Depth | How will the domestic low-voltage distribution industry change?

Polaris transmission and distribution network news:Preface: This article only observes from the perspective of corporate strategic trends and the current situation of the epidemic

(source:Low voltage power distributionR&D Group ID: LVPDRD Author: LPR2019)

01. Strategy trends of some companies

A. Siemens

On January 24, 2020, Siemens acquired C&S India. This acquisition will supplement and expand Siemens' product range, and will also export to the highly competitive international market based on its growth strategy. C&S will play a role in expanding territory for Siemens. As early as March 31, 2010, C&S established Xienshi (Nantong) Electrical Appliances Co., Ltd. in Nantong, mainly producing low-voltage distribution products. Will it supplement the Siemens product series? How to integrate brands in the future, how to combine products, and which level of market competition will it participate in? Worth paying attention

On April 1, 2020, Siemens Intelligent Infrastructure Group's medium and low voltage product division (LP) and Control Electrical Product Division (CP) were officially merged into the Electrical Product Division (EP), seeking to become the world's fastest growing electrical product supplier and can create higher profits.

B. Schneider

On May 1, 2018, Schneider acquired India's L&T, one of its purposes was to use L&T as an export base to radiate to Southeast Asia, the Middle East and Africa. It is worth mentioning that L&T once established a subsidiary in the Chinese market to operate low-voltage distribution business. On September 13, 2005, it was established to Lascent Boluo (Wuxi) Electrical Co., Ltd., and on December 10, 2012, it was sold to Wuxi Weihua Group, which is now Wuxi Weihua Electrical Manufacturing Co., Ltd. After 7 years of hard work, L&T still has certain basic customers in China. Will it return to the domestic market and how to position it? Also worth paying attention to

In October 2019, Tianjin Wangao, a subsidiary of SchneiderElectrical equipmentCo., Ltd. entered the low-voltage distribution industry and released a batch of low-voltage distribution products. This is Schneider's intentional layout after the domestic market segmentation, and supplemented by Delixi Electric's powerful distribution channel, Schneider has completed all-round coverage of the domestic market.

C. ABB

On September 25, 2017, ABB announced a US$2.6 billion acquisition of GE's industrial systems business, GE's global electrification solutions business, and integrates it into ABB's electrification products division. On January 16, 2020, just two years and four months later, ABB sold its original GE industrial system's power distribution business in China to its partner Shanghai Radio and Television Electric, and still participated in market competition with ABB's own brand low-voltage distribution products in the Chinese market.

On March 27, 2020, ABB announced that it would provide digital solutions for its customers for free. Mainly including ABB Ability Power Distribution Control System (EDCS), ABB Ability Backup Management for Electrical Systems – DataCare, ABB Commercial Building Automation Solutions, and exempts all new subscription fees for 12 months of hospital iUPSGuard software and all new subscriptions or renewals for ABB Ability’s SaaS. This measure will add more possibilities to ABB digital promotion.

D. Changshu switch

On July 21, 2019, the strategic cooperation signing ceremony of Changshu Switch and Germany's Jinmier was held at the Zhuomeya Hotel in Nanjing, and the two sides reached a number of agreements on cooperation. Through this cooperation, Changshu Switch and German Kimmiller will work together to occupy the high ground in the industry, and will also bring more possibilities to the development of the industry and market. Kim Miller has entered the field of low-voltage distribution for this cooperation, and Changkai has also benefited from this cooperation.

On January 15, 2020, Changkai's 6-series ACB with independent intellectual property rights, MCCB was released. It is an attempt to develop and design by Changkai's independent research and development, and a concentrated reflection of technical accumulation. This series of products will undertake the important task of Changkai's high-end market expansion.

E. Liangxin Electrical

On September 30, 2019, Liangxin Electric Co., Ltd. jointly established Shenzhen Baoteng Power Technology Venture Capital Enterprise, mainly investing in the fields of smart grids, ubiquitous power Internet of Things, energy storage, energy conservation, new energy, comprehensive energy management, power grid big data edge computing cloud platform, etc.

On November 8, 2019, Liangxin Electric newly registered and established Shanghai Liangyun Technology Co., Ltd. in Pudong New Area, focusing on computer software technology and information technology. The first computer software copyright registration certificate obtained by Liangxin Electric was developed by the company, and it has independent intellectual property rights for the core controller algorithm.

In November 2019, Liangxin released a batch of 6-series low-voltage distribution products. The low-voltage distribution research and development team believes that these are likely to be products used in the distribution market. In addition, on September 28, 2019, Liangxin Electric Haiyan Intelligent Production Base started construction, which will greatly solve the production bottleneck of Liangxin Electric.

According to the monitoring of patent dynamics by the low-voltage distribution research and development team, Liangxin Electric is very likely to be developing a new series of low-voltage distribution products, and the goal is to expand the high-end market.

F. Shanghai People's Electrical Appliance Factory

A century-old state-owned enterprise, affiliated to Shanghai Electric Power Transmission and Distribution Group Co., Ltd., whose shareholders are Shanghai Electric Group and State Grid Shanghai Power Company. Shanghai People have always been the high-end image of domestic independent brands. ACB and MCCB are national key new products, Shanghai key new products, Shanghai independent innovative products, and key engineering projects are preferred brands.

On October 31, 2019, Shanghai People's Electric Appliances established Shanghai Changduan Electric Appliances Co., Ltd.; on April 2, 2020, Shanghai People's Electric Appliances established Jiangsu Shenhong Electric Appliances Co., Ltd.

G.Zhengtai Electrical Appliances

The dealer network of Zhengtai Electric Appliances is very complete, with 16 offices, more than 510 core dealers and more than 4,000 distribution outlets in China. In recent years, we have continued to make efforts in the direct sales field. The direct sales business focuses on six major industries: power, machinery, communications, industry, construction engineering and new energy, and continues to explore high-quality and large customers in the industry.

On March 16, 2020, Zhengtai Electric invested 255 million yuan and controlled Shanghai Ailinke Intelligent Technology Co., Ltd. to supplement the technology, product and solution capabilities of Zhengtai Electric in terms of power quality, intelligent power distribution and marine shore power, improve the level of the power electronics technology platform, and enhance the competitiveness of the entire electrical equipment industry chain.

On April 8, 2020, a wholly-owned subsidiary "Zhengtai Automation Co., Ltd." was invested 200 million yuan in Shanghai, and will focus on system integration and other solution businesses; increasing holdings in Zhongkong Information will help accelerate the company's automation, intelligence and digital transformation, which is in line with the company's long-term development strategy.

H. Other corporate news

Other companies have begun to lower prices to strive for competitive advantages. On March 6, 2020, in the cover announcement of the first issue of 2020 of a magazine, the DW45 of the 2000A shell frame is only 2,500 yuan. The low-voltage distribution R&D team checked the company's customer list, which is no less than 20, including listed companies, well-known companies in the industry, and other small and medium-sized enterprises.

On April 6, 2020, a well-known domestic company launched an economical ACB. According to the official price list, some specifications have dropped by more than 30%. For detailed price data, you can check third-party software such as Tiangong Matrix or EP Elf.

02. Macroeconomics and Policy

From the perspective of scale of COVID-19, it is no longer possible to rely on administrative means to control the epidemic, and a global pandemic is a foregone conclusion. The impact of the new crown epidemic on the global economy is more serious than that of previous financial crises. The global GDP recession in 2020 is inevitable. Detailed data can be found online, stock market circuit breakers in various countries, asset plunges, shutdowns in multiple industries, etc. With the huge economic stimulus measures taken by overseas governments and effectively alleviating the liquidity crisis, the situation gradually began to change, but a recession is still inevitable.

It has a relatively large impact on domestic companies that account for a relatively large proportion of overseas businesses, domestic companies that rely on overseas core components, and domestic companies that rely on international logistics.

Relatively speaking, our country has controlled the epidemic in a timely manner and institutional advantages, which has greater resilience and relatively better economic conditions. In addition to the expected first-quarter data, the government launched a combined blow, gradually putting the economy on track. The central bank's reverse repurchase, targeted reserve requirement ratio cuts, and lowering the excess reserve interest rate have strongly supported the resumption of work and production of the real economy. In order to combat possible monetary deflation, the high-level meeting pointed out that the fiscal deficit ratio should be appropriately increased, the interest rate of the loan market will decline, etc.

After the epidemic, infrastructure investment has received special attention because it takes some time to recover from exports and consumption. On April 1, senior leaders said that they should seize the opportunities given by industrial digitalization and digital industrialization, accelerate the construction of new infrastructure such as 5G networks and data centers, vigorously promote scientific and technological innovation, and strive to strengthen new growth points and form new development momentum.

On March 5, 2020, new infrastructure was launched on CCTV for the first time, and the seven major areas it included were also more well-known: 5G base station construction, ultra-high voltage, intercity high-speed railways and urban rail transit, new energy vehicle charging piles, big data centers, artificial intelligence, and industrial Internet.

Of course, for low-voltage distribution companies, the launch of new infrastructure and trillions of investments are undoubtedly very attractive. But new infrastructure is different from old infrastructure. Is this cake so easy to share? The low-voltage distribution R&D team believes that due to different demand and different positioning, most companies may not be able to share too many benefits of new infrastructure, and their share will gradually concentrate on oligopolies.

03. Observation and summary

In 2019, the global economy was already in a downward channel, and this epidemic has only accelerated its outbreak. Therefore, under the real macroeconomic environment and driven by different strategies of each company, the low-voltage distribution R&D team believes that the industry structure of the mid-to-high-end market will not change much, the share of a few companies will be eroded and declined, while other companies will grow slightly. The mid- and low-end markets are facing a wave of reshuffle. Most small and medium-sized enterprises may be eliminated, the share of a few enterprises will grow rapidly, and the oligopolis effect may be appropriately reduced.