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Report assesses China's machinery sector

December 18, 2012

SHANGHAI (Dec. 18. 11:50 a.m. ET) — Improving technology and lower costs have helped Chinese plastics machinery manufacturers compete with Western suppliers. But a considerable number of Chinese suppliers will disappear in the next five years, according to a new study.

Currently there are 546 domestic manufacturers of plastics machinery in China, most of them producing injection molding machinery. The industry is quite fragmented, with the largest 10 manufacturers accounting for only 39 percent of the total sales, according to Georg Stieler of Stieler Technologie- & Marketing-Beratung GmbH & Co. KG, a L"rrach, Germany-based firm with an office in Shanghai.

According to Stieler, higher-end Chinese press manufacturers have been able to build machines that can handle 80 percent of molding applications. That number will continue to rise, resulting in a shift away from German, Japanese and other imported equipment.

At the same time, there is a large price discrepancy between imported machinery from Europe and made-in-China equipment. Imported injection presses cost up to three times as much as domestically produced ones, and imported extruders and granulators cost up to 30 times as much.

“Chinese as well as international machine buyers in China still rely on foreign machines,” Stieler, general manager of the company’s Shanghai branch, wrote in an email to Plastics News China.

“Other important benchmarks where Chinese manufacturers still lag behind are speed, replicability and energy-efficiency,” he wrote.

Chinese companies face challenges to raising their equipment standards.

“The low profitability and a lack of reliable intellectual property rights lead to short-term thinking on the management side,” Stieler noted. “Together with a lack of capable R&D personnel and a high employee fluctuation, this turns out as a vicious circle for many companies.”

The report predicts growth for Chinese-made machinery, with an increase in quality over the next few years. It credits the Chinese government for its strong support to the industry and quoted the China Plastics Machinery Industry Association’s projection of a growth rate of 12 percent through 2016.

Bigger companies are expected to develop more sophisticated machinery and further expand internationally, Stieler said, “We expect a considerable number of players in the low and medium segment to disappear during the next five years.”