This article is analyzed by Taylor, the sales manager of Hengfengshuai Electric, on the German transformer market in 2024, including market overview, German market characteristics, opportunities, challenges, and response strategies for Chinese transformer enterprises in Germany. It aims to provide a basic understanding and guidance for the development of Chinese transformer enterprises in the German market.
Overview of the German Power Transformer Market
The compound annual growth rate of the European transformer market is expected to exceed 2.5% from 2020 to 2025. The increase in industry energy demand and the upgrading of old transmission and distribution systems may drive the development of the European transformer market. As one of the largest economies in Europe, Germany's power transformer market has a long history of development and a large market size. With the rapid development of renewable energy and electric vehicles, the demand for power transformers is also increasing, and the market prospects are very broad. Major energy companies have also expanded their business in the transformer market.
As shown in the figure, Hitachi Energy invested over 30 million euros this year to expand the production of power transformers at its Bad Honnef factory in Germany. This fund will be used to expand the factory's production capacity and improve production processes to meet the growing demand.
Germany is expected to become the fastest-growing market
1. The German industrial sector is an important demand driver for distribution transformers. As one of the world's leading industrial economies, Germany has diversified manufacturing bases covering multiple industries such as automobiles, machinery, chemicals, and electronics. These industries heavily rely on reliable and stable electricity supply for efficient operation. Therefore, the demand for distribution transformers has increased to effectively distribute electricity within industrial facilities.
2. The expansion and establishment of new industrial facilities have further increased the demand for distribution transformers. According to data from the Federal Bureau of Statistics in April 2023, Germany's industrial production growth in February exceeded expectations, mainly driven by the automotive manufacturing industry. As companies increase production capacity or establish new manufacturing units, they need additional distribution transformers to meet their electricity needs.
3. Promote government emission reduction targets. As is well known, energy transformation has become the most important energy policy implemented by the German government at present. Germany's goal is to reduce emissions by at least 65% by 2030 and at least 88% by 2040. To achieve its energy transformation goals, Germany plans to expand investment by billions of euros and accelerate the comprehensive decarbonization process of the five major industries of electricity, transportation, industry, construction, and agriculture. German Deputy Prime Minister and Minister of Economy and Climate Protection Robert Habeck said that accelerating the increase in renewable energy generation capacity is a key factor for Germany to reduce its dependence on imported fossil fuels. Renewable energy typically generates electricity at a voltage level different from the standard grid voltage. Distribution transformers play a crucial role in converting the voltage of renewable energy generation to meet the voltage requirements of the distribution network. This ensures compatibility and seamless integration with existing grid infrastructure.
Therefore, due to the above points, Taylor, the sales manager of Hengfengshuai Electric, believes that Germany will become the fastest-growing market for distribution transformers in Europe during the forecast period.
Analysis of Opportunities for Chinese Transformer Enterprises in Germany
1. Compared to the US market, the European market is more open to Chinese companies. The prospects for economic and trade cooperation between China and Europe are broad.
2. Chinese power equipment enterprises have a market share of less than 5% in the European market and have great potential to go global. Moreover, Chinese power equipment enterprises have a competitive advantage of "strong technology, strong manufacturing, and low cost".
3. Germany far exceeds China in both raw material costs and labor costs for manufacturing power transformers, thus giving Chinese transformers an absolute price advantage in the European market.
Analysis of Challenges for Chinese Transformer Enterprises in Germany
1. Established German companies occupy the high-end market. Represented by Siemens, Hitachi Energy, Schneider, and German SGB, the four major German transformers have been active in the high-end transformer market for a long time, with high visibility and market share in Europe. Therefore, Chinese enterprises entering this market face high barriers to the export of power equipment due to technical standards, qualification certification, and other issues. Adequate preparation is required.
2. Chinese companies face language barriers and cultural differences when entering the German market, resulting in low communication efficiency and difficulties in cooperation. Therefore, it is necessary to strengthen cross-cultural training and team building. Hengfengshuai Electric has established cooperation with European clients in Spain, Albania, Germany, France, Czech Republic, Macedonia, Bosnia and Herzegovina, Cyprus, and other countries, mainly supplying 11-33KV distribution transformers, 110kV grid main transformers, distribution boxes, ring main cabinets, cables, and electrical accessories, as well as providing OEM/ODM services（ taylor@hengfengyou.com ）.
3. Chinese enterprises must strictly comply with relevant technical standards and safety certification requirements of Germany and the European Union, such as TUV, CE, etc., to ensure that their products comply with strict energy efficiency standards and electrical safety regulations.
The strategy for Chinese transformers to enter the German power transformer market:
1. Technical certification and R&D innovation, investment in R&D resources, cooperation with German research institutions or establishment of R&D centers, to develop efficient, intelligent, and environmentally friendly power transformer products that meet the needs of the German market.
2. Establish subsidiaries or offices in Germany to provide quick response after-sales service and technical support, meeting the high requirements of German customers for timeliness and professionalism.
3. Seek cooperation opportunities with local German enterprises, such as through OEM/ODM cooperation, joint bidding projects, etc., and leverage the channels and influence of local enterprises to enter the market.
4. Cost control and cost-effectiveness advantage: Continue to maintain the advantage in production costs, while focusing on improving product cost-effectiveness, and provide products that meet German quality standards while also having price competitiveness.
5. Environmental Protection and Sustainable Development: In response to Germany's high emphasis on environmental protection and sustainable development, Chinese enterprises should be committed to researching and developing green power transformer products, such as the application of energy-saving materials such as amorphous alloys and three-dimensional coil iron cores, and actively participate in supporting projects in the field of renewable energy.
In summary, through the comprehensive application of the above strategies, Taylor, the sales manager of Hengfengshuai Electric, believes that Chinese transformer enterprises can gradually gain recognition in the German market while ensuring product quality and service, and occupy a place in the fierce local competitive environment.
