China’s thriving metal Additive Manufacturing industry: An outsider’s perspective

In its Spring 2023 issue, Metal AM magazine published an article entitled ‘An inside perspective on China’s thriving metal Additive Manufacturing industry’ written by Xuesong Pan [1]. Pan is the cofounder of Nanjixiong, a leading Chinese-language website covering the AM market in China for domestic readership. The article was able to disseminate Pan’s market insight into a valuable catalogue of the market parameters, major players and events in the Chinese AM market.

Given that the article reported on the dynamism of the market and its impressive growth inside China, the question may be asked: What does the AM market in China look like from the outside looking in through the prism of the international AM industry? This is not to suggest that the information in Xuesong Pan’s article was in any way inaccurate or incomplete. On the contrary, the data reported are as comprehensive a source of raw data on metal AM in China as one could find anywhere outside of China. Still, there are two sides to every coin, and each may just be as valuable as the other.

In two trips to China over the past nine months, I have been afforded the opportunity to see what is happening in AM in China firsthand, as well as speak with local participants and representatives of companies in China to gauge their opinions on industry developments. The adage that ‘what you see from there, you cannot see from here’ is a truism that is especially applicable in circumstances where cultural and linguistic differences can affect an objective impression or assessment of the industry – and it is even more true in the completely unpredictable reality of pandemic-induced disruption and inaccessibility.

What follows is a collection of impressions and observations of the Chinese Additive Manufacturing industry as seen through an outsider’s eyes. It does not purport to be a studied opinion borne of a structured or technical methodology by a Chinese expert. It is informed by broad exposure to AM in many countries and through conversations and interviews with numerous individuals active in the Chinese AM industries. The less-than-conventional approach is an opportunity to address interesting aspects quite freely, unbound by the discipline of rigorous methodology. It is, by definition, a subjective account, and possibly affected by the author’s own biases. By exposing readers to thought-provoking ideas, it is hoped that a discussion of AM in China and its role in the larger AM community can spark an objective discussion and exchange of opinion.

Behind the Great Wall

Compounding an outsider’s view of China have been global events and a changing geopolitical climate – factors not within the expertise of the average AM industry analyst, but any analysis is obviously impacted by them. Consider that quarantine requirements for visitors to China ended only on January 8, 2023. Until then, entering China was burdensome enough to cause all but the most determined visitors to delay plans to visit China. Anti-COVID regulations within China also severely restricted the ability of Chinese companies to interact, extending to the elimination of industry events at which the local market customers could obtain industry information through direct interaction with multiple and competitive suppliers in one place. A less obvious impact of these restrictions is the lack of visibility of industry movement in China, both to global and domestic observers.

The most extreme example of this was Shanghai, China’s largest city. Beginning in March 2022, a phased lockdown was ordered for the city. It was extended to the whole of the city in early April that year and remained in effect until June 1, 2022. By contrast, industry events in Western countries started to take place, albeit with restrictions, in 2021. Exhibitions and tradeshows in China were severely impaired.

The Additive Manufacturing segment suffered a particularly painful blow in late August 2022 when, due to a COVID lockdown in Shenzhen, the TCT Asia exhibition, a leading AM event in China, was shut down by authorities nine hours before it was due to open. More than two hundred AM companies were denied the opportunity to exhibit, victims of China’s zero-tolerance COVID response policy.

All of these obstacles notwithstanding, the Chinese AM industry did not stand still. As shall be seen, AM technologies and business over the past decade have still seen China become a significant centre for the development of AM and its industrial application.

Advances in science

Additive Manufacturing in China had its origins in university research programmes starting in the 1990s – early by global standards. Researchers in AM later went on to found commercial companies. Commercialisation of AM technologies by Chinese researchers commenced after the first product launches in the US and Europe. EOS was among the first foreign companies to see potential in China and began its activities there in collaboration with Xi’an Bright Laser Technologies Co., Ltd. (BLT), although it subsequently also opened a Chinese subsidiary. BLT was founded in 2011 and went on to develop its own systems, the sales of which now dwarf those of the company with which it once collaborated.

In many respects, by a conservative assessment, the Chinese AM machinery industry as a whole has almost closed the gap with foreign machine manufacturers. A more reasonable estimate would say that the gap has already closed. Indeed, a fair case could be made for saying that, at least in some respects, Chinese industry has pulled ahead of its peers in the West.

Overall, the development of science and technology in China has been impressive, and the performance of the AM segment has to be understood against the general growth and excellence in scientific endeavour in China. Chinese manufacturing prowess needs no introduction to Western consumers. The iPhone is a prime example of the success of taking a product developed elsewhere and manufacturing it in China with flair, quality and commercial success for both the local manufacturer and the Western customer manufacturing there.

New products developed in China are racking up successes in many industries. Take, for example, electric vehicles, where Chinese manufacturers are making a significant global impact despite many brands being, until recently, unfamiliar to consumers outside of China. In 2023, China overtook Japan to become the largest exporter of cars. BYD has overtaken Tesla in the number of EVs shipped. The electric vehicle may not have been invented in China, but it has been adopted there with impressive results. Applied research, or product development, in China is strong and a source of national pride, encouraged by a government with an active agenda in growing new industries.

But what about basic research? According to The Economist [2], data shows that China has become a scientific superpower. It has overtaken both the US and Europe in the number of high-impact scientific papers published by authors located within the country. The article goes on to note even more surprising data from 2022: in the fields of materials science, chemistry and engineering, Chinese researchers account for more than 70% of the authors of high-impact academic papers; in the case of materials science, the figure is above 80%.

There is no reason to suggest that this data is any different when it comes to AM research. Anecdotally, those who follow AM research publications cannot have failed to notice the bump in the number of papers being led by Chinese research teams, or in which Chinese researchers at foreign institutions participate. Sceptics might correctly point out that Chinese researchers are incentivised to publish – to which one might respond that the research still must be good enough to pass peer review.

Market parameters

The AM market is active in both polymers and metals. Chinese companies have been successful in Vat Photopolymerisation (VPP) and Material Extrusion (MEX). Large service providers additively manufacturing polymer parts are vigorously competitive throughout China and run primarily Chinese machines. For our purposes, let’s take a more detailed look at the most important segment: metal AM.

According to Context, which tracks Additive Manufacturing machine shipments, in the fourth quarter of 2023, Chinese vendors of PBF-LB machines sold more units globally than Western suppliers. Year-on-year growth by Chinese vendors was 36% whilst Western AM machine manufacturer sales declined by 27%. Analysts believe that there are explanations for the poor performance of Western suppliers in international markets. One reason might be high interest rates that depress capital expenditure; pent-up demand might cause this trend to reverse, they say, but this will only be known when the figures for 2024 start to roll in.

An interesting statistic reported by Context for the year 2023 is that unit sales in China of industrial machines costing $100,000 or more exceeded the sales of such machines in North America. All told, one-third of industrial machines sold globally were in China. North America accounted for 31% of industrial machine shipments. While it is true that this regional breakdown of shipments covers both polymer and metal industrial machines, it seems that quarterly sales of metal machines in each of the past five quarters accounted for between 35-45% of all high-end industrial unit sales. Reporting from Wohlers Associates, a unit of ASTM International, also confirms the strong growth of metal machines in China.

Going public

A recent trend in AM in China has seen the organisational and financial maturing of some leading companies. A number of larger established companies have opened AM activity within their existing corporate structures. For example, Ningbo Haitian, a leader in China’s injection moulding machine market, recently launched a series of metal AM machines. Two leading PBF-LB manufacturers have gone public on the Shanghai Stock Exchange: BLT and Farsoon.

BLT went public on July 22, 2019. The company listed its A shares on the Shanghai Stock Exchange’s Science and Technology Innovation Board under the ticker symbol 688333. BLT became the first Chinese AM machine manufacturer to be publicly listed in China. The IPO raised CN¥626 million, the equivalent of about $91 million at the time.

Farsoon Technologies went public on April 17, 2023, on the same exchange under the ticker symbol 688433. Farsoon had been talking about an IPO for some time, but the market conditions were not in its favour. It eventually pulled the trigger to go public in less-than-optimal conditions, only raising CN¥112.7 million ($16.3 million).

Speaking to industry insiders, it seems that the AM industry in China continues to be going through the local equivalent of the IPO or SPAC hype cycle that afflicted AM in the US over the past few years – or at least that is the hope of some of the leading Chinese AM companies. Recent IPOs of US companies, performed by way of SPAC mergers, raised considerably more money than the two Chinese IPOs to date, even allowing for differences in macro-economic conditions, culture and geography. Desktop Metal, for example, raised $575 million in its SPAC merger in 2020 and, until its public listing, had raised more than $400 million in VC funding since its establishment in 2015.

BLT is the largest and most established AM company in China and has set the pace for many others to follow. This is mostly true for its leadership on the technical and commercial fronts, but no less so than for its IPO achievement. A number of companies planned to follow BLT, but about six months after the BLT IPO global conditions changed dramatically, and uncertainty reigned.

A number of companies are still planning IPOs, despite the less-than-optimal financing conditions. As one China AM industry observer said, not all companies are going to realise their IPO dreams, and they would be wise to internalise this fact. Uniontech, mainly a manufacturer of Vat Photopolymerisation machines, does not hide its plans to go public, but it is behind schedule on its hoped-for exit.

Stock market conditions in China are still not at their peak, though far from their nadir. At the time of writing this in June 2024, the stock price of BLT was around CN¥59 per share, and its fifty-two-week price ranged from CN¥44-98. Farsoon, which has only been trading for about a year, was priced at CN¥23 per share but ranged from CN¥17 to 44 per share over the course of the year.

Table 1 compares the stock prices and market capitalisation of leading Western companies to the two public Chinese companies.

We’ll leave a more detailed review of financial and market performance to financial analysts trained to unpack the meaning of the financial numbers and provide comparisons of the financial performances of public companies in the industry. However, even to a financial novice, there are some obvious points to note:

• Chinese companies trade at much higher multiples than their Western counterparts
• Both Chinese companies are profitable, while their Western counterparts struggle to make money

Hypercompetition

Walking the aisles at the TCT Asia exhibitions in Shanghai in 2023 and 2024, a foreign visitor could not have failed to be struck by the number of competitors in general, and in metal Additive Manufacturing in particular. Even a visitor with some knowledge of the players in AM in China would encounter unfamiliar brands.

Xuesong Pan’s article reports that there are more than sixty suppliers of metal AM machines in China; a number that includes companies producing Directed Energy Deposition (DED) and Binder Jetting (BJT) machines. Metal powder companies are proliferating in many smaller cities in China, small enough that sales literature is only available in Chinese. These types of companies are a long way from being able to target foreign sales.

Another very noticeable feature of the TCT Asia events was the size and sophistication of the booths of the major companies. Booths were larger than any of the booths that were ever mounted at Formnext, which is considered the West’s leading showcase. Even investment in trade shows in the high-flying years before COVID-19, when companies such as GE Additive, EOS, Nikon SLM Solutions, and HP vied to impress the industry with the most elaborate booths, could not be compared with the display that leading metal AM companies put on in China.

A number of these leading Chinese metal AM machine companies are already active overseas and have attended international trade shows for a number of years. In a few cases, companies have established sales offices in both Europe and the US. Chinese companies with a presence overseas include BLT, Farsoon and E-Plus 3D, the ‘big three’ of the Chinese metal AM industry. These and other companies – such as HBD, Z-Rapid, Easymfg and AmPro – have appeared at Formnext. From the TCT Asia show statistics for 2023, conservatively less than 5% of visitors came from overseas, more than half of them from Asia. Very few Europeans or Americans could be seen on the exhibition floor at TCT Asia 2024. Of the Europeans, unsurprisingly, many were Russians, a country the Chinese market is willing to supply, while Western countries are bound by sanctions.

In 2023, the total number of exhibitors was up 10% over the figure for 2019, and exhibitor space was up 28%. This means that the average booth size per exhibitor was up to around 85 m2 from around 70 m2 in 2019. Unique visitors numbered around 17,000, up 50% from 2019.

Could the decision to mount such expensive and eye-popping exhibition booths at TCT Asia have been related to the leading companies’ desire to enter international markets? Given the data above, it is unlikely. The TCT Asia show – as clear an index or mirror as one could expect to find about the state of the Chinese AM industry – suggests that competition in China is very much a domestic affair. Looking at this problem from the reverse perspective, are foreign AM companies actively pursuing business in China? Only 2.8% of exhibitors by floor space were from overseas, though some foreign brands were represented by dealers and representatives. Only EOS operates a subsidiary in China.

So, with few foreign companies offering any kind of competition in China, how can one explain the aggressive competitive environment in China? The Chinese word used to describe the type of competition in AM in China is 內卷 (neijuan). The formal definition of this term is ‘to become increasingly competitive.’

Competition in AM is currently in a state of internal hypercompetition. TCT Asia is only very marginally an event for the international AM community. It is primarily an event developed from a Chinese competitive dynamic. It is sharp, clear and aggressive competition. The larger companies vie to show the biggest and the best at a level of competition that exceeds what one could observe among Western companies.

Not all companies will come out on top in a competitive environment such as this. Some companies will rise, others will sputter or even fail, and others might find solace in consolidation. It is not unlike the competition that one would observe in Western countries. It can be said that this level of competition is driving the Chinese industry as a whole to push the boundaries and produce better products. Foreign competitors, perhaps facing relatively fewer competitors, should take note. Strong competition is a driver of innovation and improvement.

Bigger indeed – but better?

Table 2 provides one window into the way Chinese companies are pushing the envelope in metal AM. While bigger is not always better, the impression one gets from a firsthand interaction with the metal AM landscape in China is the pride that the companies take in pushing boundaries and bringing to market devices that display considerable engineering prowess and achievement, even if the commercial viability and market potential might be less obvious. Having more lasers and large build volumes is a technological calling card that projects an image of excellence. In a market of hyper competition, technological excellence helps build a brand and leads commercial success for smaller machines as well. There is a market for large volume, multi-laser systems, although the parameters of that market might not yet be determined. The exhibition floor was scattered with huge parts, in particular for the aerospace segment. The confidence that Chinese metal AM manufacturers display in advancing the technology is palpable.

A question that many ask is whether Chinese machines can compete with more experienced machines from Western suppliers. Anecdotal evidence suggests that the gap, if any, between parts made on Chinese machines and those made on international brands is – at most – negligible. Details and application requirements matter, and eventually, measurement and testing will be able to lay the rest of the argument as to whether Chinese machines can compete on quality with Western counterparts. However, parts on display at exhibitions should never be a reliable measure of what a machine can do. It’s the reality of the shop floor where, over time, an evidence-based argument can be made. Companies in Western countries have more experience than their Chinese counterparts. BLT was founded in 2011. EOS was founded in 1989, and their metal systems were introduced in 1998.

Taking into account all of the circumstances and the progress made by Chinese metal AM machine manufacturers, experience suggests that it’s only a question of time before any gaps will close or disappear completely. Conversations with industry professionals with operational experience from the customer side – meaning they’re not beholden to any manufacturer – suggest anecdotally that there is already little difference today between Western and Chinese quality.

All of the major suppliers asked indicate that key components in their machines, such as laser systems and galvanometers, are the same top-of-the-line international components that equip the best of the international machines. IPG lasers and Scanlab galvanometers are standard on all topflight Chinese machines. Interestingly, price-sensitive local customers can opt for alternative Chinese-made components should there be a need. While these components might not have the reliability or product life expectancy of their best-of-class competitors, there is no evidence to suggest that the parts made with them are significantly inferior.

Summary and conclusions

Several central insights have emerged:

• The Chinese market is large and developing fast
• In some respects, metal AM in China has at the very least achieved parity with global AM
• Intense competition in China is fuelling excellence, innovation and a healthy willingness to take calculated risks in pursuing industry leadership
• Given the slope of the growth trajectory of AM in China, avoiding proactive interaction and contact with developments there is ill-advised

Opinions, by definition, are expected to differ. The author’s view and interpretation of Additive Manufacturing in China is not immutable. Readers are encouraged to take exception to the ideas communicated in this article. Opinions expressed have tried to conform to the facts as presented. Additional facts may emerge over time, which may affect how one views the AM market in China. All would agree, though, that China is an increasingly important player in the Additive Manufacturing world.

References

[1] An inside perspective on China’s thriving metal Additive Manufacturing industry, Xuesong Pan. Read in full at https://bit.ly/3xn7eId

[2] www.economist.com/science-and-technology/2024/06/12/china-has-become-a-scientific-superpower

Author

Joseph Kowen

Joseph is an industry analyst and consultant who has been involved in Additive Manufacturing since 1999. He is an Associate Consultant at Wohlers Associates, part of ASTM International’s AM Center of Excellence.

www.linkedin.com/in/joseph-kowen-a5129b3/