Defense, data centres, infrastructure to add $1.1t demand

BCG says old-growth engines are fading.

China’s cooling market for foreign suppliers is reshaping the $5.8t industrial-technology industry, as defense, data centres, and infrastructure replace China's automotive and parts of green tech as the main growth engines, according to Boston Consulting Group.

BCG said global industrial technology is still projected to expand at a 6% compound annual rate through 2030, but China is becoming a more difficult market for European and US manufacturers as domestic suppliers gain scale, policy support, and cost advantages.

China accounted for one-quarter of global industrial-tech sales from 2015 to 2020, but BCG said export opportunities for foreign suppliers are diminishing as the country becomes more self-sufficient in machinery and equipment.

Chinese manufacturers are also competing more aggressively in Western markets and, in some cases, have caught up with or surpassed Western rivals in technological know-how.

Against that backdrop, defense, data centres, and infrastructure are emerging as the industry’s main new value pools. BCG said those three sectors are projected to generate $1.1t in additional demand by 2030, accounting for about 37% of industry growth.

The automotive sector is expected to become a smaller source of demand, with its share of industry demand falling to 4% through 2030 from 9% in 2010 to 2015, partly because electric vehicles require fewer mechanical parts.

The green economy will also contribute less to supplier growth than in the previous five years, as hydrogen expectations are cut back.

BCG said industrial-tech companies will need to rethink business models, alliances, and market priorities to adapt to the shift, warning that the winners of the past will not necessarily be the winners in the next phase of growth.