China Elevator and Escalator - Market Size & Growth Forecast 2022-2028

MARKET INSIGHTS

China Elevator and Escalator market by new installations sales were 677.6 thousand units in 2021, which is expected to reach 982.7 thousand units by 2028 growing at a CAGR of 5.45% during the forecast period (2022-2028). The absence of elevators in old residential buildings and the renovation of aging infrastructure offer lucrative growth for China's elevator and escalator market.

KEY HIGHLIGHTS IN THE REPORT

• In 2019, over 82% of all elevators installed in China were less than or equal to ten years old. 
• According to KONE, by 2025, 65% of all elevators installed would be less than ten years old, resulting in increased demand for new installations of elevators.
• According to the World Economic Forum, more than 500 smart cities are built around China. For instance, the Cloud Valley project launched in April 2021 with a 13 million square feet area that uses Wi-Fi-connected devices and sensors to gather data on everything from people's food habits to pollution.
• China remains a net exporter despite increasing domestic demand. China accounted for 63% of the total elevator new installations market in 2020, followed by Europe, Middle East & Africa.
• Major regions in terms of residential development plus new rail lines & subways are three urban mega-clusters with a lot of growth in the satellite cities around the Beijing-Hebei region and the regions around Shanghai and the Pearl River Delta. Most Chinese provinces still have a very low elevator & escalator density ratio, including several relatively wealthy areas with dense populations. Hence, the pacing regions offer scope for overall density growth in the country.

REPORT COVERAGE 

Largest New Installations Market

• The COVID-19 outbreak has slowed the construction development in China, but the sector has shown signs of a slow recovery since May 2020. According to the International Trade Administration, China is the world's largest construction market, with the industry forecasted to grow at an annual average of 5.2% between 2021 and 2029. This will eventually translate into increasing new installations for elevators & escalators.
• China continues to lead the global recovery from the adverse economic effects of COVID-19. The business environment for foreign firms in China is also improving. As a result, foreign multinationals are doubling down on their investments in China, establishing thousands of new businesses, and expanding existing ones.
• While globally, FDI fell by about a fifth last year, China's inward direct investment increased by more than 10% to USD 212 billion. As a result, China will account for 1/4^th of the global FDI in 2020, almost twice its share in 2019.
• Per the World Bank Group's 2020 Doing Business report, China was 31st of 190 nations, a significant increase from its ranking of 46th in 2019.
• The country's continued urbanization and expansion of the commercial sector are anticipated to drive the China elevator and escalator market growth over the next five years. The government is projected to strengthen policies regulating real estate over the next five years. Consequently, property prices are forecast to become more affordable, and land distribution will likely be more balanced.
• Technology adoption, such as smart elevators connected to the internet, is becoming widespread. Elevator suppliers have already begun installing them in smart buildings.
• As high-rise buildings grow, so does the demand for the construction of new elevators and escalators. However, The National Development and Reform Commission of China has issued new guidelines prohibiting the approval of any new buildings taller than 500 meters (1,640 feet) and rigorously limiting buildings taller than 250 meters (820 feet) will impact the elevator and escalator market.

Expanding Transport Infrastructure & Commercial Construction to hike Escalators demand

• In 2019, China approved 26 infrastructure projects with an expected investment of USD 142 billion. Rail projects in Kunming, Chongqing, Zhengzhou, Chengdu, Xian, and the expansion of Xianyang International Airport will help boost the elevator and escalator market.
• China's 31 provinces, municipalities, and autonomous regions announced major infrastructure investment plans over the next 5-7 years, totaling USD 6.6 trillion and including 24,515 projects, with transportation projects accounting for almost 25% of the total.
• Because of rising passenger, freight demand, and urbanization, the government plans to increase infrastructure spending from 61% in 2019 to 70% to 75% by 2035. Over the forecast period, the infrastructure investments in the transportation sector (including intercity rail and high-speed rail, highways, and passenger airports) are expected to increase.
• China's government is focusing on improving infrastructure by investing USD 573 billion and approving various projects, which will also support the increase in the sale of Elevators & escalators equipment.
• The government has already issued 97% of the funds (USD 555.81) and announced several projects, including a 19,000-kilometer railway expansion, with 12,000 kilometers of high-speed rail, a 302,000-kilometer public road expansion with 29 thousand kilometers of expressways, the construction of at least 29 new passenger airports, and a 3,400-kilometer development of urban transit rail operating mileage.
• These projects also include access rail links to coastal ports to at least 70% and airport hubs to at least 80% and increase express delivery access to rural villages to at least 90%.
• Projects such as Liuzhou-Wuzhou Railway Line (USD 4,793 million), Zengcheng-Foshan Expressway (USD 2,376 million), etc., are expected to surge the demand for Elevators & Escalators.

Residential Construction to Boost Demand for Elevators

• Due to rapid urbanization, the demand for housing is bound to increase over the forecast period. Governmental initiatives of collaborating with financial institutions to roll out a rent-to-own program are one of the driving forces in demand for housing in the future.
• The government started a "build, reconstruct, renovate, and revitalize" program to support lower-income class buyers. Government plans to build 300,000 affordable rental homes by 2025, with around 60,000 completed by 2022. The China government allocated USD 23.6 billion for housing development in the 2021 budget plan.

Increased New Installations

• Despite the infrastructure investment push by the Government, China is currently showing low new construction starts and a poor real estate investment outlook, as is witnessed by new residential property prices that declined by 0.08% in September 2021. However, aged buildings will witness new installations resulting due to replacement of old elevators or through Government policies insuring old buildings (with the absence of elevators) to get new installations for the safety of the residents
• China's government rolled out policies in 2017 to give preference to installing elevators in older housing developments and residential buildings. In October 2019, Anju Community in Qinhuangdao focused on renovation as a part of the city's plan to renovate residential areas. People only paid for window renovation costs, while government subsidies covered the rest. In addition, with the subsidies family saved 30% of the price of these windows. More than 330 old residential areas in Qinhuangdao have been renovated, benefiting over 150,000 households.

Maintenance & Modernization

• The high number of old buildings in China entails maintenance & modernization of the equipment to ensure safety. Less focus of OEMs on services, and therefore China Market is dominated by a lot of small independent competitors.
• The long-term growth potential of the market in China is driven by regulations and the upside of conversions ratios of OEMs. 

VENDOR LANDSCAPE

• The key players in China Elevator & Escalator market are KONE, Otis, Hyundai Elevator, TK Elevator, Mitsubishi Electric, Hitachi, Schindler, Fujitec, and CANNY Elevator Co.
• KONE, Otis, Mitsubishi Electric, and Hitachi are market leaders, accounting for nearly ~57% of the overall China elevator and escalator market share in 2021.
• The market is fragmented in China as both the big OEMs and smaller competitors are active.
• In 2020, large OEMs such as Kone, Hitachi, and Schneider's sales accounted for two-thirds of the elevator service market and one-third of the new equipment market.