A new year has just begun. How will the Chinese market develop and
which sectors will drive the growth of the Chinese plastics industry?
The "Adsale Survey and Forecast on 2017
Plastics and Rubber Industry" organized by www.AdsaleCPRJ.com gathered the opinions
of different Chinese industry professionals.
The survey respondents came from a wide range of
industries, including electronics & electrical, packaging, automotive and
65% are optimistic
Of the 409 respondents, nearly 65% are "very optimistic" (23.7%)
or "optimistic" (40.52%) about the market in 2017. There is a
marked improvement in confidence among the plastics industry compared with survey results a year ago, in which only 35% of respondents fell into the two categories.
Such optimism is based on the strong performance of the respondents'
businesses in 2016, as 28% were "very satisfied" with sales and
development while 41% said they were "satisfied".
According to the China Plastics Processing Industry Association
(CPPIA), income from major operations and revenues of the 402 plastics
machinery enterprises above designated size have been steadily growing since March
2016 – the growth rate of the first three quarters was 24%.
The National Bureau of Statistics of China (NBSC) also reported a
3.9% Year on Year (YoY) growth for plastics products production in the period from January to
November 2016, which amounted to 69.9 million tons.
Meanwhile, income from plastics and rubber
products in the mentioned period was RMB 293.16 trillion, a 5.1% YoY growth. Revenues grew 8.6%, totaled RMB 178.25 billion.
The above statistics showed that the plastics processing industry in
China has been steadily growing in 2016, which is in line with the respondents'
Ma Zhanfeng, Director of CPPIA, said the industry's production
volume specifically reflects the market status. Production volume of plastics products amounted
to 75.61 million tons in 2015, representing a 0.95% growth over the previous
year -- a huge drop from 2014 when the industry recorded a 7.44% YoY
The market rebounded in the first half of 2016, as production
volume grew 6%. Despite a slight slowdown in the second half, the latest NBSC
figure still showed a 3.9% growth from January-November.
"Plastics is a basic material for many different industries, so
the global economic environment, which improved in 2016, lifted the
Chinese plastics processing sector. Growth in film production (5.9%) and
consumer plastics (6.71%) were stronger than in 2015," Ma said.
However, he noted that the growth of foamed plastics, a material
used mainly for insulation and packaging, went down to 0.52% during the first 10 months of 2016, compared with 11.76% in the same period in 2015.
1/3 respondents expect sales
growth of 10% or higher
What do the respondents expect about sales performance of their
enterprises in the coming year? The survey showed that 34.83% of them predict a
growth of around 11-20% in 2017; 34.12% estimate 1-10% growth; and 16.82% expect a strong growth of 21-30%.
Given that the Chinese plastics machinery and petrochemical sectors
enjoyed a good year in 2016, their confidence is understandably high when entering
2017. In addition to growing demand, the market is gearing towards higher
quality, which will further propel the industry.
Labor costs and weak
exports are major concerns
Despite the good atmosphere, survey
respondents admitted facing numerous challenges that could hinder their business growth.
28.65% said rising labor costs remain a pressing issue; 28.22% are worried
about the fluctuating raw material prices.
There are also concerns over the weak export market (14.27%),
especially after US President-elect Donald Trump stated in his election campaign that he would impose 45% import duty on "Made in China" products.
Even though Trump's protectionism plan is unlikely to be fully
implemented under the global trading environment, his insistence on heavy
duty for certain products, e.g. textile, petrochemicals, steel and rubber, to
revive the US manufacturing industry is a warning sign to global suppliers.
R&D is the priority
In which areas shall enterprises put their money in the coming year?
25.4% of the Adsale survey respondents believe R&D is the top priority, including
innovations in product design and new material. It clearly indicates a willingness to
develop proprietary technology to increase competitiveness.
The survey also invited respondents to pick a material that they believe has the biggest growth potential. Carbon fiber composites ranked 1st with 24.21% of the votes.
What is the most promising material?
Carbon fiber composites offers the same stiffness as aluminum alloy
but is 27% lighter, making it an ideal material for weight reduction in
vehicles. According to a recent MarketsandMarkets report, the global carbon
fiber composites market amounted to US$20.20 billion in 2014, and is expected
to grow at a compound annual growth rate (CAGR) of 9.9% from 2015 to 2020.
Despite the fondness for such a game-changing material, carbon fiber
composites is relatively new in the industry compared to metal and steel. Therefore, more
research and developments are required to popularize the applications of carbon
fiber composites, said Liu Ming, Group Lab Manager of
Advanced Materials for General Motors China.
Due to high costs and recycling issues, he said carbon fiber is used
mainly on luxury cars at present.
Ranking second is 3D printing materials (18.4%). While it has not quite
reached the state for industrial production, the industry agreed that material advancement is key to 3D printing technology.
The third material chosen by respondents (17.31%) is graphene, which is not a surprising result as applications of graphene have
been growing in recent years. Huawei, for instance, has introduced the world's
first high-performance battery made of graphene and lithium ion.
The "Guideline on emerging
sectors of strategic importance" set out in China's 13th Five-Year plan" has specified a number of materials for development, including lightweight alloy, high-performance fiber, specialty alloy, inorganic metal, special steel, new display
material, battery in mobility and green printing materials.
Automation and digitalization
Industry 4.0 is the buzzword in the manufacturing sector, and 22.22%
of the survey respondents believe investments should be made in the related areas, such as automation, digitalization and smart manufacturing process, which also counter rising costs in
This is in line with the central government's guidelines in the 13th Five-Year plan to propel high-tech materials and equipment, so as to forge ahead smart manufacturing.
As living quality rises in China, demands for upmarket consumer products are increasing, which in turn boost the need for advanced manufacturing. Citylong, one of the leading plastics products companies in China, has
made a significant step in smart manufacturing by opening an automated production
facility in June 2016.
Liang Jiajie, General Secretary of Guangdong Plastics Industry
Association Professional Committee of Plastic Household Items, noted that government support can lower the costs of smart manufacturing systems
and equipment, which will help to popularize such investments.
"Smart manufacturing unavoidably shakes up the companies in
different areas, forcing them to improve in lean production and standardisation. It is a valuable opportunity for the industry to modernize
their management," he said.
Anston Tan, Principal of German Innovation Center for Industry
4.0, told CPRJ China Plastic & Rubber Journal how an automated system has
significantly shortened mold-changing time in a consumer product company.
"We have established a mold changing procedure for them. The
software tells you what to do in each step and the workers are trained accordingly.
The system will inform you the procedure one hour before the end of each
production schedule. As a result, the time needed for changing the mold of a
250-ton machine has been reduced to 30 minutes from two to four hours."
Smart manufacturing, or Industry 4.0? No matter what it is called, Chen said
it cannot be achieved by simply replacing human workforce with robots. "Talent
holds the key in future manufacturing," he said. "Engineers must maintain a craftsmanship
spirit. Gearing up the people before gearing up the equipment."
In the pipeline:
all-electric machines, intelligent control and robots
The Adsale survey also asked respondents to choose the most important
machinery technology for the future. 24.08% selected all-electric machines, while
Industry 4.0 control systems ranked second (21.79%), followed closely by
Whether it is injection molding, blow molding, compression molding or thermoforming, plastics machinery has been striding towards an all-electric era.
As for Industry 4.0 system, Tan said the collection of big data is
of utmost important. "It doesn't mean the system will collect a vast amount of data, but identify important data and collect them in
an efficient way. This requires expert knowledge in both processing and IT
technology," he explained. "The system must be able to
produce in-line reports and send them to the relevant people for decision
making. Other enhancements include providing operation checklist, maintenance
and traceability for optimizing the process."
Conclusion: Despite rising costs in raw materials and labor which brought enormous pressure, the Chinese plastics and rubber industry is looking
forward to a better 2017. Sustained efforts in materials and machinery
innovations, as well as the pursuit of automation and smart manufacturing, are expected to stay in the limelight in the new year.
Creating opportunity with innovation
Rising costs and strong market
competition are the nightmares of manufacturers.
Thomas Shi, General Manager of Shanghai Shinnov Packaging Technology
Co. Ltd, believes that the best way to overcome adversities is to focus on
innovation, because patented products and innovative technology create added
values for the products.
He said the industry must utilise information technology, smart
production and automation to improve production efficiency. "In packaging,
it is important to control material use, manage quality and reduce scrap
rates and malfunctions. Larger-scale production can also increase energy