{"id":1170,"date":"2010-04-21T17:27:29","date_gmt":"2010-04-21T09:27:29","guid":{"rendered":"http:\/\/www.sivecochina.com\/en\/?p=1170"},"modified":"2023-05-05T12:02:29","modified_gmt":"2023-05-05T04:02:29","slug":"foreword-some-thoughts-on-chinas-evolving-maintenance-services-market","status":"publish","type":"post","link":"https:\/\/newsletter.bluebeecloud.com\/en\/foreword\/foreword-some-thoughts-on-chinas-evolving-maintenance-services-market\/","title":{"rendered":"Some thoughts on China\u2019s evolving maintenance services market"},"content":{"rendered":"
Welcome to the second issue of our Maintenance in China newsletter! I am pleased to say that the first edition, sent last month to around 70 subscribers (most of them Siveco customers) and read by another 210 (according to web statistics), received good feedback. Let\u2019s continue and hopefully improve, with more contributions from partners and customers!<\/div>\n

 <\/p>\n

This month, I would like to share some of my observations on the evolution of the Chinese maintenance market. I have been in recent months increasingly involved with maintenance service suppliers, through the Industrial Services forum, which I am co-moderating with my colleague Stefan Sack (CEO of Voith Industrial Services in China) at the European Chamber, as well as, more directly, through consulting engagements, assisting facility owners in their selection of maintenance service suppliers or supporting such companies in the fulfillment of their contract.<\/div>\n

 <\/p>\n

How much has this market changed in the past 12 years (my personal benchmark since I first got involved with maintenance in China 12 years ago)?<\/div>\n

 <\/p>\n

–  Plant owners still have trouble finding qualified services suppliers\u2026 while suppliers also have a hard time signing contract to grow their business with a reasonable profit margin\u2026 Both issues came up at the European Chamber roundtable, but also at the other workgroups we are running for plant owners at the European Chamber in Nanjing and the French Chamber in various cities. In some of the cases we are handling, some service suppliers appear not even interested to bid. In that sense the situation has not changed much over the years, the market is still in its infancy.<\/div>\n

 <\/p>\n

–  Intense price competition, reflecting customers\u2019 focus on reducing direct costs (already very low in China, clearly the wrong focus) or \u2013 perhaps a more \u201cactionable\u201d item for suppliers \u2013 not understanding how suppliers could help reduce losses (on average 10+ times higher than direct maintenance costs). This is compounded by the low-price strategy of local suppliers and the idea common among many MNC suppliers that \u201cbuying a reference\u201d is the right way to enter the Chinese market (with the belief that future customers will buy at a higher price).<\/div>\n

 <\/p>\n

–  Service suppliers are struggling to build up management skills and technical resources, i.e. the exact same problem owners are themselves facing. This obviously doesn’t help them explaining (and demonstrating) how they will deliver higher value-added to potential customers. This \u201cHR\u201d problem is clearly the number one concern. It is of course not specific to maintenance, although by its very nature, our industry is reliant on multi-disciplinary resources, with a good grasp of methodologies and the ability to see the \u201cbig picture\u201d i.e. exactly what China is lacking the most.<\/div>\n

 <\/p>\n

–  The maintenance market is clearly growing, albeit at a modest rate. Even though its size is still very small compared to its potential (I do not have actual figures, but my guess is the Chinese maintenance outsourcing market is smaller than those of countries like France, England or Germany), we have observed an acceleration driven by specific industries (FM or the maintenance of building and utilities; heavy process industries with specialized operators e.g. in pulp & paper, steel, etc.). The financial crisis contributed to this acceleration, visibly helping manufacturers identify maintenance as a key success factor. I have no doubt that public infrastructures, a market segment with its own specificities, will play the major role in future market development.<\/div>\n

 <\/p>\n

What do we do with that? To each its own conclusion\u2026 Many suppliers believe that, starting with low-cost and, inevitably, low-value services, they will go up the value chain as their customers mature. This is the most common strategy I see in this market. Others purposely restrict their focus on some key accounts, usually semi-captive global customers, in the hope of establishing good references as a foundation for future growth. Major investments are required on the part of the supplier, constituting a high barrier of successful entry into this market. In any case, I do not believe the market is \u201cnormalizing\u201d in the sense of becoming \u201clike in the West\u201d \u2013 we are decades away in terms of HR (history, education system etc.). The market will have to take shortcuts and structure itself accordingly.<\/div>\n

 <\/p>\n

In the meantime, we at Siveco carved ourselves a niche, one that doesn\u2019t really exist \u201cin the West\u201d. Not pure consultants (we are too hands-on for that) nor maintenance service suppliers (in the sense we do not provide manpower to execute maintenance work), we are certainly not a pure CMMS supplier either (they all remarkably failed in China). We obviously have almost nothing in common with Siveco Group in France. We help both facility owners and service suppliers in China with what they need most: the hands-on, result-driven, implementation of the \u201cknowledge\u201d or \u201cmethodology\u201d component of the value chain. As one of our clients summarized it recently, we are \u201cmaintenance management assistants\u201d, a role that doesn\u2019t exist as such in Western countries: we fancy ourselves as one of those weird, yet cute, animals that were born and evolved in China, along with the Giant Panda and Haibao!<\/div>\n

 <\/p>\n

I will have to stop here; our marketing manager says I am getting carried away\u2026 As you can see, right or wrong, I am as passionate as ever for the Chinese maintenance market: we at Siveco China are blessed with a great job, a beautiful adventure, with a sense of positively contributing to the development of this society. I hope you will enjoy this month\u2019s edition, with a series of more down-to-earth articles on the setup of a good maintenance workshop<\/a>, the experience of pump manufacturer Ensival-Moret<\/a>, the practical implementation of condition monitoring<\/a>, meter readings in Coswin <\/a>and the usual \u201clatest news<\/a>\u201d section.<\/div>\n

 <\/p>\n

Bruno Lhopiteau
\nGeneral Manager
\nSiveco China<\/div>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Welcome to the second issue of our Maintenance in China newsletter! I am pleased to say that the first edition, sent last month to around 70 subscribers (most of them Siveco customers) and read by another 210 (according to web statistics), received good feedback. Let\u2019s continue and hopefully improve, with more contributions from partners and customers!<\/div>\n

 <\/p>\n

This month, I would like to share some of my observations on the evolution of the Chinese maintenance market. I have been in recent months increasingly involved with maintenance service suppliers, through the Industrial Services forum, which I am co-moderating with my colleague Stefan Sack (CEO of Voith Industrial Services in China) at the European Chamber, as well as, more directly, through consulting engagements, assisting facility owners in their selection of maintenance service suppliers or supporting such companies in the fulfillment of their contract.<\/div>\n

 <\/p>\n

How much has this market changed in the past 12 years (my personal benchmark since I first got involved with maintenance in China 12 years ago)?<\/div>\n

 <\/p>\n

–  Plant owners still have trouble finding qualified services suppliers\u2026 while suppliers also have a hard time signing contract to grow their business with a reasonable profit margin\u2026 Both issues came up at the European Chamber roundtable, but also at the other workgroups we are running for plant owners at the European Chamber in Nanjing and the French Chamber in various cities. In some of the cases we are handling, some service suppliers appear not even interested to bid. In that sense the situation has not changed much over the years, the market is still in its infancy.<\/div>\n

 <\/p>\n

–  Intense price competition, reflecting customers\u2019 focus on reducing direct costs (already very low in China, clearly the wrong focus) or \u2013 perhaps a more \u201cactionable\u201d item for suppliers \u2013 not understanding how suppliers could help reduce losses (on average 10+ times higher than direct maintenance costs). This is compounded by the low-price strategy of local suppliers and the idea common among many MNC suppliers that \u201cbuying a reference\u201d is the right way to enter the Chinese market (with the belief that future customers will buy at a higher price).<\/div>\n

 <\/p>\n

–  Service suppliers are struggling to build up management skills and technical resources, i.e. the exact same problem owners are themselves facing. This obviously doesn’t help them explaining (and demonstrating) how they will deliver higher value-added to potential customers. This \u201cHR\u201d problem is clearly the number one concern. It is of course not specific to maintenance, although by its very nature, our industry is reliant on multi-disciplinary resources, with a good grasp of methodologies and the ability to see the \u201cbig picture\u201d i.e. exactly what China is lacking the most.<\/div>\n

 <\/p>\n

–  The maintenance market is clearly growing, albeit at a modest rate. Even though its size is still very small compared to its potential (I do not have actual figures, but my guess is the Chinese maintenance outsourcing market is smaller than those of countries like France, England or Germany), we have observed an acceleration driven by specific industries (FM or the maintenance of building and utilities; heavy process industries with specialized operators e.g. in pulp & paper, steel, etc.). The financial crisis contributed to this acceleration, visibly helping manufacturers identify maintenance as a key success factor. I have no doubt that public infrastructures, a market segment with its own specificities, will play the major role in future market development.<\/div>\n

 <\/p>\n

What do we do with that? To each its own conclusion\u2026 Many suppliers believe that, starting with low-cost and, inevitably, low-value services, they will go up the value chain as their customers mature. This is the most common strategy I see in this market. Others purposely restrict their focus on some key accounts, usually semi-captive global customers, in the hope of establishing good references as a foundation for future growth. Major investments are required on the part of the supplier, constituting a high barrier of successful entry into this market. In any case, I do not believe the market is \u201cnormalizing\u201d in the sense of becoming \u201clike in the West\u201d \u2013 we are decades away in terms of HR (history, education system etc.). The market will have to take shortcuts and structure itself accordingly.<\/div>\n

 <\/p>\n

In the meantime, we at Siveco carved ourselves a niche, one that doesn\u2019t really exist \u201cin the West\u201d. Not pure consultants (we are too hands-on for that) nor maintenance service suppliers (in the sense we do not provide manpower to execute maintenance work), we are certainly not a pure CMMS supplier either (they all remarkably failed in China). We obviously have almost nothing in common with Siveco Group in France. We help both facility owners and service suppliers in China with what they need most: the hands-on, result-driven, implementation of the \u201cknowledge\u201d or \u201cmethodology\u201d component of the value chain. As one of our clients summarized it recently, we are \u201cmaintenance management assistants\u201d, a role that doesn\u2019t exist as such in Western countries: we fancy ourselves as one of those weird, yet cute, animals that were born and evolved in China, along with the Giant Panda and Haibao!<\/div>\n

 <\/p>\n

I will have to stop here; our marketing manager says I am getting carried away\u2026 As you can see, right or wrong, I am as passionate as ever for the Chinese maintenance market: we at Siveco China are blessed with a great job, a beautiful adventure, with a sense of positively contributing to the development of this society. I hope you will enjoy this month\u2019s edition, with a series of more down-to-earth articles on the setup of a good maintenance workshop<\/a>, the experience of pump manufacturer Ensival-Moret<\/a>, the practical implementation of condition monitoring<\/a>, meter readings in Coswin <\/a>and the usual \u201clatest news<\/a>\u201d section.<\/div>\n

 <\/p>\n

Bruno Lhopiteau
\nGeneral Manager
\nSiveco China<\/div>\n

 <\/p>\n","protected":false},"author":1,"featured_media":9983,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[19,20,21],"_links":{"self":[{"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/posts\/1170"}],"collection":[{"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/comments?post=1170"}],"version-history":[{"count":5,"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/posts\/1170\/revisions"}],"predecessor-version":[{"id":10629,"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/posts\/1170\/revisions\/10629"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/media\/9983"}],"wp:attachment":[{"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/media?parent=1170"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/categories?post=1170"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsletter.bluebeecloud.com\/en\/wp-json\/wp\/v2\/tags?post=1170"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}