**Beijing**: Mitsubishi Electric plans to create complete supply chains in China to enhance its market presence and adapt to US trade restrictions. This strategy aims to improve competitiveness while ensuring that production remains anchored in Japan, aligning with trends among European firms in the region.
Mitsubishi Electric, a prominent player in industrial automation and a manufacturer of programmable logic controllers (PLCs) and computerized numerical control (CNC) systems, is set to enhance its presence in China by establishing complete supply chains within the country. This strategic move, aimed at bolstering competitiveness in local markets and mitigating potential impacts from US trade restrictions, signals a significant shift in the company’s operational strategy.
The evolution of Mitsubishi Electric’s local partnerships and procurement is expected to commence in the upcoming year, initially focusing on sourcing lower-end equipment. More advanced products will be integrated into the supply chain gradually, ensuring that production, employment, and technological leadership in Japan remain intact. As articulated by Kuniaki Masuda, the company’s Chief Financial Officer, in an interview with Nikkei, “we will be able to meet demand by sourcing only from within China.”
This decision aligns with a broader trend observed among European companies such as ABB, Volkswagen, and Bosch, which are also developing comprehensive operations in China. These organisations have recognised the pivotal importance of local supply chains in supporting digital transformation and enhancing efficiency within the industrial automation sector.
Mitsubishi Electric is not a newcomer to the Chinese market; it has established a robust presence with its headquarters located in Beijing and sales offices in major cities. Additionally, the company boasts factories that manufacture various products, including industrial automation equipment, elevators, air conditioners, and power semiconductor devices. Its collaboration with Tsinghua University focuses on advancements in energy systems and environmental technologies.
The company’s commitment to localised supply chains is bolstered by strategic partnerships, such as the collaboration formed in 2018 with the state-owned Instrumentation Technology and Economy Institute (ITEI). This partnership supports China’s ambitious “Made in China 2025” initiative, which aims to transform the nation into a global manufacturing powerhouse. The Smart Manufacturing Comprehensive Test Platform established by Mitsubishi Electric is intended to facilitate the standardisation of intelligent manufacturing in a cooperative effort with ITEI, concentrating on incorporating cutting-edge technologies such as edge computing and artificial intelligence.
Mitsubishi Electric faces competition from various global and local players in China’s expansive industrial automation market. Its rivals include Japanese companies like Fanuc and Yaskawa Electric, as well as European rivals such as ABB and Rockwell Automation. All these competitors maintain local partnerships and manufacture part of their products in China, responding to the dynamic market landscape that demands efficiency and rapid adaptation to technological advancements.
The significance of the Chinese market cannot be overstated; it is not only the largest for industrial robots globally but is also expected to account for a substantial share of global growth in demand for machine tools and automation equipment. The International Federation of Robotics has indicated that China constituted 51 per cent of global installations of industrial robots and 41 per cent of the total stock in 2023.
Mitsubishi Electric’s market presence in China is notable, holding an estimated 5-10 per cent of the industrial robot sector and 10-15 per cent of the CNC systems market. These figures illustrate the competitive landscape and the urgency for companies to establish a foothold in China, where industrial automation equipment demands continue to rise rapidly.
The financial ramifications of Mitsubishi Electric’s operations in China are significant, accounting for 22 per cent of factory automation revenues in the fiscal year ending March 2024, alongside 15 per cent of total sales and 27 per cent of operating profit. Given the robust growth forecasts and competitive environment, the establishment of local supply chains is seen as a critical step for Mitsubishi Electric in maintaining and potentially expanding its market share in one of the world’s most vital economies for industrial automation.
Source: Noah Wire Services
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