1. Industry Overview and Development Background
Pumps are common equipment in the machinery industry and have a wide range of applications. Large and medium-sized pumps are mainly used in industries and water conservancy, while small and micro-sized pumps are mainly applied in domestic and small-scale agricultural irrigation and other civilian fields. In the mid-19th century, developed countries in Europe and America had already built world-class pump factories. China's pump industry started in the early 20th century, and with the development of industrialization, the manufacturing technology of pumps has been continuously improving.
In the 1960s, the design of pumps in China was mainly undertaken by the General Machinery Research Institute of the Ministry of Machinery Industry. Apart from domestic water pumps, industrial pumps were mainly used in fields such as military industry, thermal power stations, petrochemicals, mining and water conservancy. With the implementation of reform and opening up, the reform of state-owned enterprises and the development of industries, China's pump industry entered a new stage of development. Private enterprises became an important part of the production of civilian pumps. In the 1990s, a large number of small and medium-sized pump enterprises emerged in Wenling, Zhejiang Province, becoming the "pump capital" of China. There were nearly 400 pump product manufacturing enterprises, with sales amounting to approximately 1 billion yuan.
Meanwhile, renowned foreign enterprises have successively established factories or branches in China, occupying a considerable portion of the high-end market of industrial pumps. The domestic industrial pump market still largely relies on imported products. The design and manufacturing of domestic pump products have entered a stage of introducing, digesting, absorbing and cooperative development. In 1995, the National Pump Standardization Technical Committee was officially established, and a series of design and manufacturing standards for civilian pumps and industrial pumps were published. This played a promoting role in standardizing product design and manufacturing, approaching international standards, and increasing exports. Since the "11th Five-Year Plan", the country has implemented several major plans for the equipment manufacturing industry, raising the corresponding requirements for the supporting capabilities of general equipment. This has driven an increase and upgrade in the demand for pump equipment, and has shown a strong industrial synergy effect.
The "Special Planning for Major Technological Equipment R&D and Major Industrial Technology Development during the '11th Five-Year Plan Period" and the "Industrial Transformation and Upgrading Plan (2011-2015)" have made specific plans for the research and investment in major equipment and supporting equipment in fields such as energy, materials, and mechanical manufacturing. They also support small and medium-sized enterprises to follow the path of "specialization, refinement, uniqueness, and innovation" for development, further clarifying the development direction of the pump industry. Under the background of Germany's "Industry 4.0" and the United States' "Industrial Internet" strategy, relying on big data and cloud computing technologies, the pump industry has taken the lead among developed countries in initiating the transformation of equipment integration and intelligent production and operation.
Since the implementation of strategic and planning initiatives such as "Made in China 2025" and "Made in China 2025 - Energy Equipment Implementation Plan", the pump industry has been developing healthily around the four goals of "innovation capability, quality and efficiency, integration of informatization and industrialization, and green development". It has made significant investments in the development of equipment in areas such as coal power generation, storage and transportation, hydropower, and marine fields. It has also made considerable progress in the research and development of key pump and valve equipment such as low-temperature pumps, seawater pumps, low-pressure submersible pumps, nuclear industrial pumps, main feedwater pump sets, and special equipment such as permanent magnet motors.
With the implementation of planning documents such as "Industrial Green Development Plan (2016-2020)", "Guidelines for the Promotion and Application of the First Set (Set) of Major Technological Equipment (2019 Edition)", and "Mechanical Industry '13th Five-Year' Development Outline and Special Plans", key equipment with high dependence on imports, such as high-efficiency energy-saving pump sets, nuclear main pumps, low-temperature submersible pumps, and mixed transportation booster pumps, have become the key investment areas in the industry.
During this period, foreign enterprises or joint venture units have continuously strengthened their investment or technological cooperation in China, demonstrating strong competitiveness in the mid-to-high-end market. They have also implemented strong protection measures for core technology ownership. However, with the promotion of planning, the investment demands from downstream industries such as oil, steel, natural gas, and power have driven growth, and the previous technological accumulation has led to a significant improvement in the independent innovation capabilities of domestic pump manufacturing enterprises. These enterprises have successfully won the domestic and international markets with high-quality products and have emerged a number of "specialized, refined, distinctive, and innovative" enterprises. They are capable of meeting the needs of most fields in terms of design, production, and manufacturing and have achieved significant breakthroughs. They have also made breakthroughs in special application fields such as nuclear power pumps, large-scale water conservancy projects like South-to-North Water Diversion, pumps for deep cold environments, integrated pump with rare earth permanent magnet technology motor, and micro pumps in fields such as aerospace and medicine. Some products have achieved import substitution.
Currently, the global pump market is developing steadily, with a large number of pump enterprises. Major manufacturers in Europe, the United States, and Japan still hold core technologies and are leading in the design of special pumps, research on new materials, advanced production processes, and intelligent manufacturing. After years of development, China's pump industry has approximately 6,000 production enterprises across the country, among which there are over 1,200 large-scale enterprises. The market size has been steadily increasing, the total export volume has been continuously rising, and the gap in technical level with developed countries is gradually narrowing.
2. Current State of Industry Development
(1) Current Situation of the Global Pump Industry Development
According to the statistics released by Zion Market Research and P&S Market Research, the global water pump market size was 40.4 billion US dollars in 2014, and it increased to 44.9 billion US dollars in 2017. From 2018 to 2024, the global water pump market continued to grow steadily, with a growth rate of 5.29%. By 2024, the total size of the global water pump market will reach 66.51 billion US dollars.
There are approximately 10,000 pump manufacturing enterprises worldwide, with over 5,000 different types of products. However, the supply of pumps shows a high degree of concentration. The global pump manufacturing enterprises are mainly concentrated in three major regions: the Americas represented by the United States, Europe represented by Germany and the United Kingdom, and Asia represented by China and Japan. Due to the earlier start of the pump industry in foreign countries, international well-known enterprises, after years of development, have leveraged their advantages in terms of funds, technology, and brand to master core technologies and occupy the majority of the global pump market. According to McIlvaine's "Pump Industry Market Information", the sales of the top 10 pump product manufacturers worldwide account for approximately 50% of the total world pump market.
(2) Current Situation of the Domestic Pump Industry Development
The pump industry in our country started relatively late compared to the developed countries in Europe and America. However, with the development of the national economy in recent years, the research and development, design, and production of the pump industry have developed rapidly. In recent years, the number and amount of pump products purchased by foreign sellers from China have steadily increased, and domestic products have gained the favor of foreign sellers due to their high cost-effectiveness.
The market size of the pump industry is large, and the output of pumps is on the rise.
China has become the world's largest production base for water pumps. According to the statistics of the China General Machinery Industry Association, the output of the pump industry in China increased from 85.02 million units in 2012 to 216.38 million units in 2021, with a compound annual growth rate of 10.94% during this period. Even in 2020, when affected by the pandemic, it still increased by 2.64% compared to 2019. By 2020, there were over 6,000 pump manufacturing enterprises across the country, among which 1,255 were规模以上 enterprises (with annual sales exceeding 20 million yuan), forming a considerable production scale and possessing relatively complete technologies and production systems. From 2015 to 2020, the number of规模以上 enterprises in the pump industry generally showed a decreasing trend, and the overall market concentration of the domestic pump industry was relatively low.
② Compared with developed countries, there is a significant technological gap. The core technologies of high-tech and high-value-added products are still controlled by foreign leading enterprises.
With the increase in the domestic production rate of major engineering pump products during the "13th Five-Year Plan" period, it has basically met the needs of national economic construction. Although Chinese pump industry enterprises have achieved significant technological breakthroughs in the national economic construction, in terms of the current overall situation of the industry, there is still a gap compared with industrial developed countries. Domestic pump manufacturing enterprises mostly undertake the low-end processing links of products, and the breadth and depth of autonomy still need to be improved. In particular, the enterprises' independent development capabilities are weak, and the core technologies of high-tech and high value-added products urgently needed by national economic development have not yet been mastered.
For instance, the nuclear-grade pump products in the complete sets of nuclear power plant equipment that have already been manufactured domestically, as well as the high-pressure boiler feed pump core components in the complete sets of power plants with a capacity of over one million kilowatts and super-critical, super-ultra-critical thermal power plants; the key core technologies such as high-pressure low-flow pumps, corrosion-resistant chemical process pumps, corrosion-resistant and wear-resistant centrifugal pumps for coal liquefaction, and volumetric pumps required in large-scale petrochemical complete sets of technical equipment, mostly still need to rely on imports. This is the direction that domestic pump industry enterprises need to focus on and strive to solve.
③ The concentration level in the pump industry is generally low, but it has been continuously increasing in recent years.
The pump industry has always been a market worth hundreds of billions of yuan. In 2020, the main business income of规模以上 enterprises in the pump industry was 178.104 billion yuan, which was lower than the levels of the same periods in 2017 and 2018, but it increased by 5.59% compared with the same period in 2019. Over the past three years, the industry's scale has remained generally stable. The overall concentration of the pump industry in China is relatively low, but since 2015, the industry's concentration has been continuously improving. The proportion of the main business income of the top ten enterprises in the industry accounted for the total industry main business income in the current year, which increased from 7.96% in 2015 to 2020.
The profit levels of large-scale enterprises have declined in recent years, but the overall profit margin has increased.
In terms of the profit situation of large-scale enterprises, since 2015, the industry's profit level has declined, but the profit margin has generally increased. From 2015 to 2020, the total industry profit has generally decreased. In 2017, the total industry profit reached 17.259 billion yuan, which was the highest level since 2015. In 2018, the profit total decreased, but it rebounded to 14.021 billion yuan in 2019 and 14.038 billion yuan in 2020. The proportion of industry profit in total operating income has generally shown an upward trend since 2015 and reached the highest level of 8.31% in 2019, but it dropped to 7.88% in 2020. Overall, the industry's profit level has remained stable in recent years.
(3) Industry-specific business models
The pump industry in our country mainly adopts three business models: OBM, ODM, and OEM. In recent years, domestic pump manufacturers have made significant progress in product research and development capabilities and production technology levels. The international competitiveness of their products has rapidly increased. The products of leading domestic enterprises have approached the advanced levels of similar products worldwide. The business model has gradually shifted from original equipment manufacturers (OEM) to original design manufacturers (ODM), and some enterprises with strong product competitiveness have become brand-owning manufacturers (OBM).
3. Main Trends in Industry Development
Thanks to the development of computer technology, the Internet and new business models, pump technology has made significant progress in recent years. Its application fields have been deeply expanded, and its business model has achieved certain development. Among them, foreign leading enterprises focus on building new innovative models and integrating the latest computer technology with the Internet in the industry. Domestic pump enterprises mainly carry out technological innovation in the fields of import substitution, energy conservation and environmental protection, and industrial upgrading.
(1) The research and development of core technologies for import substitution is the main direction of innovation in the domestic industry.
For a long time, globally renowned enterprises have maintained strong protection for core pump manufacturing technologies in specialized fields such as nuclear industry, cryogenic environments, offshore platforms, and complex medium (environment) transportation. With the development of industrial technology and manufacturing, the research and development and import substitution of related core technologies have become an inevitable requirement for the development of China's pump industry and the main innovation direction for domestic enterprises. The country has issued multiple policy plans for independent innovation in important equipment manufacturing, such as the "Made in China 2025" plan, which states that "by 2025, 70% of core basic components and key basic materials will achieve independent guarantee, 80 types of advanced technologies will be promoted and applied, some reaching international leading levels, and a relatively complete industrial technology foundation service system will be established, gradually forming an industrial innovation development pattern where the whole machine leads and the foundation supports interact in a coordinated manner." The "Three-Year Action Plan for Enhancing Core Competitiveness of Manufacturing Industry (2018-2020)" believes that "developing high-end ships and marine engineering equipment is an important guarantee for marine transportation, resource development, and national defense construction."
(2) Enhancing product performance and promoting energy conservation and environmental protection are the key focuses of pump equipment technology development.
Due to the characteristics of continuous production, stability, and large workload in sectors such as petrochemicals, steel, power, municipal water supply and marine platforms, pump equipment, as one of the important production equipment, has high requirements for single-machine power, unit efficiency and reliability. Therefore, developing large-power and highly reliable large pump equipment is a practical need for important equipment in the national pillar industries. The "Guidelines for Industrial Structure Adjustment (2019 Edition)" and the "Guidelines for Promoting the Application of the First Set (Set) of Major Technological Equipment (2019 Edition)" and other documents have made important plans for the development of large pump equipment. On the other hand, energy conservation and cost reduction, which comply with industrial policies, reduce operating costs and enhance economic benefits, have become the current key development direction of pump technology. In the "National Industrial Energy Conservation Technology Equipment Recommendation Catalogue" released in recent years, the energy-saving technologies of industrial pumps and the technical parameters of multiple energy-saving model products are introduced.
(3) In terms of industrial integration, the combination of pumps with industries such as computers and the Internet has led to continuous improvement in the informatization and intelligence level of pump products.
The new generation of information technologies, represented by artificial intelligence, the Internet of Things and big data, are widely and deeply penetrating into all fields of the economy and society, and are intersecting and integrating with emerging technologies such as bioengineering, new energy and new materials, leading to significant changes characterized by green and intelligence. The "Mechanical Industry Development Outline for the '14th Five-Year Plan'" released by the China Machinery Industry Federation in April 2021 pointed out that by 2025, the rate of networking of digital production equipment will continue to increase, the intelligent manufacturing model will be continuously enriched and improved, and a number of advanced enterprises, demonstration platforms and typical projects in the mechanical industry providing services will be selected and cultivated. In the field of emergency rescue, the "Action Plan for the Cultivation and Development of Emergency Industry (2017-2019)" issued by the Ministry of Industry and Information Technology requires promoting the high-end, intelligent, standardized, series-based and complete development of emergency products. Fully utilize information technologies such as big data and "Internet +", leverage the role of the market mechanism, and establish various forms of information sharing mechanisms for emergency products and services.
