Imagine your company is successful, has been growing for years and is one of the market leaders
- but only regionally. Now you want to conquer new markets.
Inovance is facing this task.
This article was first published on 07.08.2020 in Maschinenmarket – a German engineering trade magazine
Any company that wants to expand into new markets, must contend with a period where brand recognition is low. Entering an existing, already highly competitive market successfully therefore requires strategic planning.
The example of the Chinese drive technology and automation manufacturer Inovance shows how a company prepares itself.
Inovance? What is this? The question is not surprising, because up to now the manufacturer of drive technology and automation components has been mainly active in its own domestic market - and very successfully so far.However, this does not mean that no Inovance products have been sold in Europe until now: you may not see them, but they are widespread in elevators, for example. Now, however, Inovance wants to establish its name in Europe, and is keen for all potential customers to consider it as an alternative supplier to the big European top dogs.
In the domestic market, sales have grown since the company was founded in 2003 to more than 1 billion dollars in 2019, and Inovance is the third largest supplier of frequency converters in China, behind ABB and Siemens. Now, the company is developing products specifically for the European market.
A strategy for entering a highly competitive market
In the long term, Inovance says it aims to become a key player in the European automation market. "We are aware that Germany is the most innovative and highly competitive market for automation technology in the world, but we are up for the challenge" states Daniel Hochrein, Sales Manager of Inovance Technology Europe GmbH. So, what’s the plan?
So far, the company has taken the following steps:
- In 2018 Power Automation AG in Pleidelsheim was acquired. This gave Inovance a foot in the door with a web presence and a small customer base as well as a European company HQ
- The first European trade fair appearance took place in 2019 at Interlift in Augsburg
- For 2020, a stand at the Automatica in Munich in December is planned, where innovations in the field of motion control and CNC will be presented.
European machine builders often meet Chinese manufacturers with a certain amount of scepticism. Daniel Hochrein knows this from experience - and can therefore prevent it.
"The expectations of customers in Europe are very different from those of Asian customers in many aspects. There is a perception that products will be unsuitable. This does not necessarily have anything to do with quality, but rather with the fact that every market has its own special features that must be taken into consideration. That is why we offer products in Europe that have been developed for this market – meaning we can meet the expectations of our European customers."
Before any Inovance products are included in the European portfolio, they are put through their paces in Germany. According to Daniel Hochrein, the bad reputation of Chinese manufacturers is often based on the fact that sometimes unsuitable products that were designed for the Chinese market are also sold in Europe. At Inovance, this does not happen.
Bridge builder between Germany and China
It is not enough to offer only a generic catalogue of goods, if you want to join the big players in the industry. It is therefore not surprising that Inovance also develops application-specific drives and controls, such as converters for crane applications with integrated load sway damping, drive solutions for electric vehicles or complete systems for injection molding machines and servo pumps.
For this purpose, research and development centres are available in Milan in Italy and in Pleidelsheim in Germany, where specific solutions for the European market
are created. This is also where the foundations for a new generation of servo drives were laid, as well as the safety technology that underpins them. In this respect, being near to the relevant European regulatory authorities and pilot customers is a big benefit. MD500 Amplifiers
Classic German medium-sized businesses can benefit from a Chinese manufacturer that is well adapted to the European market. Often, medium-sized German businesses want to solve automation tasks quickly – and to obtain high-quality products at a low price. This is what companies like Inovance can offer. But there are also advantages in the other direction: many machine builders export to China, but there is an increasing preference for such machines to have domestic components. This poses challenges. "We, as the Chinese market leader with our strong roots in the 'Ländle' [a colloquial reference to the south-western German State of Baden-Württemberg] could be an interesting bridge builder here, helping German machine builders to select suitable products for the Chinese market, but still enjoying the security of a German company," Daniel Hochrein says.