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).”