The market of power supply units in Russia
Last month I read an old interview with the president of MORNSUN company Xianyang Ing,
where he stated the following: “The Russian market is extremely important for us, since it has huge potential. At present, shipments to Russia account for one third of all European deliveries”. Besides the product quality, success of MORNSUN in Russia grounds in fact that here we have a very good distributor – ECO company. All our high sale rates in Russia are due to the work of its specialists. They helped MORNSUN to begin active sales in Russia in 2008, and in four years today we have actually become one of the five leading suppliers on this market”.
I have never personally worked with MORNSUN company, but I’ve heard about it. In the world of power supplies (PS), it is quite a well-known company on the Russian market. I know that MEAN WELL company is the absolute leader on the PS market. I became curious about comparing these companies. The interview was given back in 2012 and after reading it I decided to analyze the Russian power supplies market in the context of these two most prominent brands.
Why do we need analytics?
By using analytics, one can expand the product range based on an analysis of popular brands and competitors’ positions. Find free niches in your product range and penetrate new market segments. You can the process of searching for suppliers simpler and cheaper. Can easily track dynamics of competitors’ supplies and follow the market competition in dynamics. Analytics makes it possible for you to see how your brands are developing, how your activities influence the market.
The market leader
Of course, it won’t be entirely correct to compare these two brands, since I believe that there is no full-fledged brand that can completely replace MW in its segment. MEAN WELL offers an exhaustive and wide product range: 1000 series, 10,000 models, more than a billion sales a year.
According Micro Technology Consultant Report dated March 2017, it ranks number 5 among international manufacturers of (direct current) power supplies. Unlike the commercial model offered by the first five manufacturers designed for ODM/OEM, regular power supplies of the company’s own brand account for almost 99% of MEAN WELL’s sales turnover.
The company specializes in developing and manufacturing of ready-made power supplies only, producing a wide range of power supply units: AC-DC converters, DC-DC converters, DC-AC inverters, LED drivers. The company is known by 99% of the Russian market participants.
Table 1 compares the sales volumes of both companies in Russia.
So, let’s analyze the customs code 85044 – static converters – and the year 2018.
The customs code 85044 includes several subclasses, described in Table 1
Table 1. Import to Russia of MEAN WELL and MORNSUN in 2018 under the customs code 85044*
|
Customs Code |
MEAN WELL |
MORNSUN |
The customs code description |
|
8504403009 |
282,404 |
_ |
Static converters, used with telecommunication equipment, computing equipment and its blocks, others |
|
8504405500 |
519,099 |
_ |
Chargers |
|
8504408200 |
15,986,184 |
_ |
Rectifiers |
|
8504408400 |
212,629 |
_ |
Invertors with power less than 7.5 kVa |
|
8504409000 |
9,650,352 |
3,144,599 |
Other static converters |
|
Total |
26,653,566 |
3,144,599 |
|
Why 2018?
I should mention that until early 2019, ECO was the only official distributor of MORNSUN products in Russia, having been extremely successful in promoting the leader MORNSUN to the Russian market. ECO company exists since 2004, dealing with supplies of almost PS only. Here is what the company’s website tell us. “Our priority areas are supplying power supply units and components for power supplies – transformers, throttling valves, microcircuits for power supplies, etc. In this segment, ECO is one of the largest Russian suppliers of electronic components supplying to domestic manufacturers of electronic equipment”.
According to the Federal Tax Service for 2018, the company’s financial maens amounted to 382 million rubles or 6 million dollars at an average exchange rate of 62.9 rubles.
But in general, I think that it was a strategic mistake of MORNSUN company – to choose a single distributor, especially a highly specialized one. According to a market participant, ECO met MORNSUN at an exhibition in 2008 and immediately signed an exclusive contract. Early in 2019, the company corrected the mistake and gave distribution simultaneously to two companies. MicroEM and Kompel signed distribution agreements with MORNSUN. There is another version based on the company’s history. On the company’s website we can find the following:
“In the past, we used to work in Germany through distributors, and we received customers feedback through distributors as well, who provided information to our sales team, and they, in turn, transferred it to our developers. Thus, we got a rather long chain, which sometimes led to delays and errors. Due to this, we lost opportunities that we could successfully use on the market. Now, we have a local company…
Another advantage is that in Germany there are a lot of small and medium-scale companies that are interested in our products. Before, not all of them could work with us directly”.
Perhaps, the company has an individual approach to each country. In Germany, they refused distributors in favor of a local company. In Russia, they thought that local conditions, on the contrary, are more suitable for wide distribution sales. Anyway, creating a local company is a dangerous precedent for distributors in the company’s policy.
“By creating a local company in Germany, we have reduced this chain, in fact becoming closer to our customers, and now we can guarantee the necessary promptness and accuracy of our reaction, providing our customers with faster service of higher quality. It was the main aim of creating this local company”.
In 2019, new players undoubtedly placed orders, but due to long production and delivery period – from 6-14 weeks, extended over its sales time, the imbalance between purchases and sales in 2019 will produce an artificial effect on statistics and increase the real market share of MORNSUN products. Therefore, to maintain the analytical integrity, it was decided to take 2018.
Fact analytics
Let’s return to the table. As you can see, two codes – 8504408200 and 8504409000 – account for the major part of both manufacturers’ products. Let’s take them for further analysis. If we summarize sales by these two codes, we will get the following Table 2.
Table 2. Import to Russia in2018 under the customs codes 8504408200 and 8504409000
|
Manufacturer |
Total |
|
MEAN WELL |
25,636,536 |
|
NIDEC ASI S.P.A |
13,600,000 |
|
SIEMENS AG |
13,057,232 |
|
PHOENIX CONTACT |
8,751,802 |
|
PT SCHNEIDER ELECTRIC MANUFACTURING BATAM |
8,239,080 |
|
AO RIZHSKY ELECTROMASHINOSTROITELNY ZAVOD |
7,997,257 |
|
VICOR CORPORATION |
7,110,839 |
|
DONGGUAN SOLUM ELECTRONICS CO.LTD |
5,757,502 |
|
CRANE ELECTRONICS INC |
5,731,298 |
|
VESTAS MANUFACTURING A/S |
5,303,653 |
|
CRANE INTERPOINT AEROSPACE & ELECTRONICS |
5,036,263 |
|
LIEN CHANG ELECTRONIC ENTERPRISE CO. LTD KOREA |
4,858,959 |
|
SUNRISE HOLDINGS (H.K.) LIMITED |
4,845,789 |
|
APC INDIA PVT LTD |
4,202,647 |
|
ASIAN POWER DEVICES INC. KOREA |
4,098,698 |
|
TRACO POWER |
4,097,258 |
|
OPALTECH (HK) LTD |
3,377,518 |
|
HANSOL TECHNICS CO. LTD |
3,215,459 |
|
MORNSUN |
3,149,847 |
| TDK-LAMBDA |
2,900,000 |
|
Total |
454,249,807 |
The total import to Russia under the codes in question amounted to $454 million. If any analytics company provides you with this table, you can take it as it is, but probably you will arrive at wrong conclusions about your market share or your competitors.
For further processing of results, let’s separate products recipients from this table.
Table 3. The first 3 clients by brand.
|
Manufacturer |
Total |
$ |
|
MEAN WELL |
Distributor |
11,874,874 |
|
Distributor |
7,999,967 |
|
|
Distributor |
1,760,139 |
|
|
SIEMENS AG |
«SIEMENS AG» |
12,620,345 |
|
PHOENIX CONTACT |
«PHOENIX CONTACT» |
8,660,066 |
|
PT SCHNEIDER ELECTRIC MANUFACTURING BATAM |
«SCHNEIDER ELECTRIC» |
8,067,527 |
|
AO RIZHSKY ELECTROMASHINOSTROITELNY ZAVOD |
Consumer |
7,997,257 |
|
DONGGUAN SOLUM ELECTRONICS CO.LTD |
OOO Samsung |
5,757,502 |
|
VICOR CORPORATION |
Distributor |
4,450,000 |
|
??? |
1,287,258 |
|
|
CRANE ELECTRONICS INC |
??? |
5,731,298 |
|
VESTAS MANUFACTURING A/S |
«VESTAS» |
5,303,653 |
|
CRANE INTERPOINT AEROSPACE & ELECTRONICS США США |
??? |
5,036,263 |
|
NIDEC ASI S.P.A |
Consumer |
8,530,000 |
|
Consumer |
4,959,717 |
|
|
LIEN CHANG ELECTRONIC ENTERPRISE CO. LTD KOREA |
«LG» |
4,858,959 |
|
SUNRISE HOLDINGS (H.K.) LIMITED |
Consumer |
4,695,759 |
|
Consumer |
150,030 |
|
|
APC INDIA PVT LTD |
«SCHNEIDER ELECTRIC» |
4,157,552 |
|
ASIAN POWER DEVICES INC. KOREA |
«LG» |
4,098,698 |
|
TRACO POWER |
Distributor |
3,791,728 |
|
Distributor |
67,473 |
|
|
Broker |
63,061 |
|
|
OPALTECH (HK) LTD |
Consumer |
1,436,298 |
|
??? |
1,009,026 |
|
|
Consumer |
932,194 |
|
|
HANSOL TECHNICS CO. LTD |
OOO Samsung |
3,215,459 |
|
MORNSUN |
Distributor |
3,010,384 |
|
Broker |
51,502 |
|
|
Broker |
33,694 |
I didn’t manage to identify and bind three clients to the classifier quickly. As you can clearly see from the table, the recipient of SIEMENS AG products is SIEMENS AG itself; DONGGUAN SOLUM, and LIEN CHANG are delivered to Samsung and LG manufacturing facilities. All these sales are delivered under global agreements or directly to customers; it’s almost impossible to replace them here in Russia by distributors, therefore we don’t count such sales as competing ones. We count them as the market participants, but omit if it goes about a competition opportunity. It is not in Russia that decisions on these brands are made.
If we remove the brands that have only 1-3 customers in Russia and take net distribution sales, we’ll get only a few brands that are rapidly developing in Russia under the codes 8504408200 and 8504409000.
Table 4 shows their total sales, including the total imports, without division by the customs codes.
Table 4. Imports of the brands with distributors.
|
Manufacturer |
$ |
|
«MEAN WELL» |
25,636,535 |
|
«VICOR CORPORATION» |
7,616,696 |
|
«TRACO ELECTRONIC» |
6,895,122 |
|
«AIMTEC ASIA CORP» |
3,923,000 |
|
«MORNSUN» |
3,149,847 |
|
«VPT INC.» |
2,256,000 |
|
«SHENZHEN MAIWEIXUN ELECTRONIC» |
1,892,000 |
This table shows another MORNSUN mistake, which they corrected in 2019. The problem is that the power supply units that MORNSUN specializes in are often supplied as part of the whole or partial specification. ECO is almost a monobrand company. Kompel can offer the whole specification to its clients, which greatly increases the chances that a client will choose a MORNSUN power supply unit or its competition for replacement. Now, MORNSUN has its old highly specialized distributor with the second one being a distributor with the widest opportunities of supplying the whole specification, and the third being an intermediate one. It has been compared with MEAN WELL by this criterion.
Beside these brands, there are more than a dozen others that together account for a significant market share. Therefore, I will provide the import statistics of distributors that I’ve managed to identify quickly. This method makes it possible to filter out global deliveries under contracts, as well as direct deliveries by SIEMENS, NIDEC, ASIAN POWER, and others. I take the net market share within the competition, with the sales decisions being made directly in Russia.
Table 5. Import of power supplies under the customs codes 8504408200 and 8504409000, in 2018 by distributors and brokers.
|
Distributor/Broker |
$ |
|
1 |
25,939,162 |
|
2 |
15,206,840 |
|
3 |
11,324,897 |
|
4 |
4,269,014 |
|
5 |
3,649,604 |
|
6 |
3,557,645 |
|
7 |
3,064,971 |
|
8 |
3,034,712 |
|
9 |
2,635,180 |
|
10 |
2,074,932 |
|
11 |
1,675,636 |
|
12 |
1,621,828 |
|
13 |
1,453,154 |
|
14 |
964,764 |
|
15 |
932,035 |
|
16 |
903,005 |
|
17 |
901,331 |
|
18 |
624,460 |
|
19 |
427,864 |
|
20 |
228,146 |
|
21 |
223,988 |
|
22 |
208,657 |
|
23 |
202,740 |
|
24 |
179,941 |
|
25 |
171,109 |
|
26 |
162,869 |
|
27 |
136,347 |
|
28 |
116,218 |
|
29 |
111,754 |
|
30 |
111,182 |
|
31 |
111,123 |
|
32 |
108,316 |
The import volume of 32 distributors and brokers of electronic components to Russia amounted to $87 million. It’s an extremely important stipulation, since this customs code implies not only import of the products that the companies listed in Table 4 specialize in. It can be exemplified by SIEMENS AG from Table 2. But 87 million is a guaranteed amount of the products import through distributors, which can be confirmed by facts. In reality, the result will be a little higher due to unidentified market participants and import through customs brokers. The main thing is that this figure is guaranteed. Schneider Electric, Samsung, SIEMENS, PHOENIX CONTACT, and LG account for 100 million.
Since I don’t aim at writing a whole book in this article, I should apologize to my readers for the general wording. The remaining 250 million are divided between more than 1000 customers, with the majority of them being end users of all power supplies, including not only the groups that the companies from Table 4 specialize in.
The leaders are always right
Based on the shown analytics, we can easily summarize the facts. MORNSUN company joined the top five leaders of the Russian market back in 2012, and remained in fifth place ever since. MORNSUN has more than 70 distributors, but conducts a flexible sales policy. Being an older and more powerful player, MEAN WELL, can’t work with all medium- and small-scale customers, and therefore has more than 200 distributors in 80 countries, which account for 70% of its revenue.
MORNSUN takes advantage of having a full-fledged production chain, but for crystal manufacturing. They produce their own transformers, circuits, as well as perform assembly.
In most cases, OEM policy is more efficient, but MORNSUN manages not only to control the whole production cycle, but to maintain the price competition as well.
As the manufacturer’s website says, “The automatization degree of our production exceeds 60%. Besides making our products cheaper, this makes it possible for us to guarantee repeatability of quality, to be sure that our products feature stable characteristics and high reliability level”.
MEAN WELL has been and still remains the unrivaled market leader. There is one thing that these two brands have in common: in Russia, distributors account for more than 90% of their sales.
You can order this article or a separate analysis by codes with all the data, including the importing companies’ names, each brand’s customers, and much more.
http://www.electronics.ru/files/article_pdf/3/article_3277_946.pdf
https://www.meanwell.com
https://www.mornsunpower.ru
