The demand for test and measurement products in China is increasing substantially, spurred by the growth of communication equipment industry and network providers, according Frost & Sullivan's Chinese General Purpose Test & Measurement Equipment Markets report released Wednesday.
The report also shows that China's test equipment manufacturers will be making more sales due to increased investments in the aerospace, military and defense industries which are enhancing opportunities in homeland security, radar communications networks, aircraft and fighter planes.
China's general purpose test and measurement equipment market had revenues of $370.2 million in 2005, and the market is projected to be at $684.6 million in 2012.
According to Frost & Sullivan Research Analyst David Ren, increased investments in end-user markets and the relocation of manufacturing facilities to China are responsible for the surge in demand for general purpose test and measurement equipment.
"With the end-user industries showing tremendous growth potential not only in terms of revenues but also technological advancements, China is rapidly becoming the 'factory of the world' for a wide variety of electronic and communication equipment," Ren said.
Still, the growth potential in China's test and measurement market does have some challenges, the report notes.
As research and development quickly improves test equipment technology, end users are beginning to demand better price to performance ratio with lower profit margins for the vendors. The growth of the test equipment market is also being hampered by investors in the communication industries who are hesitant to invest in competing technologies that do not yet have a proven track record.
Frost & Sullivan's analysis suggests that test and measurement equipment manufacturers must come up with tactical strategies to deal with these challenges and become more profitable.
To open their market to different customers, the industry should adopt a stratified pricing strategy by categorizing its products across two or three price levels.
Test and measurement equipment vendors also should try to work more closely with the communications and electronics industries to identify market needs, and to keep up current with trends in the market.
