USA vs China trade war impacting Digital Plant software firms
Trump’s war fixates around large trade surpluses, a lack of access for American companies to domestic markets and intellectual property protection.
This is undoubtedly impacting the US tech giants in China, but how is it impacting the process industries and the remaining Digital Plant market?
Emerging technology under threat
Emerging technology markets face the biggest threat, such as autonomous vehicles, particularly where Chinese companies start from an equal position and benefit from favourable domestic industrial policies.
China is forcing US companies to share some of their intellectual property, labelled as a “forced technology transfer”, in exchange for gaining access to the world’s largest manufacturing market.
Closures & redundancies
US manufacturing and hardware providers see these tariffs as additional taxes which directly impact smaller start-ups as they lack collateral to absorb these duties, resulting in forced closures and redundancies.
As a result, many USA businesses are scaling back their Chinese operations whilst being forced into making cost cutting decisions. Notably, this is being delivered via hiring freezes and redundancies to streamline operations.
The trade war is therefore negatively impacting the hardware and manufacturing environments. Established software providers operating within the process industries are thriving.
The likes of Aspen Tech, OSIsoft and AVEVA are growing their operations whereas smaller local copycat businesses are experiencing challenges as customers, such as Sinopec and PetroChina, lean towards established, authentic brands.
However, it is worth noting the likes of Yokogawa and Schneider Electric who will struggle to continue expansion within the automation markets. There are many other national brands with excellent reputations with established customer bases to compete against.
In the next 5 years, we see an importance for the need to create partnerships with the local businesses to mitigate the risks posed by this trade war and the economic climate in China.
FMC Smart Industry
FMC continue to work on a global scale, providing leading technical and sales talent for software providers and consultancies.
Interested in talking about how the China and USA trade war could affect your recruitment strategy? Contact me at firstname.lastname@example.org or call me on +44 (0) 1275 372 230 for more information.