In 2020, China's GDP increased 2.3%, the slowest pace in more than four decades. However, during the COVID-19 pandemic, China's PLM market showed strong resilience with a growth rate of 9.4%.
Fast recovery from COVID-19
According to a report from the UN Department of Economic and Social Affairs (DESA), the world economy in 2020 shrunk by 4.3%, over three times more than during the global financial crisis of 2009. The Chinese economy grew 2.3% in 2020, which was the slowest pace in more than four decades. Even so, it was the only major growing economy in the world in 2020.
China’s PLM market also showed strong resilience to overall economic forces. The overall PLM market size in China for 2020 was $2.9 billion, an increase of 9.4% over 2019, according to the China PLM Market Report released by CIMdata.
Figure 1 - China’s PLM market growth trend for 2016-2020
“Despite shocks caused by the COVID-19 pandemic, China’s PLM market revived in the second half of 2020. Many manufacturing enterprises started increasing their PLM investments to drive digital transformation,” said Dr. Pei Huang, e-works CEO.
e-works, CIMdata’s long-term strategic partner in China and the best-known smart manufacturing portal and research organization headquartered in Wuhan, rapidly transformed to online training during the COVID-19 pandemic and hosted 181 webinars with over 1.7 million attendees in 2020. In the second half of 2020, it resumed in-person forums and conferences and held 11 large events, including a grand international forum with 1,500 participants in Wuhan. In September 2021, over 1,200 participants attended the same forum again in Wuhan, despite several people contracting the COVID-19 Delta virus in Wuhan in August 2021. “On the whole, China's PLM economy is back to normal,” said Dr. Huang.
Figure 2 - Wuhan International Smart Manufacturing Forum hosted by e-works on September 9-10, 2020, in Wuhan, China, with over 1,500 participants.
The growing chance for PLM solution providers
The COVID-19 pandemic caused Chinese manufacturers to accelerate their innovation and product development. Many manufacturers increased their investment in 3D design and simulation. Some large enterprises have shown great interest in cutting-edge technologies such as BIM, MBD, MBSE, Digital Twin, and generative design. Some pioneers started to apply digital thread.
The increasing demand in the market has brought new business opportunities to mainstream PLM solution providers such as Siemens Digital Industries Software, Dassault Systèmes, PTC, Autodesk, Hexagon, AVEVA, Ansys, Altair, ESI, Synopsys, and Cadence. Local industrial software companies received more funding and investment, especially in 3D CAD/CAE/EDA. Additionally, digital twin enablement has come under the spotlight, and local VR/AR providers have emerged.
The capital markets start to show a preference for PLM solution providers
In March 2021, ZWSOFT was listed on the SSE STAR Market, becoming the first listed Chinese company in engineering design. Its current market value exceeds $4 billion. Hoteam Software launched CrownCAD, a native cloud-based CAD system, in September 2021, after completing several rounds of financing. Recently, the company received over $30 million in a new round of funding. New Dimension Systems closed a Series A round of financing for over $10 million. Proceeds will advance its core expertise in 3D CAD modeling, complex surface modeling, CAE pre-and post-processing, Web3D lightweight model, large-scale software architecture, and industrial cloud platform. Transemic Technology, a partner of Siemens, raised more than $10 million in a Series C round of funding. X-EPIC, a leading local EDA software and system provider, raised close to 200 million CNY in Series Pre-A and Pre-A+ financing to accelerate the product development of eDA2.0.
Earlier this year, E-lead, a local PLM software and service provider, completed a Series A round of financing. They plan to use the funds mainly for the development and market expansion of its self-developed platform, eRDP. Finally, Empyrean Technology, a local EDA solution provider, also listed on the SSE STAR Market.
Innovative domestic software and solutions were launched
The percentage of service revenue also increased in 2020 in the China PLM market. Local service partners of the global mainstream PLM leaders are developing rapidly with the expansion of the PLM ecosystem.
Domestic PLM solution providers began to develop unique and integrated solutions to increase their competitive advantage. PERA Global has launched its simulation software, PERASIM, and cloud platform. In addition, Glaway Software released an independent industrial software named REACH; Yond-e launched an independent industrial software—Dex2.0; Hoteam Software released a SaaS-based 3D CAD software called CrownCAD; and Tianyu Software developed a 3D browser.
Several other domestic PLM solution providers, including CAXA, KMsoft, Gstarsoft, Global Crown Technology, SIMP, E-lead, JWI Software, INTESIM, RAINFE, Corilead, Litosim, Orient, Lan-you Technology, and Gant Software, have also launched PLM platforms and associated solutions.
New opportunities for the leading global solution providers in China
Global PLM solution providers are still leading the Chinese market. Siemens, Dassault Systèmes, Autodesk, Ansys, PTC, Synopsys, and Cadence all show strong performance and make up the majority of China's PLM market. Using the MCAD Multi-Discipline segment as an example, Siemens, Dassault Systèmes, and PTC account for more than 90% of this market in China. Ansys and Synopsys are respectively the leader in their field of Simulation & Analysis and EDA in China.
From a business model perspective, led by the international mainstream providers, subscriptions are gaining wider acceptance in China. Subscriptions to Creo and AutoCAD are increasing rapidly.
“With the continuous promotion of Smart Manufacturing and industrial software applications, the Chinese PLM market will continue to provide a promising prospect and enormous opportunities for international PLM solution providers. Given the strong resilience that the market has shown during the COVID-19 pandemic, we expect China’s PLM market to be back on track again in 2021 with double-digit growth,” said Dr. Huang.
[1] e-works is CIMdata’s long-term strategic partner in China. For more information visit http://www.eworksglobal.com/