Otis Elevator shifts focus to maintenance, repair

With safety as its top priority, The Otis Elevator Co, one of the largest elevator and escalator producers in the world in terms of sales volume, is planning to increase investment in maintenance and repair by 30 percent in China.

Alan Cheung, president of Xizi Otis Elevator Co Ltd, the biggest subsidiary of the US-based Otis, says its servicing business will be the company's focus, requiring more employees and training.

"China is not only the largest market for the elevator and escalator business but also the biggest service market in the world," Cheung says. "Because equipment that has been installed in the past decades gets older, there will be a great demand for maintenance and repair.

"And we want to keep investing in that and investing in people in that sector."

Because of industrialization, urbanization and overall economic development, China is experiencing rapid construction growth, which has led to greater opportunities in the elevator and escalator market.

But less than a quarter of market revenue has been generated by service work, in contrast to the much higher proportions found in other markets.

Zhang Lexiang, deputy secretary-general of the China Elevator Association, says compared with the elevator and escalator markets in the United States and Europe, where service work accounts for more than two-thirds of total revenue, the Chinese service market has a lot of room for growth.

The estimated maintenance market of China in 2011 was 6 billion yuan ($978 million). Zhang says it will grow steadily, along with the number of new installations.

"As the number of aging, overused elevators increases, so does the potential for accidents," Zhang warns. "But professional maintenance, which is crucial to the safe operation of the elevator equipment, can help reduce the risk of accidents and, with more customers coming in, the after-sales service is enjoying a high growth rate."

A number of escalator and elevator incidents in recent years have also prompted manufacturers to strengthen their service sector and check existing installations.

Xizi Otis, which has its head office in Hangzhou, Zhejiang province, has about 1,500 maintenance technicians and has set up service centers in every major city where it operates.

Cheung, president of Xizi Otis, says about half its entire workforce is dedicated to maintenance and repair, a higher percentage than the global average, and will continually be increased. "It's really a commitment from the organization that we want to streamline our organization here," Cheung adds. "China has become one of our most important markets. One out of every two elevators we sell in the world is in China."

Despite a booming market, Zhang says that elevator and escalator servicing is still in its infancy in much of Asia. Not enough trained technicians are available to meet the demand.

"Currently for many price-sensitive customers, third-party maintenance is a good option because of the cheap price, but the original equipment suppliers normally provide the best service," he says. "Both kinds of service should be encouraged to help form a base in the maintenance market for fair pricing and competition, not monopoly."