Analytik Jena has started production of its first analytical apparatus to be made entirely in China representing a new venture for the company as it aims to advance into a market that has experienced unprecedented growth in the analytical instrument sector.
The analytical instrument provider has made its venture in to the market that has more than doubled in seven years, from $680m (€540m) in 1998 to $1.6bn in 2005. Despite these gains, China accounts for less than 5 per cent of the worldwide analytical market, estimated at $32.7bn
The German -based firm has been developing a TOC analytical system for industrial routine applications, which is to be produced at the group's Chinese subsidiary in Shanghai.
The technology allows UVTOC analyses of pollution primarily in drinking or industrial water with organic contamination. The technology will come in handy for China's growing problem that is suffering from declining water resources.
Analytik Jena has started producing the first TOC instruments at the start of June. Some 20 instruments and these are expected to be sold within the year.
Distribution of the instrument systems produced in China is initially limited to the local market, after which the entire Asian market is to be supplied from China.
The company said that looking towards the medium term the intention was to market the products worldwide.
The company's own Germany production sites will remain unaffected by this decision.
"By outsourcing parts of our production to Asia, we can directly participate in a market that enjoys above-average growth and exploit China's advantageous cost structures," said Klaus Berka, CEO of >Analytik Jena AG .
"At the same time, this represents an important operational activity for us, as we can strongly counteract the price pressure exerted by the dollar."
Overseas investment by western companies has injected a much-needed boost for analytical instrument companies in China.
So much so that The Analytical Apparatus Academy of China estimates that there are now 144 factories making analytical instruments, and 20 Chinese companies with individual sales of more than 10m RMB, not considering the foreign companies.
The Chinese Apparatus and Instrument Association puts the number of companies at 117, with a total turnover of 2.3bn RMB.
Meanwhile, this growth has allowed Analytik Jena to forecast annual market sales of over 100 instruments in the Asian region.
The short to medium term objective of Analytik Jena is to achieve an average market share of 10 per cent.
Analytik Jena added that it is obtain the mechanical assemblies and casings to produce the systems in China mainly from the local market. Obtaining components will continue to be imported in advance from Germany.