Vietnamese automation market will expand to US$129.1M by 2016
Market researchers at Frost & Sullivan report that Vietnam is emerging as a global manufacturing hub, helping to buoy the outlook for automation and controls in the Asian nation.
The automation and control market in Vietnam is in the growth phase and is set to unleash a plethora of opportunities in the coming years, according to market research firm Frost & Sullivan (San Antonio, TX, USA). Vietnam is fast emerging as a global manufacturing hub and new industries, and changing lifestyles are expected to spur advancements in the near to medium term. The burgeoning plastics and rubber industries are serving a diversified industrial base.
New analysis from Frost & Sullivan, “Automation and Control Market in Vietnam,” finds that the market earned revenues of US$71.1 million in 2009 and estimates this to reach US$129.1 million in 2016. Growth is likely to be fueled by the use of PLCs, SCADA, and DCS.
Other industries helping to bolster the outlook for the automation and control market in Vietnam are residential and commercial building, paper and pulp, and mining. Industrialization in Vietnam is affected by the interest shown by public and private organizations in the manufacturing industry.
“After the reunification of Vietnam, a concerted effort was made to rapidly transform the private, capitalist industry in the south into a state-run sector,” says Frost & Sullivan research analyst Krishnan Ramanathan. “Many industrial operations were nationalized or forced to become joint state-private enterprises; productivity of both capital and labor declined for the market as a whole and gross output slumped.”
Reform measures in the 1980s introduced incentives, reduced subsidies to inefficient state-run operations, and gradually allowed limited market mechanisms. The Vietnamese Government has been adopting agile methods to facilitate the deployment of large-scale industrial projects, stoking growth in this market.
The Vietnamese market holds much potential; however, several deficiencies must be remedied to ensure forward momentum, according to the study. The economic slowdown had clouded market prospects and industrial production witnessed a downtrend. Companies had been operating under constrained budgets and large-scale investments were pushed to the back burner. Although the recession was a growth bottleneck, other factors had also contributed to make the market less attractive.
Among the challenges faced by the industry is the lack of infrastructure and skilled professionals. This has proved to be a major deterrent for foreign investors, says Frost & Sullivan. Strong support from the private sector will be needed. As far as the competitive landscape is concerned, major multinationals hold sway over the automation market in Vietnam.
Local industries have neither resources nor the financial resources to compete effectively in this space. There are import barriers in Vietnam that make it difficult for companies operating in the market as the country lacks the technology to manufacture indigenously.
To ensure business progression, equipment manufacturers operating in Vietnam must offer customized solutions to clients as there is very little in terms of product differentiation. The onus is on the government and private agencies to raise the capital needed to augment infrastructure.
“Vietnam is on the threshold of phenomenal growth across industries, and conventional ones, such as oil and gas, are expected to continue on an upward trajectory,” concludes Ramanathan. “In particular, the food industry is poised to be a major propelling force in Vietnam’s attempt to become an industrialized nation by 2020.”
SOURCE: Frost & Sullivan
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