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By Mr. Alexis Monlun, Director, GBU Durable Goods, APAC
Globally, the durable goods industry is seeing growth at a $22.3 trillion market value at the beginning of 2023 with an outlook of reaching $26.7 trillion at a growth rate of 5% by 2027. Asia Pacific is the largest region of growth with soaring demands in the industry setting a buoyant atmosphere of a strengthening economy. Yet, many are cautiously elated. The uncertainty shrouding these past years has taught us to not just enjoy current fruits but to be vigilant and constantly look to how we can future proof our businesses.
We can see this in the consumer durable and electronics industry. Positive consumer sentiments with driving double digit growth in the industry has seen a sudden change over the past few months and entering 2023. And while the industry is seeing a strong growth with an expected increase of 10-15% in the mid-term, 2023 might be a demand deep breath, with industry players being alert and centred on trends that will move the industry forward.
This is particularly evidenced by China’s consumer market, as we see analysts raising their forecasts for the country’s GDP growth to 5.2 percent from 4.7 percent with a positive prediction of an above-trend rebound in the second quarter of 2023. Although public affluence is higher than it has ever been, the impact of recent global events is still quite fresh, influencing consumers to be more pragmatic in their consumption behaviour. This shift towards a more rational consumption behaviour is seeing reduced impulse purchases and consumers prioritising quality and value for cost-effective acquisitions. Consumers are also more concerned with the social attributes of their shopping experience, choosing products and channels that allow them to leave behind ethical footprints in their consumption. Such green and sustainable efforts are due in part also to China’s advocation towards carbon peaking and participation in climate change governance on the global stage.
Another key trend driving growth is the demand for premium and feature-led products. Connected. Comfortable. Convenient. Manufacturers are cognisant of this and are concentrating on delivering high value smart products that have ease of use and are energy efficient. Chinese consumers’ openness and acceptance of new technologies is propelling the adoption of innovative technologies like 5G, cloud computing, Artificial Intelligence (AI), big data and the Internet of Things (IoT) with China targeting the digital economy to account for 10% of its gross domestic product by 2025.
In efforts to keep abreast of trends that will grow the industry, manufacturers are also mindful of utilising the latest technologies to circumvent challenges as they strive to push their businesses forward. This is the age of digital transformation, and it is a trend that is not only here to stay but one that will have enormous impact on the industry moving forward. We see this in the automotive industry to electronics to construction, where the IoT is dominating products and processes across sectors. A McKinsey study noted that IoT will be connecting as many as 30 billion objects within the next few years, and this will influence economic growth to exceed $11 trillion by 2025. Wireless communication and ability to share data across platforms has the potential to automate processes, allowing businesses to leverage on digital technology to recalibrate operations and optimise their supply chains to facilitate more superior product delivery.
Industry players are embracing the digital trend, recognising that the digitalisation of business operations like Industry 4.0 can lead to substantial efficiency improvements and provide massive growth opportunities. This has also resulted in resurgent interest in employing AI to fuel the digitalisation of the supply chain to enable businesses to innovate and boost their agilities while reducing environmental impacts. Manufacturers are aware that implementing their visions of the Factory of the Future is the way forward with its ability to provide smarter decision making, optimise operational efficiency, and create a more engaging work environment. The factory of the future furthers sustainable production with its efficient use of energy, materials and its ability to allocate correctly skilled labour to do the job.
As a key partner to many production processes, the adhesive industry has had to also innovate in tandem with factory automation. Product innovations is progressing rapidly, not only via new chemistry but in dispensing equipment and state-of-the-art curing processes. The increasing demands for more complicated products means manufacturers are constantly searching to improve consistency, precision and quality in their processes. Thus, blending automation with adhesives improves operational efficiencies and costs while providing a more sustainable process by reducing waste. This is possible with adhesives’ ability to be scaled to specific operational needs. Automated processes ensure the correct ratios are disseminated thus improving accuracy, speed, and consistency on the assembly line. As the connection between automation and adhesive becomes even more compelling in light of digitalisation, we can see more advanced bonding solutions being created to assuage production challenges.