Market Status And Trend Analysis Of Third Party Testing Industry In China In 2019

- Mar 21, 2019-

Basic Survey Analysis of Third Party Testing Industry: Definition, Important Role and Development Course

Third-party inspection, also known as fair inspection, refers to the commodity inspection activities carried out by a third party (such as a full-time supervision and inspection agency) outside the interests of sale and purchase, in accordance with relevant laws, standards or contracts, in a fair and authoritative non-Party status.

Because the third-party testing institutions play several important roles in the testing market, they can not be replaced by other testing institutions, which include three aspects: 1) strong professionalism; 2) more impartial and objective as a third party independent of the parties; 3) to make up for the shortcomings of public resources testing, while the third-party testing institutions with lower costs and higher services, make it more important. It is widely welcomed by the market.

The third-party detection in our country is obviously later than that in developed countries in Europe and America. At the beginning of the fifteenth century, in order to ensure the quality of products, European and American countries had the involvement of third-party inspection agencies. The involvement of mature third-party inspection agencies in commodity inspection was very common in the middle of the nineteenth century, and has developed into a conscious commercial behavior. The promulgation of the Import and Export Commodity Inspection Law of the People's Republic of China in 1989 marks the formal start of third-party inspection in China. At this stage, the inspection and inspection in China is mainly conducted by state-owned organizations. Since 2002, state-owned institutions have made further concessions to third-party testing institutions, and wholly foreign-owned testing institutions have also been allowed to enter the Chinese market, which has fundamentally changed the size of the main body of the Chinese testing market. In 2014, China's inspection and testing industry, represented by third-party testing institutions, began to achieve rapid development.

In recent years, with the promotion of market demand, China's third-party testing institutions have developed well. The number of third-party testing institutions has increased rapidly. By 2018, the number of third-party testing institutions in China will be about 33,000.

The industrial chain covers a wide range of areas and needs a wide range of downstream areas.

The upstream of the third-party detection industry mainly involves the corresponding hardware and software services such as intelligent control system, as well as the chemical reagents and consumables needed by the third-party detection. The third-party detection is widely used in the fields of food manufacturing, pharmaceutical manufacturing, electrical equipment manufacturing, automobile manufacturing and so on. According to the different nature of downstream demand areas, the areas of demand generated by third-party testing include life science testing, consumer goods testing, industrial products testing, construction engineering testing and import and export commodity testing.

Internet Spring Wind Helps Promote Downstream Demand, Expand Industry Scale and Realize Capacity Expansion

With the rise of new forces such as Internet medicine and mobile medicine, some outpatient services and chronic disease management services in traditional hospitals will gradually be disintegrated (hospitals will retain the most competitive advantages of high-end specialist services and major surgery and other difficult and complicated diseases). All links will be developed towards socialization. As an essential link for patients to see a doctor, detection services are mobile medicine. Closed-loop construction of medical treatment mode is an important part of medical treatment and internet medical treatment.

Following the spring breeze of the development of the Internet, the third-party testing institutions in China began the road of Internet transformation, actively using big data to maximize the use of resources, expand consumers'awareness of the third-party testing industry, thereby expanding the growth of downstream demand.

With the Internet spring breeze boosting the downstream demand of the third-party detection industry in China, the scale of the industry is expanding. From 2013 to 2018, China's third-party testing industry has developed well and its market scale has been growing. According to the statistics published by Prospective Industry Research Institute, "Research Report on Development Trends and Investment Decision Support of Third Party Testing Industry in China", the size of China's third party testing market reached 45.63 billion yuan in 2013. By 2016, China's third-party testing market had grown to 77.751 billion yuan, an increase of 24.22% over the same period last year. As of 2017, the scale of China's third-party testing market has increased to 90.634 billion yuan, and has maintained a high growth rate of more than 10% in recent years. It is expected that in 2018, the scale of China's third-party testing market will exceed 100 billion yuan to reach 10.428 billion yuan, and China's third-party testing market will reach a new height.

Statistics of Third Party Testing Market Scale and Forecast of Growth in China from 2013 to 2018


Data Source: Prospective Industry Research Institute

The proportion of state-owned enterprises occupying half of the private enterprises in Jiangshan is increased

From the perspective of the development process of third-party testing in China, the number of state-owned and state-controlled testing institutions is much higher than that of private enterprises and foreign-funded enterprises for a long time. State-owned quality inspection and testing institutions, such as Weikai, China Electrical Appliances Research Institute, testing institutions under the commodity inspection system, testing institutions under the quality inspection system, testing centers at the regional and national levels, and testing institutes at the county level, are the leaders of the quality inspection and testing market in China. These institutions have a long historical background or the background of the government. Through the early development, they have mastered a large number of customers. Household resources.

According to the latest test data of the State Accreditation Regulatory Commission, the number of state-owned and state-owned holding enterprises in China's testing institutions is as high as 16 773, accounting for more than 50%. With the gradual liberalization of the policy since 2000, the number of private testing institutions in China has risen to 14265, accounting for 42.9%. Since December 2005, wholly foreign-funded testing institutions have been allowed to enter China. Since then, Hong Kong, Macao, Taiwan and foreign-funded enterprises have gradually entered the Chinese market. At present, the number of testing institutions of this type is about 267, accounting for about 0.8%.

Foreign-funded enterprises take the lead in market share of China Testing and Leading Domestic Testing Institutions

At present, the main share of the third-party testing industry is occupied by branches of large international testing enterprises in China, and the competitiveness of domestic enterprises is improved. According to statistics, in 2017, SGS's business income in China market reached 3.96 billion yuan, with a market share of 4.4%; Intertek's revenue reached 2.24 billion yuan, with a market share of 25%; China Testing (300012) did not want to lag behind, ranking third with a revenue of 2.12 billion yuan and a market share of 2.3%, leading domestic testing institutions.

Statistics of Business Income of China's Major Third Party Testing Enterprises in 2017


Data Source: Prospective Industry Research Institute

Analysis of Market Competition Pattern of Third Party Inspection Institutions in China in 2017


Data Source: Prospective Industry Research Institute

Policies Promote Enterprises to Realize Investment Restructuring and Entry of Numerous Non-Testing Enterprises

In November 2015, the State Council issued a series of documents, such as Guiding Opinions on Actively Playing the Leading Role of New Consumption, Accelerating the Cultivation of New Supply and New Motivation, Guiding Opinions on Accelerating the Development of Living Services and Promoting the Upgrading of Consumption Structure. It clearly put forward the role of certification and accreditation, speeding up the construction of certification and accreditation, testing capacity and improving the certification and Accreditation Institution, improvement of relevant standards and inspection and certification system, vigorous development of inspection and inspection and certification services, certification and certification as an important means and policy tool to promote the upgrading of consumer quality and supply-side reform.

By 2020, China's third-party testing and certification organizations will achieve remarkable results in professional upgrading, large-scale integration, market-oriented operation and international development, and form a group of comprehensive testing and certification groups with well-known brands.

At present, China has become the second largest market of the third-party testing industry in the world. According to the statistics of the State Quality Supervision Commission, as of the first three quarters of 2018, 36,327 inspection and testing institutions in China have issued 376 million inspection and testing reports annually. However, until the end of 2018, China's third-party testing industry is still in a low concentration, small-scale chaotic competition, with few institutions with annual revenue of more than 1 billion yuan and few enterprises going abroad. With the stricter supervision on the inspection and inspection methods of the industry at the national policy level, the third-party inspection institutions in China will realize the integration of their own business resources quickly through investment restructuring to improve the competitiveness of the company. In addition, from the types of investment restructuring enterprises in recent years, many non-inspection enterprises achieve cross-border entry into the third-party inspection through a large number of investment restructuring actions. Measuring industry, so that they can get a piece of the fast growing industry.

In the field of M&A, environmental testing (environmental protection) and gene testing are the hottest M&A targets. Tianrui, Sujiao Branch (300284) and Hanwei Electronics have extended their antennae to the field of environmental protection. In the field of genetic medicine, companies such as Huawei Testing, Xilong Science (002584), Dean Diagnosis (300244) and Tongyuan Medicine (300244) have extended their antennae to the field of environmental protection.

In addition, Tianrui Instruments (300165), Xilong Science and Hanwei Electronics belong to cross-border mergers and acquisitions, which extend the industrial chain to the independent third-party detection field. The analysis shows that because the testing and certification industry is a typical fragmentation market, the testing and certification services to all walks of life in the national economy have different technical characteristics and government regulatory requirements. The technology and qualification threshold make each market relatively independent. It is difficult for testing and certification institutions to replicate quickly and expand rapidly through direct investment. It is a common practice for testing and certification industry to adopt M&A to enter new fields quickly. It is expected that more non-testing enterprises will enter the third-party testing field through M&A in the future.

State-owned Institutions Gradually Transform Private Institutions to Build Brand Credibility in Various Directions

The State-owned Inspection Institutions for Institutions of Institutions of Institutions of Institutions of Institutions of Institutions have inspection institutions and representative offices in 31 provinces, municipalities, autonomous regions and municipalities/counties under their jurisdictions. They are invested, constructed and supervised by government departments of different functions, and are prepared for public institutions. They are mainly engaged in mandatory and monopolistic government testing With the opening of China's quality testing market, the marketization of state-owned testing institutions is an inevitable trend. In the process of marketization, state-owned testing institutions need to integrate testing resources, determine development strategies, and explore independent corporate culture management model. Private testing institutions in China are mainly distributed in the coastal areas of China. Private testing institutions have the advantages of localization, efficient decision-making, faster expansion of the national marketing network, and provide local services to customers. However, private testing institutions also have two obvious shortcomings

Combining the above two obvious shortcomings, enterprises can use sustained and large-scale technology investment and high-end service level to build brand credibility from various aspects. For example, enterprises can organize industry-specific seminars and training from time to time everywhere, pass the latest international and domestic product regulations and technical requirements to customers, and let customers consider relevant laws from the beginning of product design. The regularity of the rules, thus establishing the brand credibility of the enterprise itself from the source.