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BRICS: Opportunity or Threat?

BRICS–States–Boom Challenges the International Valves and Fittings Industry

| Editor: Dominik Stephan

The BRICS countries are an important driving force for economic growth
The BRICS countries are an important driving force for economic growth (Picture: depositphotos.com / Marco Rodrigues)

Some valve makers fear emerging markets, others place their bets on them. Competition from companies from threshold countries is growing rapidly, yet at the same time demand for machinery and plants from industrialized Western countries is high in order to maintain the upswing. One thing is certain—success has pampered emerging markets in the past years, even when other states were slightly weakened.

Basic data shows the great potential emerging markets have to offer. Forty per cent of the world population lives in such countries, yet they account for only 20 per cent of the worldwide gross domestic product. Still the share of global GDP is on the rise—a dormant, yet tremendous market. In the end, this creates an opportunity in uncertain times for makers and exporters of industrial valves.

BRICS States Developing Fast

A mere glance at BP’s World Energy review demonstrates the rapid development of the so-called BRICS states—Brazil, Russia, India, China and South Africa. These countries account for the major part of worldwide energy demand, which rose by 2.5 per cent last year. In China, India and Brazil, energy demand grew by 5.3 per cent year over year. China itself accounted for 71 per cent of growth for increased consumption. All this growth requires energy.

Worldwide production also demonstrates the current developments. The contribution of emerging markets grew from 15 to 25 per cent in the period from 1995 to 2010. For further growth, these states need support. The industrialized first world nations can help still the hunger for prosperity. This proves to be an excellent opportunity, seeing European countries and the USA are stagnating or are heading towards a recession. Many industrial valve manu-facturers have already set their sights on Asia.

China’s Mega-Market for Nuclear Energy

Mankenberg has long discovered China as a market for its products. Last year, the Asian superpower accounted for five per cent of the company’s turnover. Amongst other things, the company exported special valves for oil production to Chinese companies. Companies making valves for power plants simply cannot ignore China. The country is viewed as the single greatest market for nuclear technology. Current plans see it constructing around 60 nuclear power plants within the next twelve years, all of which naturally have to be fitted with valves and pumps. “New power plants are

being built at a speed that we can hardly imagine over here in Europe,” confirms CEO, Bomafa, Friedrich Appelberg.

Bridging Relationships Through Networking

Companies take advantage of the current scenario by setting up subsidiaries in the Asian region. A strong example is KSB Valves setting up subsidiaries in the Asia Pacific and growing 29 percent—the strongest growth within the entire group. “The strongest percentage growth was achieved by the group’s subsidiaries in the regions of Asia, Pacific and America,” the company declares.

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