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Adsale annual survey gathers opinions from plastics and rubber industry professionals to reveal current and forecast trends.
Adsale annual survey gathers opinions from plastics and rubber industry professionals to reveal current and forecast trends.

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 materials, etc.
 

65% are optimistic about 2017

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.
Are they satisfied with the business in 2016?
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' opinions.

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 growth.

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
Sales growth for 2017.
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
What are the obstacles?
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
What is the prime target for improvement?
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?

What is the most promising material for plastics industry?
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 China.

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
What is the most promising machinery technology for plastics industry?
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 robotics (21.56%).

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 efficiency."

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