Since 1978, and especially since around 1990, when reformers in the Chinese government began the bold process of dismantling a generation’s worth of burdensome state economic regulations and controls, opening the door to private ownership and entrepreneurship, China has experienced one of the biggest economic and productivity booms in recorded history. It’s a clear testament to the inherent power of a free economy, marred only by the occasional, if dramatic, flaws of residual government meddling.
Viewed from the outside, it’s tempting to think of the Chinese boom simply in terms of more cars and bigger buildings. But it’s all under-pinned by a world of less conspicuous though no less important technological and infrastructural developments, exposing opportunities which global investors are beginning to target as the best way to ride the Chinese wave.
One of these foundational areas of development in China is the fast growing PLC market. PLCs (Programmable Logic Controllers) are basically specialized computers for controlling electromechanical systems, applied to the automation of factories, utilities, and just about anything else you can find in an industrialized society. The massive surge in the Chinese economy over the past decade has fed a huge demand for PLCs, and the Chinese market is now approaching nearly $1½ billion, with a continued double-digit growth rate.
Dragon Capital Group acts as a unique conduit between Western investors and the Chinese industrial and consumer market, and the company’s Yazheng subsidiary is an important supplier of utility controls for China’s growing cities. Recently, Yazheng was selected by the Chinese government as one of the participants in a national science and technology research project focusing on the application of safe and large-scale PLCs. With a total estimated R&D cost of approximately 20 million RMB ($3 million U.S.), this project is expected to begin in the fourth quarter of 2013 and last through 2015.
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