With the increasing globalization of international trade, the importance of standard testing and certification in promoting industrial chain upgrading, regulating market development, and improving regulatory efficiency is becoming increasingly prominent. Opportunities and challenges coexist. From a demand side perspective, on the one hand, China's economy has shown resilience and vitality in a mild recovery, with the upgrading of residents' material consumption levels and strengthened market supervision policies. The role of testing and certification in helping China move towards a "quality and manufacturing powerhouse" is becoming increasingly prominent. On the other hand, the competition in the existing market is intensifying, and the trend of "buyer's market" is becoming more prominent. There are many factors that customers consider when making decisions, making it more difficult for testing and certification institutions to attract customers. Institutions with forward-looking thinking have entered the ranks of digital transformation to adapt to supply and demand changes, leveraging digitalization Emerging technologies such as AI have increased their touchpoints with customers, expanded their customer base, and gained insights into emerging incremental markets through comprehensive market analysis, freeing them from the current predicament of low customer prices.
Based on the competitive landscape, market distribution, technological innovation, dynamic signals of leading enterprises, and benchmark cases, the Exploration Big Data Research Institute presents to business owners a clear and in-depth overview of the recent changes and opportunities in China's testing and certification market, and further looks forward to the future growth direction of the testing and certification industry, forming the following five major perspectives:
Key points of the report:
Viewpoint 1: The competition among foreign leading companies and the increasing risk of credibility pose challenges, requiring a shift from passive customer acquisition to active exploration, expanding customer base, and seeking development
Viewpoint 2: The number of certified and certified enterprises in the province is relatively high, and the industrial industry has a higher number of certified enterprises with a high penetration rate and increased market opportunities
Viewpoint 3: Small and medium-sized enterprises rely on low price competition to survive, and should consolidate their competitive advantages through product personalization, service experience upgrading, and improving sales power
Viewpoint 4: Enterprises should introduce digital technology, strengthen regional linkage, enhance resource reserves and integration efficiency, achieve business value-added, and develop towards a "one-stop" service direction
Viewpoint 5: From a digital perspective, intelligent sales are a good medicine for testing and certification institutions to break through industry competition and achieve growth against the trend, improving efficiency in all aspects of business operations
01 Competitive landscape and opportunities in the testing and certification industry
After the millennium, the domestic testing and certification market has entered a high-speed promotion stage, and in recent years, it has developed towards specialization, intelligence, and scale. Although the industry's growth rate has slowed down, from the perspective of market performance, industrial certification is showing a rapid momentum, and many emerging industries also have growth opportunities. The following will be analyzed one by one:
Industry Changes: Slowing Growth, Manufacturing Supports Quality Certification "Half Wall"
Under the requirements of the "Institutional Management Measures", "streamlining administration and delegating powers", and "supply side reform", China's testing and certification industry has made leaps and bounds in terms of the number of institutions, certified organizations, and certification organizations. According to market insights from the Tanji Big Data Research Institute, as of March 2024, there are a total of 68455 testing and certification service related enterprises in China, an increase of 7344 compared to 2019, further intensifying the competitive situation. The market size is expected to exceed 530 billion yuan in 2024.
According to data from the State Administration for Market Regulation, as of January 1, 2024, there are approximately 3.76 million valid certification certificates in China, with Guangdong Province having the highest number of certificates obtained. From a regional perspective, economic development is positively correlated with industry scale, The development potential of Guangdong Province's GDP certification is still very huge nationwide. From the perspective of downstream industries, the manufacturing industry supports half of the quality certification industry. The type of voluntary industrial products with a high proportion of certificates obtained by enterprises is 1056983, accounting for 57.81%. With the macro demand for high-quality development, the future development space of industrial enterprise certification cannot be underestimated.
For 14 consecutive years, China's manufacturing industry has ranked first globally in terms of scale. According to data, the current direction of testing and certification industry services is still in the manufacturing industry, accounting for 41%. The competition is highly market-oriented, with private enterprises accounting for up to 85.19%. Leading enterprises expand their market influence through mergers and acquisitions to expand their business in new industries, regions, and fields.
Industry regional distribution: Guangdong is a dual source of "issuing and obtaining certificates"
According to data from the Detective Big Data Research Institute, in terms of provincial distribution, Guangdong Province is a gathering place for the testing and certification industry. In 2024, there were a large number of testing and certification enterprises in Guangdong Province, with 16965, making the number of "issuing and obtaining certificates" one.
According to industry registered capital data, enterprises with a registered capital of less than 5 million yuan account for over 33%, with Class A taxpayers accounting for 48%. The overall level of the industry is low, and there is chaos in the institutions, which leads to doubts about the credibility of small and medium-sized certified enterprises by the parties to be audited, and high risks in enterprise management and operation. More customers prefer large brands, comprehensive strength, and more professional technology in large institutions. Small and medium-sized enterprises mainly cater to customer business needs, with low customer prices and weak competitiveness, and urgently need to find new ways out.
Industry competition pattern: Overall showing a small scattered and weak pattern, with "cluster financing" expanding market share
The industry relies on low price competition to survive, showing a weak and scattered situation. It is greatly constrained by demand, technology, and geography, with over 60% choosing financing. Among the enterprises that have disclosed specific financing amounts, the enterprises with the most financing amount are those with financing amounts below 50 million yuan, accounting for 26.6%. After the financing is completed, many companies have started a new round of investment and expansion, mainly for the expansion of research and development teams, market promotion, and new product research and development. 80.4% of the testing and certification institutions that received policy support in 2024 are high-tech enterprises, with strong overall technology introduction capabilities in the industry.
Public data shows that the average income of a single report by private testing institutions is about 400 yuan, which is lower than the industry average price of 600 yuan. Under the competition of low prices, the performance and profits of testing and certification institutions are generally facing a decline, and their cash flow situation is not ideal, facing the risk of being eliminated from the market. To avoid this situation, in addition to establishing an effective evaluation mechanism, enterprises should actively explore the market, use digital customer acquisition methods to increase the customer base, and open up new performance growth points.
Opportunities and crises in the 02 testing and certification industry
Industry driving factors: peripheral technology accelerating value exploration
From 2013 to 2023, the number of various instruments and equipment increased year by year, with a compound annual growth rate of 12.6%. The growth rate of the number of equipment exceeded that of institutions. The upgrade of intelligent detection technology and equipment application promotes the updating of instruments and meters in online detection, measurement and other fields. Manufacturing equipment and inspection and testing equipment are interconnected, achieving automated and intelligent detection processes, improving inspection and testing efficiency and accuracy, and enhancing human efficiency.
Industry driving factors: increased public awareness and government regulatory efforts
In the long run, the total amount of social consumption will continue to grow, and people's requirements for the quality, health, and performance of consumer goods, food, etc. are increasing, which will force production enterprises to improve product quality, thereby bringing more testing and certification needs. In addition, the government has increased its regulatory efforts, promoting enterprises to improve product quality and brand reputation through mandatory certification, standard revision, and improving technical specifications through testing and certification.
Industry constraints: Foreign investment competition and industry competition, squeezing local institutional space
Due to the late start of China's testing and certification industry, foreign leading enterprises have taken advantage of advanced testing equipment, strong brand strength, international standards, and other advantages to seize the market. Over a century of accumulation has made it difficult for local institutions to catch up in the short term. In addition, malicious competition among peers poses reporting risks, many institutions have been banned, business risks have intensified, and industry credibility has also been compromised. Only by "surviving" can one possibly "live well". In order to avoid the market being completely eroded, many institutions are accelerating digital business model innovation, continuously expanding service boundaries to upgrade brand strength, introducing digital means to enhance sales power, shortening every link from lead acquisition to conversion, further empowering the industry's refined operation and cost reduction and efficiency increase, in order to obtain certainty in a changing market environment.
Faced with challenges such as customer acquisition costs, operating costs, and malicious competition from peers, many enterprises choose to seize the market through digital active customer acquisition in the short term to comply with the trend of compliance development. For example, they choose to undertake customer groups of failed institutions, screen more customers with new and renewal qualification requirements, obtain customers with product workshop testing and measuring tool calibration needs, expand their customer base, achieve rapid results, and open up a new form of digital competition.
03 Road to Breakthrough in the Testing and Certification Industry
Testing and certification institutions are facing market surplus and intensified homogeneous competition, with generally declining performance and profits, unsatisfactory cash flow conditions, excess regional capabilities, and difficulties in acquiring new customers. Opportunities and challenges coexist, forcing private testing and certification institutions to actively explore, innovate and transform themselves. By leveraging digitalization to enhance services and core competitiveness, increase business revenue and market share, enterprises that actively seek innovation and change are still standing out.
Industry Trend Insight 1: Innovating Business Models and Creating Business Value
Business upgrade and transformation. Enterprises should actively explore B-end cooperation, enhance business value-added, try cross industry and cross regional operations, and develop towards "one-stop" services and "integrated" solutions. Continuously improving market friendliness and stickiness.
Industry Trend Insight 2: Consolidate Digital Competitiveness and Focus on Incremental Markets in Emerging Industries
Sales power is a strong growth engine for testing and certification institutions, representing the future of their development. The form of casting a wide net does not bring more conversions, but rather requires refined operations to attract customers and find customers with demand for the right products, which is the direction of growth. The weak profitability of enterprises and the need to strengthen their core competitiveness require the construction of sales channels and the establishment of sales capabilities in the short term. Exploring the sales cloud can help institutions achieve high cost-effectiveness in acquiring customers, enhance their ability to reach customers, and build sales teams. It can also undertake business with expired institutions, reach abnormal certificate customer groups with just one click, and filter based on dimensions such as institution revocation time, certificate suspension date, and violation certification penalties, providing clearer information and communication entry points.
The growth of traditional testing and certification fields is limited, and many institutions choose high growth sub sectors such as new energy and biotechnology to forge their own strengths and drive business growth upward. Alternatively, we can take the lead in developing testing projects with market potential using the certified version of the detection system, quickly forming large-scale production capacity that meets the requirements of emerging track testing certification, expanding our business scope, and building strong core competitiveness for the institution.
Industry Trend Insight Three: Transforming Business Models
The sharp decline in market demand and the loss of old customers will inevitably become a bottleneck for development, relying solely on passive customer acquisition. The degree of digitalization of certification agencies will become an important bargaining chip for later competition and elimination. The digital business model mainly reflects innovation in four aspects: value creation, operation, support, and acquisition. Only through a good product foundation, sales team, and good internal operations can performance and operational level be improved.
Industry Trend Insight 4: Intelligent Sales Reduce Costs and Increase Efficiency
With the intensification of competition, having a high cost-effective customer acquisition ability is the key to achieving performance growth for testing and certification institutions. It provides solid support for filling gaps, forging strengths, and establishing new models to break through the development constraints of key business processes. In addition, optimizing various aspects of operation through digital means can achieve short-term improvement in performance and sales management level, thus widening the gap between enterprises.
In 2024, various industries will enter a new stage of recovery. Faced with uncertainty and uncertainty, testing and certification enterprises need to be more aware of the importance of maintaining composure. External difficulties are also the internal driving force for seeking innovation and change. Change requires both determination and methods. For testing and certification, a mature industry that has been around for hundreds of years, it is impossible to rise overnight to become a leader. The efficiency of the sales process is currently an important means for enterprises to break through the encirclement of internal competition. Today, with rapid performance growth, there is a tomorrow for local forces to overtake in the curve.