AM Investment Strategies
AMS Spring 2023

China’s Belt and 3D Printed Road: The Global 3D Printing Market Split in Two

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A friend of mine told me recently, “Chinese 3D printing service bureaus only have Chinese 3D printers.” Another echoed this sentiment, saying, “Companies here want to buy from here.” Yet another stated, “All businesses use only Chinese machines.” A business contact told me, “Buying Chinese is the right thing to do” in the eyes of the government, as well as in the eyes of many people.

The Chinese government is stimulating local growth in high-tech sectors. 3D printing is one of the technologies specifically alluded to in China’s five-year plans. The country considers advanced manufacturing technology prowess to be key to its future.

3D printing is also a very important technology for aerospace engines, missiles, and hypersonics. Each of these developments could give China superiority in the air or make it impossible for the U.S. and its allies to attack the country. A hypersonic missile would circumvent all existing U.S. countermeasures, while making cutting edge turbo-mechanics and rocket engines will additionally be strategic for the country.

At the same time, aero engine technology is one of the few that the country lacks. Doggedly chasing a future in 3D printing and stimulating this future is, therefore, a real priority for the nation. Additive manufacturing (AM) is also an enabling technology that lightweights missiles, could make electric cars go further, and could reduce the weight of industrial machinery while increasing their efficiency. In this manner, our technology supports Chinese leadership in many other areas. In specific segments such as batteries and wind turbines, AM also has a big role to play.

Farsoon’s HT403P installed at the BASF AMTC in Shanghai. Image courtesy: BASF Forward AM

AM is, therefore, strategic across Chinese energy and defense policy, and is recognized to be so by the government. And once the government has set its mind on pushing or achieving something, the ducks start to fall into a row. Local authorities then clamor for business, funding, and attention around the national policy goals. Institutions, regions, and provinces all vie to become the next locus for the next revolution. The government then doles out significant cash at many levels to bring about a gradual leadership in in that area. Typically, companies will scramble for the bottom of the market, but then through volume growth and increasing ability, approach overseas products.

What is new now is that China’s domestic market is so considerable that many companies still want to benchmark their performance with overseas firms but don’t see a need to go overseas. Startups are “China-only” focused and companies don’t even bother in many cases to try to export. In another development, firms such as Hikvision and DJI show that Chinese hardware firms can best and dismiss western competitors quite quickly, aspiring to become market dominant quickly. DJI leads in drones because it used a highly competitive local manufacturing base to make well-engineered products that were marketed well and beat competitors not only on price but also on the overall proposition.

What we’ve seen over the last several years is that China’s strategic independence has meant more to it under Xi Jinping. The U.S.’s execution of ZTE and its battle against Huawei show us all how one man’s national champion is the other’s security threat. Such action as banning Chinese firms by Western governments may very well protect the  infrastructure of telecoms from prying eyes, but it will serve as a warning to Chinese policymakers.

In China, Doves can no longer make the “one happy global village” argument of continued integration and national competition on a level playing field. Hawks, meanwhile, can see these moves as strengthening a development path featuring intertwined nationalism and commercial success. Yes, in fact, we should have national champions but this time they need to be able to function completely separate from foreign commercial partners and markets.

The lesson for Chinese policymakers can only be “we must do more to be truly independent.” This means that the firm will have to not only see to making the latest chips but also the fabs that produce them. It is not enough for the company to be an assembler of all the things. It must manufacture all of the key components. With China assembling all of the core constituent technologies of the future, the 3D printing activity in the country has been frenetic.

Many fab labs were opened. Many companies were started. And there was a wave of creative destruction. Now, we see that China leads the low-cost desktop 3D printing segment with companies such as Anet and Creality. The nation also has a 3D printing offering at all the major price points in every conceivable technology. Regionally, companies like Shanghai Kings have seen considerable success.

Whereas initially only Tiertime really tried to go after higher-end markets in Europe and the States, we can now see other firms pursue this path, as well. Farsoon has a European office and is expanding with an increasingly credible line of powder bed fusion systems. BLT (also called X’ian Bright Laser) is expanding overseas with metal systems, as is EPlus. EPlus is probably not very well known but has been around for over two decades. Farsoon was founded by Xu Xiaoshu and has been active for decades as well. Allen Guo’s Tiertime has been at it for 20 years also. Newer companies such as INTAMSYS are also making their presence known by expanding overseas. Indeed that firm has quickly grown into one of, if not the largest firm in high-temperature extrusion.

Initially, there was a lot of straight up IP theft and copying by Chinese firms. Indeed, a friend of mine was successfully able to install a powder bed fusion system in Chinese because the menu structure was copied wholesale from a German firm. But with a cohort of firms that have been underway for two decades, this is not some fly-by-night event. We’re talking about a long-term concerted effort underway since the 2000s to make Chinese firms dominant in AM market globally.

What we’re seeing right now is that many Chinese firms are starting to gain parity with overseas firms. In terms of functionality and performance, they are peers or near-peers in many cases across several technologies. Some significant polishing will have to be done on user interfaces, software, content, marketing, and design but they’re closer than you think. Meanwhile, application development is something in which many of these firms are weak. Likewise qualifying parts and actually helping manufacture them is something in which they lag behind a bit, as well.

China’s service bureau market has been a riotous thing for decades. Generally, we can say that quality has been less of a focus. So, here, the domestic market will not be able to keep up as quickly as we edge towards manufacturing. Fewer, Chinese startups are inventing technologies. There has been less of a grasp of materials as a part of the total equation. Whereas, now buying polymer powder bed fusion systems from China is happening, stereolithography firms are growing, and the country leads in all but industrial FDM, the country has seen less market exposure in metals. The rigors of the market and true scrutiny awaits these firms.

But, overall, we can see a remarkable success unfolding in Chinese industrial policy. This success will accelerate in the years to come. I personally don’t believe that these firms can truly touch the cutting edge of technology’s reach at the moment, but they will come closer. Meanwhile, they will have a decided advantage over all non-Chinese players. By being strategic for their country, they will receive a lot of support. They will have their home market almost to themselves while being able to play overseas.

As we can see the market will then essentially be cut into two. On the one hand, we have a Chinese market that is almost exclusively served by Chinese materials, software, and equipment. Separate from that, we will have a global market. And only very few firms will be able to leverage local dominance and use it to export some systems to the other market, and these companies will in the future increasingly be Chinese.

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