China’s construction industry has represented a cornerstone of the country’s economic growth in recent years. While such growth cannot go on in perpetuity, new drivers, regulations, and constraints are emerging to create a very different opportunity, where materials developers can and must play a critical role. Front and center in that are the building thermal envelope materials pivotal in addressing the high heating and cooling component of China’s vast and growing building inventory. China’s demand for building thermal envelope materials from 2012-2015 will be 5,570 million m2, but there is structure to this at the provincial level.

To identify the promising provincial market, the overall market size, energy demand on heating and cooling caused by weather, electricity price, and the energy saving target can be used to determine the highest potential markets and for the highest performing materials. The Premium quadrant indicates the provinces with the strongest need for high-quality building thermal envelope solutions, because of the harsh local weather and high electricity price. There are four provinces in this category, including Heilongjiang, Jilin, Liaoning, and Xinjiang. For these provinces, improvements in the thermal envelope solutions’ insulating performance can make a huge economic difference. Technology providers with high-quality building thermal envelope solutions can realize a shorter payback period in these provinces than in other locations, considering China’s price-sensitive construction market. In addition to these four markets, there are two markets that clients should pay attention to – Shandong and Hebei – with considerable market size and lying just outside the Premium quadrant. Both of these provinces also are promising based on their large market size and on their strong demand on high-quality building thermal envelope solutions.

Provided appropriate local relationships are established in the locations with greatest need, payback period analysis indicates that developers of phase-change materials, vacuum insulation panels, and low-emissivity (low-e) insulating glass are set to parlay these and similar provinces’ predicaments into growth, while aerogel and electrochromic glass developers will be left wanting.

Source: Lux Research report “Go North: The Path to Performance-Driven Profits in China’s Construction Materials Market (client registration required).”

Share this

facebook   twitter   email   linkedin  

While China’s build‐out of “smart cities” is significantly smaller than the hype might suggest, it still represents a $153 billion opportunity across 54 projects, mostly in the southern and eastern provinces. This week’s graphic appeared in a report published in March by Lux Research’s China Innovation Intelligence Service. It illustrates analysis revealing that over half – 31 – of China’s smart city projects are slated to unfold in cities that in 2010 yielded a minimum GDP of USD 100 billion (Tier A) and USD 60 billion (Tier B).

In terms of the speed at which these projects are unfolding, 15 are already under construction. Another 21 were announced with details such as investment amount, smart city applications involved, project deadline, and even participating suppliers. Fifteen additional smart city projects rated an official announcement, but few details to date. Finally, three Tier C cities – minimum 2010 GDP of USD 15 billion – have expressed an intention to launch projects, but haven’t formally announced them yet.

As the graphic shows, all of the 15 smart city projects under construction are either in Tier A or B cities. Not surprising, since these cities have more developed economies with greater resources. But they also have more urgent needs than lower tier cities. For example, top Tier cities, such as Beijing, Shanghai, Shenzhen and Guangzhou, were the earliest to open to foreign companies, and had to meet demands for advanced municipal infrastructure before other cities did. This experience with infrastructure construction benefits these Tier A and B cities when additional deployment is needed.

In addition, Tier A and B cities were more ambitious in their municipal development planning than cities in the bottom two Tiers. They had to be since almost all were economically strategic for China or their respective provinces.

China’s largest cities – Beijing, Shanghai, Tianjin and Chongqing – are managed directly by central government. Guangzhou and Nanjing are the capital cities of Guangdong (No. 1 province by GDP) and Jiangsu (No. 3 province by GDP). Lastly, Wuxi is in the top Tiers due to its appointment by Prime Minister Wen Jiabao as the center of “Sensing China,” the national initiative to build out embedded sensor and actuator technologies for applications in everything from containers to pacemakers.

Source: Lux Research report “Intelligent Navigation of China’s Smart Cities.”

Share this

facebook   twitter   email   linkedin