At present, the new type of coronavirus has entered an “outbreak period”, and people across the country are working together to fight against the virus.

During the special period, the country extended the Spring Festival holiday, and traffic control was implemented in major cities, and medical supplies were in short supply in the short term. How will the epidemic affect China’s economy? What is the impact on manufacturing? Will the automation industry go further down in 2020? Let’s take a look at Rui Industry’s detailed analysis of these issues that everyone is concerned about.

NO.1 Analysis of the overall impact on China’s economy

● The most meaningful one is the impact of SARS in 2003 on China’s economy. The GDP of that year dropped significantly in the second quarter, but the impact was very short-lived in the environment of rapid economic growth when China had just joined the WTO.

(Data source: National Bureau of Statistics)

● The current situation is very different from that in 2003. On the one hand, China’s total GDP and economic strength are not the same as those at the beginning; on the other hand, due to the Sino-US trade war and the electronics industry , The impact of the industrial cycle of the automobile industry is quite severe. Therefore, judging the future economic trend will be more complicated. The author believes that the most critical factor is whether the epidemic can be effectively controlled in a short period of time. According to the current situation of China’s economic development, the strong thrust of 5G, semiconductors, new energy vehicles, etc., and the end of the Sino-US trade war, if the epidemic can be controlled in a short period of time, it is a high probability that China’s economic situation will be better than last year.

NO.2 The impact of the epidemic on the manufacturing industry

● The epidemic also has a great impact on China’s manufacturing industry. Central China, centered in Wuhan, Hubei Province, has always been one of the centers of China’s manufacturing industry. Even if the epidemic is brought under control in the near future, the manufacturing industries in Hubei and Wuhan will not be able to recover in the short term due to the combined impact of personnel isolation, extended holidays, traffic control and other factors. The author summarizes the situation of the industries that are more affected as follows:

(Data source: MIR Databank)

● Nevertheless, the epidemic will have a favorable impact on a few industries, especially those related to medical supplies. From a national perspective, the medical mask and related protective equipment industries are the industries that benefit most directly. Among them, production enterprises in Zhejiang Province, Shandong Province, Jiangsu Province, Henan Province, Hebei Province and Guangdong Province are relatively concentrated. From the perspective of automation, a major change in demand and supply in the short term is just one of the application scenarios of intelligent manufacturing. Therefore, 2020 is the best time to promote digitalization to these enterprises.

National distribution map of medical masks and protective equipment enterprises

(Data source: MIR Databank)

● In addition, anti-coronavirus drugs are also under intensive development. According to the author’s current information, the country’s major medical virus research institutes are cooperating with some well-known pharmaceutical companies to develop related drugs. Once the relevant formulations are developed and tested, they will be mass-produced in a short period of time. The following companies are worthy of recent attention:

(Data source: MIR Databank)

● The pharmaceutical equipment industry is also one of the beneficiary industries. Among all kinds of medical equipment, pharmaceutical packaging equipment has the largest sales volume and the most manufacturers. The following table analyzes the situation of pharmaceutical packaging equipment and related companies:

(Data source: MIR Databank)

● In addition to pharmaceutical-related industries, a new round of hospital construction is also essential. Through this epidemic, fever clinics for medium and large-scale pharmaceuticals have been independently established, and various isolation measures for fever wards will be systematically put on the agenda. This will drive the rapid development of related industries, such as the HV/AC industry.

NO.3 Forecast of the automation market in 2020

● First of all, everyone should understand that before this epidemic, in 2019, affected by the Sino-US trade war, the electronics industry, and the automobile industry cycle, the growth rate of most products in the automation market did not meet expectations or showed negative growth. Some well-known foreign companies such as Siemens and GE have laid off employees. Some companies that have maintained rapid growth in previous years, such as Inovance, have also experienced a sharp drop in growth rate in 2019. Since 2020, we will catch up with such an epidemic again, and the prospects of the automation market are not optimistic. However, the author believes that under such strict and strong measures across the country, it is a high probability event that the epidemic will be quickly controlled, so the impact on the market for the whole year is relatively limited. Moreover, with the large-scale application of 5G in China this year and the strong promotion of electric vehicles, semiconductors and other industries to the Chinese economy, the situation in the automation market will be better than last year.

■ The growth rate forecast of major products is as follows:

(Data source: MIR Databank)

● The downstream application industries of automation are extensive, basically involving all walks of life, and the development of different industries is not the same. The figure below shows the growth of automation products in various industries predicted by MIR in 2020.

■ Equipment manufacturing industry:

Growth rate of automation products in various equipment manufacturing industries

(Data source: MIR Databank)

● As can be seen from the above figure, due to the impact of the overall manufacturing economic downturn, most industries will still experience negative growth in 2020, but the semiconductor industry and the lithium battery industry, which are industries favored by national policies, will still grow rapidly in 2020 , and the pharmaceutical industry, logistics industry, etc., are the beneficiary industries of this epidemic. The electronics industry and LCD industry will grow rapidly in 2020 with the popularization of 5G mobile phones.

■ End User Industry:

Growth rate of automation products by end-user industry

(Data source: MIR Databank)

● See the above chart for the industry growth forecast of end users. Industries such as metallurgy and chemical industry will maintain a good growth trend in 2019, while the growth of the transportation industry will decline sharply due to the impact of the epidemic. In addition, the auto industry fell into a trough in 2019. MIR expects that in 2020, with the pull of new energy vehicles and the conclusion of a new Sino-US trade agreement, the situation of the entire auto industry will improve.