a large state-owned company or a monopoly is usually not based on the price and/or the products-it’s mainly based on personal relationships.
A machine-vision company should choose a partner who has a strong relationship with the government if it wants to break into the highly profitable state-owned businesses.
Another approach to successful business ventures in China is to turn competition into cooperation. Currently, most Chinese system integrators choose components from many companies so they can offer a variety of solutions. As a result, each machine-vision equipment supplier has different agents in China and there is intense competition between the agents, which can sometimes harm the industry.
For example, Company X has spent two years persuading a customer to accept its machine-vision system and almost succeeded. But before making the final decision, the customer calls Company Y. Company Y quotes him a much lower price, perhaps even unreasonable, and takes over the contract. This kind of competition may end up as a triple-loss game: Company X wasted two years; the customer did not get the system he wanted because Company Y found its estimated price was too low and had to replace some components with cheaper ones; and the machine-vision industry loses potential customers in the future if the case failed.
Several system integrators had complained about similar situations in the last two years. “To fix this problem, machine-vision equipment manufacturers should adjust their agent policy to prevent this kind of harmful competition, and system integrators should work more closely together,” says an executive of a Chinese system integrator, who would like to remain anonymous.
Machine-vision companies have many new opportunities in the Chinese packaging market because of changing policies or growing demands. Policy changes can suddenly give birth to a large potential market.
A new regulation from China’s General Administration of Quality Supervision, Inspection and Quarantine requires Chinese producers from the food, cosmetics, household electric appliance, and four other industries to print the government anti-counterfeit codes on their packages. Although the application has been delayed as a result of opposition from local food producers, machine-vision companies have begun to target this market. For example, Cognex has worked with Santuo, a maker of smart-card identification systems, to design a new system based on In-Sight vision sensors to make sure the government anti-counterfeit codes print correctly.
Growing demands also offer opportunities. For example, according to Jia Yaguang, vice secretary general of the China Healthcare Association, the value of anti-counterfeit packaging in China’s pharmaceutical industry will increase 20 billion yuan (US$3 billion) in the next few years and the machine-vision industry could take a large share of that market.
Chen Nan Yang is a contributing editor based in Shanghai, China.
Basler, Ahrensburg, Germany
Cognex, Natick, MA, USA
Daheng Image, Beijing, China
DALSA, Waterloo, ON, Canada
Microview, Beijing, China
Port Union, Shenzhen, China
Second2None Machine Vision Systems, Shenzhen, China
Siemens, Munich, Germany