Otis Elevator riding the future of China’s growth to the top
Otis Elevator, one of the world’s biggest elevator and escalator manufacturers by revenue, is planning to deploy more resources, including new investment to build technical training and engineering centers in China, to seize new opportunities from the country’s growing elevator maintenance service markets.
Many of these growth points come from the country’s increasing demand for elevators driven by urbanization, as well as its many already-operational units that require quality after-sales service from all tier cities.
Philippe Delpech, Otis’s global president, believes that implementing a digitalization strategy will empower the company to enhance maintenance service efficiency and reliability. Its field mechanics will have better tools, while customers will have more immediate access to its team and to their equipment.
“As China continues to move up the value chain amid the ‘new normal’ with slower growth, investment in aftersales services, green-energy and advanced products surely will benefit the economy long term,” said Delpech, who has been working in the high-end manufacturing industry for more than 30 years.
In addition to new elevator and escalator installations, Delpech said China has urgent needs for quality service support, because high-quality service can effectively prevent callbacks and shutdowns, and is able to respond quickly when a problem arises.
Statistics released by Beijing-based Chinese Academy of Science and Technology for Development show that there are more than 4 million elevators and escalators installed
Philippe Delpech, Otis’s global president
and operating today in China, giving a huge impetus to the service business, which has enjoyed double-digit growth in China, compared with only single-digit growth for installations of new units.
Delpech said major infrastructure projects including airports, high-speed railway and metro networks, and residential building developments, especially in second and lower-tier cities offer significant growth potential in China’s urbanization progress for the company, in particular under the current global business setting.
More than half of China’s population now lives in cities, compared to 18 percent in the 1970s. In the next decade, more than 300 million people in China are expected to move into cities, the equivalent of almost the entire population of the United States, according to a report from Tianjin-based Nankai University released in July.
Urbanization has driven demand for elevators and escalators to move people safely and efficiently, especially in urban communities and transportation hubs. The construction of high-rise buildings and major infrastructure projects also spark innovation based on the market’s need for new elevator and escalator solutions.
Otis is serving rail and metro transport as well as airports across China. Its presence is likely to grow as more infrastructure projects are built. For example, the company will provide 98 units of GeN2 elevators to the new terminal and associated facilities for the Guangzhou Baiyun International Airport extension.
The GeN2 elevator is a product that uses 75 percent less energy and has patented flat polyurethane belts instead of conventional steel ropes, which reduces wear and tear and makes for a smoother ride.
As a major subsidiary of the US-based industrial giant United Technologies, Otis has thus far installed more than 2 million elevators and escalators in more than 200 countries and regions. The company said it will make new investment plans in its key markets including China, the United States, Brazil, France and Spain next year.
“Otis has been part of China’s urban growth and economic development for three decades. With the country’s rising middle class and higher customer expectations for quality, safety and energy-saving products, we will accelerate product and technology development in the country by increasing our investment in service, innovation and engineering here,” said Delpech.
Delpech said Otis is also growing exports to markets such as Southeast Asia and Europe from its plants in China, to explore more opportunities from the Belt and Road Initiative.
The infrastructure, service and trade network proposed by China in 2013 envisions a Silk Road Economic Belt and a 21st Century Maritime Silk Road, covering about 4.4 billion people in more than 60 countries and regions in Asia, Europe and Africa.
Supported by more than 16,000 local employees and seven research and development centers, Otis has manufacturing facilities in Tianjin, Shanghai, Guangzhou, Hangzhou, Dalian and Chongqing, manufacturing products under multiple brands, namely Otis, Otis Electric and Express/Sigma.
“Because more than 60 percent of the global market for new installations is in China, the after-sales service market certainly will clock a high growth rate, as the number of aging and overused elevators increases,” said Shi Yong, vicepresident of Beijing-based China Machinery Industry Information Research Institute.
Shi said the government needs to further strengthen regulations and oversight of the elevator maintenance market, as it is important for long-term passenger safety.
“Unlike the elevator and escalator market in developed markets such as the US, Germany and Japan, where service accounts for more than two-thirds of total revenue, the Chinese service market is still in its infancy due to low awareness of the magnitude of quality service in elevator and escalator safety,” said Shi.
As China continues to move up the value chain amid the ‘new normal’ ... green-energy and advanced products surely will benefit the economy long term.” 2m elevators and escalators installed by Otis in more than 200 countries and regions 16,000 employees in China