Developing Nations Drive Growth in Asia's DCS Market

By ARC Advisory Grroup

Dec 21, 2012

The major growth in distributed control system (DCS) revenues continues to come from developing nations. Growth in countries such as India and China is conspicuous because of sluggish growth rates in other regions of the world.  While developed nations are just holding their own in DCS investments, in developing countries, several recent trends are becoming increasingly important for success in the DCS business.

"The trends that drive the DCS business in Asia vastly differ from those in developed nations, said G. Ganapathiraman, country manager for ARC Advisory Group. "Due to the economic growth in China and India along with the other BRIC countries, investments in infrastructure, oil and gas production, and in refining are rising, lead to increased demand for DCS."

The total distributed control systems market in Asia will exceed $6,300 million in 2016, ARC's latest study "Distributed Control Systems for Asia Market Research Study." ARC expects the top five growth industries in Asia to be oil & gas, mining & metals, cement & glass, water & wastewater, and electric power, in that order, with associated increases in DCS revenues.

The growth of these industries is expected to be above average. Demand for oil will continue to increase in the long term despite short-term demand shortfalls. Oil exploration and production is taking the industry into increasingly remote and hostile regions, increasing demand for remote operations and subsea production.

The power industry is also growing at a healthy rate over the forecast period. Developing economies, such as India and China, continue to invest in new power capacities and world-class power generation facilities. While pent up demand for mining & metals and cement & glass investments caused sizeable increases from 2010 to 2011, the growth is expected to return to a more moderate level over the forecast period.

In 2011, ARC saw a much larger increase in revenue over 2010 than previously anticipated.  The order book started improving at the end of 2009 and was quite strong throughout 2010 and the first half of 2011. Because the DCS business is primarily project based with an average nine month lag time from order book to recognized revenue, this strong order book translated into an excellent revenue year for 2011 with Asia's revenue up over 4.5% from 2010.

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