Automation upgrade of Southeast Asian manufacturing industry has spawned a market worth tens of billions of yuan. How can Chinese pneumatic component companies dig into the emerging blue ocean?

As Vietnam, Indonesia and other countries accelerate the transformation and upgrading of manufacturing industry, the core components of automation equipment - quick-plug pneumatic connectors are experiencing explosive growth. This blue ocean market, which is still in the development stage, brings structural opportunities for Chinese companies.

"Automation awakening" of Southeast Asian manufacturing industry

According to the latest data from Vietnam's Ministry of Industry and Trade, the proportion of manufacturing in GDP in the first half of 2023 climbed to 25.3%, and foreign investment in precision manufacturing fields such as electronic products and auto parts increased by 38% year-on-year. Indonesia's Industrial 4.0 roadmap clearly requires that the automation rate of key industries must be increased to 60% by 2025. The wave of manufacturing industry upgrades has directly led to a surge in demand for pneumatic components. Frost & Sullivan predicts that the compound annual growth rate of the Southeast Asian quick-plug connector market will reach 14.2% from 2023 to 2027, and the market size will exceed US$2.2 billion.

"Different from the demand for standard parts in traditional manufacturing, emerging industries such as electronic assembly and new energy equipment in Southeast Asia have higher requirements for pneumatic components." The Southeast Asia director of a multinational pneumatic brand pointed out, "The trend of compact equipment promotes the development of quick-connect connectors towards miniaturization and modularization, and at the same time needs to adapt to special working conditions of high temperature and high humidity."

Localized services build competitive barriers

Faced with the first-mover advantage of Japanese and Korean companies, Chinese suppliers are opening up breakthroughs through deep localization strategies. A leading enterprise in Zhejiang Province has set up a bonded warehouse in Dong Nai Province, Vietnam, which has compressed the delivery cycle of conventional products to within 48 hours, forming a significant advantage over the average 7-day cycle of multinational companies. In response to the special needs of Indonesian palm oil machinery, a manufacturer in Guangdong has developed a corrosion-resistant reinforced connector, which, in conjunction with the on-site service of the local technical team, has increased its market share to 17% within half a year.

"The fragmentation of the Southeast Asian market is obvious. Indonesia has more than 300 industrial zones distributed on more than 17,000 islands." Industry analyst Wang Min suggested that companies should establish a distributed service network, set up regional centers in core hubs such as Ho Chi Minh and Jakarta, and build satellite warehouses with local dealers to form an instant response circle with a radius of 200 kilometers.

Digital transformation becomes a new track

It is worth noting that smart connector products have begun to penetrate the market. A Thai auto parts manufacturer recently tendered that pneumatic components should be equipped with IoT sensors to monitor air pressure and leakage data in real time. The Bluetooth configuration connector launched by a Chinese manufacturer can complete parameter setting through a mobile phone APP, which attracted attention at the Indonesian Textile Machinery Exhibition.

When manufacturing upgrades meet regional industrial transfer, Southeast Asia is becoming a must-fight place for the pneumatic component industry. With flexible supply chains and digital innovation, Chinese companies are expected to achieve a leap from "following" to "leading" in this emerging market.