Global study of challenges and opportunities in the BACS market

This article originally appeared as a BSRIA blog post 'Building Controls: Throwing a BRIC in the Works' written by BSRIA's Henry Lawson and published in April 2014.

The BRIC countries; Brazil, Russia, India and China feature prominently in the news on an almost daily basis, for all sorts of reasons. While there have been concerns over a slowdown in growth, China, India and Brazil have all continued to grow through the recession at substantially faster rates than most of the developed world, and whilst the somewhat reduced growth rates may cause alarm in China and India, they would be cause for wild celebration in, say, much of Europe.

China, Brazil, Russia and India all now rank in the World's top 10 economies, and China is already second only to the USA, and is poised to overtake it sometime in the next few years.

This economic development has naturally been associated with a lot of building development, including demand for such systems as HVAC and building automation. Nonetheless, in the BRICS countries the Building Controls markets have tended to lag behind their economic development.

Hence, according to BSRIA research, China's Building Automating market was the world's 5th largest in 2012, while Russia ranked 11th, India 16th and Brazil 18th. What is more, the same research shows that the Chinese, Indian and Brazilian markets were dominated by the “Big 4” global suppliers: Siemens, Johnson Controls, Honeywell and Schneider Electric, even though the individual company shares varied reflecting local market conditions.

One thing that the history of the past 150 years has taught us is that as technologies mature and economies develop, industries tend to migrate to areas which offer the combination of lower costs and growing markets which China, India and Brazil are all in a position to do. This has been seen with the massive movement of manufacturing industry to China and of IT related industries and services to India. This in turn has created some new locally owned corporations with major industrial and financial clout, in a position to compete and invest on a global basis.

The latest update to BSRIA's global study, Challenges and Opportunities in the BACS Market, looks at a number of key trends, including the potential for new challengers to emerge in China, India and Brazil. Unsurprisingly, the process appears to be most advanced in China. Spurred on by the wave of new construction suppliers such as Techcon, SUPCON, Beston and RUNPAQ that have started to make a real impact covering most of the main vertical markets, and including some high profile projects.

In India, where the overall market is significantly smaller, only Larsen and Toubrou, a major Indian-owned global corporation, stands out. There are however a host of Indian companies providing implementation and integration services.

In Brazil a major domestic supplier has yet to emerge, though as in India, there are a range of local companies offering related services.

In Russia, local champions such as Regin and Polar Bear have gained a significant national market share, but have yet to have much impact elsewhere.

Past experience in other industries suggest that these countries may well provide favourable conditions for local champions to emerge and that, as their national BACS markets grow and mature, so this could even provide a springboard to offer products and services on a regional or even a global basis. This is definitely an area that everyone with an interest in building automation, be it as a supplier, customer or service provider, should continue to watch going forward.

Other subjects in the latest update include technical infrastructure support providers, developments in cybersecurity for buildings, and new alliances and mergers.

--BSRIA

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