Centralized air supply, good air separation equipment provider, seeking to change business model
On the eve of National Day, the 18th Member Congress of the China Industrial Gas Industry Association and the 2008 Annual Conference were held in Yichang, Hubei Province. During the event, industry experts discussed the development paths of foreign air separation equipment manufacturers and reached a consensus that regional centralized gas supply will significantly influence the future direction of domestic manufacturers.
Experts emphasized the importance of regional centralized gas supply, with Yang Yangyuan from China Metallurgical Southern Engineering Technology Co., Ltd. explaining that this model involves centralized production of gases like oxygen, helium, and argon from specialized centers. These gases are then delivered to users through pipelines, cylinders, or liquid tankers. The benefits include reduced energy consumption, lower staffing needs, and cost efficiency due to large-scale operations. Additionally, centralized systems allow for better coordination, reducing idle units and improving overall efficiency. This approach also enables more effective utilization of rare gases, further lowering costs. Finally, it leads to broader social benefits by minimizing land use and workforce requirements.
Sun Guomin, executive vice president of the China Industrial Gas Industry Association, added that the collaboration between equipment manufacturers and gas suppliers is key. While manufacturers excel at producing equipment, they often lack operational expertise, whereas gas suppliers understand management but may not be skilled in maintenance. This synergy can enhance performance and safety.
Gong Guozhi, another expert, noted that models such as professional production, socialized supply, and park management are widely used in advanced countries like Europe, the U.S., and Japan. He predicted that these practices would gradually be adopted in China as well.
Foreign companies have long dominated the Chinese gas market. Companies like BOC, Air Products, Air Liquide, Praxair, Linde, and Messer entered China early, establishing joint ventures and wholly-owned subsidiaries. They focused on both equipment sales and gas supply, capturing significant market shares. For example, BOC started in 1978, while Air Products entered in 1987. These firms built large-scale projects across China, supplying gas to industries such as steel, petrochemicals, and electronics. By 2008, these six major players had invested nearly $3 billion, operating over 100 companies and controlling 35–40% of the on-site gas and liquid product markets.
Domestic manufacturers are now catching up. Some have begun entering the gas supply sector, forming partnerships with steel and chemical companies. Firms like Sichuan Air Separation Equipment Group, Hangzhou Oxygen Group, and Yingde Gas Company have expanded their operations, building new facilities and acquiring existing ones. These companies benefit from lower costs and strong local connections, allowing them to compete effectively with foreign firms.
Despite progress, experts noted that China still lags behind developed nations in terms of centralized gas supply. In Western countries, 80% of industrial gas demand is met through third-party suppliers, with extensive pipeline networks. In contrast, most Chinese enterprises still produce their own gas, using one-on-one supply methods. To catch up, the government is urged to support financing and infrastructure development, particularly for regional pipeline networks. This will help drive the shift toward a more specialized, socially integrated, and regionally coordinated gas supply system.
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