China
Major Market andÂ
Production Powerhouse
June 2024
China is a complex, competitive and crowded market for diesel generator sets. Â
It's also a major production powerhouse for the global market.
Over the last 15 years, China has been the world's fastest growing regional market for diesel generator sets, growing just slightly faster than North America over that timeframe.Â
It's a market that has evolved considerably.
In the early 1990s, diesel generator sets operating continuously were a common sight in China: at that time, the economy was growing so rapidly that new factories were often built long before being connected to the grid, relying completely on diesel generator sets for electricity.Â
Today, it's different. Across most of the electricity network, stability and reliability are usually at Western levels. China is predominantly a low-hours standby market with most diesel generator sets operating well below 500 hours a year and in normal circumstances, many units are barely used at all. Â
There were some well-publicized outages in 2021, caused by a mismatch between demand and supply, and magnified as the economy rebounded after a weaker 2020. In mid 2022, further widespread outages were caused by an unusually long heatwave, lasting around two months, impacting China’s hydro power plants, which account for almost 20% of the grid supply. These created a surge in the market for diesel generator sets, both to buy and to rent.Â
But taken over the longer term, the recent outages represent more of a blip than a trend and the China market at its core remains predominantly a low-hours standby market.
China Opportunity for Diesel Generator SetsÂ
> 7.5 kVA, (US$ Billions)
![](Insights_China/211ceb196d20fc552f8f892f06a217a5.jpg)
Source: Genstat from Parkinson Associates. Values based on OEM ex-works. Includes price inflation.
![](Insights_China/058b80332d6c0cb487d93e136d995c79.jpg)
Grid supply issues in 2021 and heatwaves in 2022 drove strong growth in sales of diesel generator sets.Â
Around 8% of businesses in China own or have access to a generator set.
The typical lifetime of a generator set is 15 - 20 years.
Market Drivers
![](Insights_China/8bfc9795c71437d1809c2574206aa5ea.jpg)
A Modern Power Grid
China is the world’s largest producer of electricity, accounting for around 30% of global production with a huge and modern power grid that has been built rapidly over the last 30 years.Â
Although there have been some recent outages, at its heart, the power grid in China is relatively modern and secure. The needs of customers buying diesel generator sets closely resemble those in North America or Europe.Â
![](Insights_China/ea0298d0c08a9beae982c5991ff09c50.jpg)
Economic Growth
For most of the last 10 - 20 years, the market for diesel generator sets has closely followed general economic growth. Construction has been a major customer sector. Â
To a great extent, this is still true, but as in North America and Europe, critical applications have grown in importance and are a significant growth driver in their own right.
![](Insights_China/87b15b5c9481ce6e924c703454cc1cae.jpg)
Critical Applications
Over the next 5 - 10 years, critical power applications, which dominate higher power ratings, are likely to be the biggest growth drivers. Â
Although the data center sector in China is not as super-charged as the United States, it is still very significant and growing, the largest in the Asia Pacific region and hosting around 500 data centers.Â
Critical applications will continue to be a major growth driver.
![](Insights_China/c5588cd2de17119ba5503de9f02256a6.jpg)
Wind farm on Huitengxile Grassland, Inner Mongolia, China. Around 30% of China's electricity needs are supplied by renewable power. Â
Competition is strong and very fragmented at lower power bands.
Players in the Market for Diesel Generator Sets
The diesel generator set market in China is large and highly fragmented with at least 150 local producers in the market. Â
Below ~ 1,500 kVA
At lower power ratings, the market is competitive, very crowded and dominated by local OEMs, often using components with local brands and selling directly from the factory via internet sales channels. Â
Particularly below 1,000 kVA, established global OEMs have a very small presence and export most of the units that they produce. Â
Above ~ 1,500 kVA
Premium global players have a strong presence at higher power ratings, particularly above around 2,000 kVA, and account for around two thirds of the market. At these higher ratings, critical applications, particularly data centers, are key sectors. Most diesel generator sets at these higher ratings (around 90%) are produced in China.
With many of the global OEMs facing capacity constraints in the next 2 - 3 years, expect to see more Chinese OEMs develop stronger positions in this space. Â
China Opportunity by OEM Type 7.5 - 1,500 kVA
![](Insights_China/bbd3489787801df8784c90504ac727a3.jpg)
China Opportunity by OEM Type Above 1,500 kVA
![](Insights_China/b6eb516bffdbc10f42d1ae777b85145f.jpg)
Source:Â Genstat+ from Parkinson Associates
Expect to see more Chinese OEMs taking up positions in the most attractive market sectors.
China: The World's Production Powerhouse
In the scheme of things, the costs involved in assembling a standard diesel generator set are relatively low as a percentage of total product costs. Â
Most costs are accounted for by components, particularly engines and alternators. Â
Over the last 10 - 20 years as major component suppliers have relocated to China, it has made increasing commercial sense for manufacturers of diesel generator sets to follow. All of the world's major players now have a manufacturing footprint in the country. Â
Today exports of diesel generating sets from China make up around 20% of the entire global market above 7.5 kVA and account for:
Around 50% of the market in Africa, Middle East and Asia Pacific.
Around 60% in CIS and Central Asia.
Around 40% in Latin America.
Around 20% in Europe.
Most exports are by global players with manufacturing facilities in China but they also include a growing number of Chinese OEMs often working with established "Western" component brands produced in China. Often these are exported as part of Chinese investment in overseas regions for infrastructure or construction.
Only North America and India, where there is a very strong tradition and preference for local manufacture, have remained immune to the advance of diesel generator sets made in China.Â
Chinese Diesel Generator Set ExportsÂ
> 7.5 kVA, (US$ Billions)
![](Insights_China/90889b8ea444135c19bdc95cb8006593.jpg)
Chinese Exports as a % of Each Regional Market
> 7.5 kVA, based on value
![](Insights_China/d68ed1ba58158a7759e1c89a96aaee8f.jpg)
Source:Â Genstat+ from Parkinson Associates
Insights on Opportunity for Producers of Diesel Generator Sets
To find out more about this study, contact us at at enquiries@parkinsonassociates.com
Parkinson Associates publish an opportunity database, Genstat, available quarterly and annually, for diesel generator sets, split by 12 power bands for every country. Click here to find out more.
To find out more about our research in the diesel generator set industry, click here Â
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