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Exciting Business Opportunities in Emerging Markets

15 Oct

The global demand for welding equipment is huge. A recent estimate, from ESAB, put revenues for cutting and welding supplies and equipment at $15.5 billion per year. Approximately half of that demand comes from North America and Europe, but the rest is from emerging markets such as China and Asia.  Western demand is plateauing, as the need for infrastructure investment is less pressing, and the troubled economy means that many companies are downscaling their operations.

In contrast, China and Asia’s construction markets are booming, and there are some good opportunities for enterprising businesses to capitalize on the increased demand in these emerging markets.

The increase in demand comes as countries in Asia and other parts of the world look to improve their infrastructure and upgrade their oil, gas, and energy facilities. Metal consumption in Asia (and in particular China) accounts for approximately 70 percent of the weld metal consumed each year, and the Asian construction industry is growing rapidly. These new companies need welding equipment – not just tig and mig welders, but welding positioners, plasma cutters, and consumables too.

Many of the existing companies in the Asian market are working with very basic equipment, and are finding that they need more sophisticated and powerful gear. To them, plasma cutters, welding positioners, cored wires, and submerged arc welding fluxes are the pinnacle of welding technology, and such equipment is in high demand.

Exporting Second Hand Equipment

Few companies have the financial resources or the space to keep old equipment sitting around doing nothing. Today, companies in Europe and America see old equipment as an asset waiting to be liquidated. It should be easy to find plasma cutters for sale, and even “obsolete” welding consumables being sold off in bulk. A few of these old pieces of welding equipment may be bought up by smaller local shops, but in general it’s hard for companies to get rid of equipment because all the other companies in the region are doing the same thing.

This old equipment, assuming it is serviceable, is exactly what emerging Asian markets need. To them, it’s affordable, reliable, and functional.

If exporting equipment is something that interests you, then you’ll need to plan carefully. The equipment itself, even second hand, can be expensive, and it will need carefully inspected before resale. You’ll also need to take into account shipping prices – which can be hefty for bulky and heavy equipment. That’s not to say that there’s no opportunity for profit, just that each purchase will need to be carefully considered.

In the early days, if you don’t have buyers lined up, selling consumables may be a good way to get started. Consumables are, by their very nature, always in demand, and they tend to be easier to handle, although margins may be lower. It’s up to you to use your knowledge of the industry to select the products that will sell best in developing markets, and carve out your own profitable niche in each country.

This article was written by Amy Fowler on behalf of Westermans; suppliers of Welding Equipment. Having completed a business studies A level in school and then nearly choosing to complete a degree in the subject, business and industry have always interested Amy.

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