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Advanced Imaging Magazine

Updated: January 12th, 2011 10:01 AM CDT

Special Report: The Largest Market in the World

While Japan, Korea and Taiwan are most developed, China and India are charging forward
Matrox Imaging representative addresses the audience at the China International Machine Vision Technology & Application Conference.
Education and training are becoming very important for Western countries moving into the Asian market. Here, a Matrox Imaging representative addresses the audience at the China International Machine Vision Technology & Application Conference.
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By Barry Hochfelder

Asia is huge. After all, it's the world's largest and most populous continent, covering 8.6 percent of the earth's total surface area (29.9 percent of its land area). Its more than 4 billion people comprise approximately 60 percent of the world's population.

The technological level of the Asian countries varies, of course. Keith Reuben, President of DALSA Asia-Pacific points to developed countries, like Japan, with a second tier featuring Korea and Taiwan, followed by the emerging countries like China and India.

Companies looking to increase their business in the East are concentrating on China and India, where the machine vision growth potential is astronomical. China is generally considered the world's fourth-largest economy behind the United States, Japan and Germany—and it's gaining on Germany. The U.K.-based international newspaper, The Economist, estimates the Chinese economy at approximately $2.7 trillion (U.S.) and growing approximately 10 percent per year. Here are a few other China statistics, thanks to the Automated Imaging Association 2008 Machine Vision Market Study:

  • 2007 Annual rate of economic growth (real GDP): 10.5 percent (estimated)
  • Size of manufacturing sector: 47.3 percent of economy
  • Demand growth for semiconductors: 29 percent
  • Growth of automation market: 25 percent annually
  • Size of machine tool market (2005): $10.9 billion (U.S.)

According to the AIA study, the automation market has grown at double-digit rates (approximately 25 percent) for the past five years. It's expected to rise to $2 billion (U.S.) by 2010. The report also lists leading domestic machine vision manufacturers and distributors, as well as companies that have established direct sales forces in China. These companies, the AIA points out, must compete not only with each other, but with about 28 domestic machine vision suppliers.

Is it worth it? Well, the AIA study says "it is clear that targeting the 2,135 largest industrial enterprises that produce approximately one-third of the country's industrial output brings with it the potential for an impressive financial outcome. In 2007 alone, nearly $178 million (U.S.) in total sales transactions were addressable by machine vision companies. That amount could well grow to $431 million by 2012 according to our calculations."

In India, the economy, in terms of purchasing power parity, is an estimated $5.21 trillion (U.S.) as of 2008. In nominal terms, according to the AIA Machine Vision Market Study, it's the world's 12th largest economy at $1.25 trillion. It is the second-fastest growing economy in the world, with the percent change in real GDP at just less than 10 percent in 2006.

The study points out that, while 60 percent of the labor force still is engaged in agriculture, signs of a modernizing economy are evident. India has the world's second-largest small-car market, 5,000 publicly traded companies, extensive R&D facilities used by 100 of the Fortune 500 companies and the second-largest group of software engineers in the world. It's also one of only three countries that makes its own supercomputers and is one of only six that launch its own satellites.

Just 10 years ago, the sale of machine vision components was almost unheard of in India, says the AIA study. Machine vision sales were limited to university and government research labs for experimentation. There was no domestic system-integration capability. Machine vision equipment sales in India were limited to importation of fully integrated inspection systems.

The first integrator, in 1998, was Soliton Technologies (Bangalore). A decade later, the lack of system integrators remains a bottleneck for machine vision development in the country, says Dr. Ganesh Devaraj, CEO of Soliton. "The few system integrators are grappling with an immature industry. There are unreasonable expectations and estimates." Soliton is the only Indian machine vision component manufacturer, manufacturing smart cameras, FireWire cameras, and LED machine vision lighting.

The AIA study concludes: "At present, machine vision opportunities in India are limited. As a technology, machine vision has yet to prove itself with Indian companies. This, however, will expectedly change as India realizes its full potential in the world economy, reaching the stage in its industrialization where its competitiveness can no longer rely largely on lower labor costs, but instead must prominently feature product quality and reliability in its value proposition."

To look further into Imaging in Asia, we talked to a number of vendors, OEMs and distributors to get their thoughts on Imaging in Asia, including, of course, the technology, but also the ins and outs of doing business in the East. Our panelists are: François Bertrand, VP Sales & Marketing, Matrox Imaging (Dorval, Quebec, Canada); Jeremy Chang, Managing Director for China Operations, Edmund Optics (Shenzhen, China); Henry Chia, Senior Sales Engineer, Ultravision Pte.(Singapore); Marc Damhaut, Managing Director Euresys Pte. Ltd. (Singapore); Ganesh Devaraj, CEO, Soliton Technologies (Bangalore, India); Bob Grietens, CEO, XenICs (Leuven, Belgium); Frank Grube, Managing Director, Allied Vision Technologies (Stadtroda, Germany); Keith Reuben, President, DALSA Asia-Pacific; and Tjalling van Asbeck, former Business Development Manager of Adimec Asia-Pacific (Singapore).

In what country are you most active?

François Bertrand, Matrox Imaging: We're everywhere, but are in two major areas—Japan and Korea. We have decent size in China, Taiwan, Hong Kong and Singapore. But the bulk is in Japan and Korea. We have multiple distributors.

Keith Reuben, DALSA: The Asian market is the largest in the world. It's a manufacturer to the world. We do about one-third of our business in Asia. Our focus is in China and India, in particular, because of the higher growth-rate potential.

Tjalling van Asbeck, Adimec: In the late 1990s, Adimec was approached by some Japanese companies who were interested in high-quality cameras they could not find in the local market. We began supplying them, and then opened a business office in Tokyo in 2002. Since Southeast Asia is the center of the semiconductor industry, Adimec extended its presence in the region and opened an office in Singapore. We currently are active in Southeast Asia, India, China and Taiwan.

Frank Grube, Allied Vision Technologies: When Allied Vision Technologies started developing and manufacturing its own cameras in 2002, we wanted to quickly set up a worldwide distribution network. As a major manufacturing base and a region of growth of the worldwide economy, Asia offered—and still offers—a very high potential for machine vision applications, making up about one-third of the global machine vision market. We entered the Asian market in 2003 with a distribution contract with a local partner in Taiwan. Since then, our presence in the region has expanded with distribution partners in seven countries (China, India, Japan, Korea, Malaysia, Singapore and Taiwan). Our priority for 2009 is to open our own subsidiary in Asia to offer our customers and local distributors enhanced service and technical support. This is a major step for us as we experience higher growth in that region than elsewhere in the world.

Bob Grietens, XenICs: We have established sinfraRed Pte. in Singapore. The main reasons are to strengthen local customer support in regard to our existing Asian markets, Australia and New Zealand, and, last but not least, to our markets in the Middle East. It's a nice door to Asia; it is accepted by all Asian business partners and it accepts European partners as well. It's a link between the worlds.

We want to get more direct feedback from our customers. We want to be able to effectively customize products that are in demand in these markets. This necessitates local design and engineering. And we will get into local low-cost volume production once we deliver larger volumes of selected products to these markets.

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