By: Steve Toloken
April 1, 2013
HONG KONG — China may have hit a watershed last year in its trade balance for injection molding machines — for the first time, exports of injection presses made in China exceeded imports, with the country sending nearly US$1 billion worth of molding machines abroad.
Industry executives and the China Plastics Machinery Industry Association offered two reasons for the change: The country's domestic press industry is becoming more competitive globally and foreign machinery companies are building more of their own factories in China to better tap its growing market and exports.
China exported $900 million worth of presses in 2012 and imported $810 million, a reversal from 2011, when Chinese injection molding machine exports were $824 million and imports were $842 million.
It's a much sharper change from 2010, when China exported $624 million of injection molding machines and imported $926 million, according to Beijing-based CPMIA.
The figures were first supplied to Plastics News by Chinese press maker Haitian International Holdings Ltd. as part of a presentation at its March 27 annual meeting, although CPMIA later gave slightly revised figures.
"2012 is a turning point," said Helmar Franz, executive director at Ningbo, China-based Haitian, in an interview at the firm's annual meeting in Hong Kong.
"This says to me that some people in Asia, like the Taiwanese, the Japanese, they continue to relocate their [plastics equipment] manufacturing facilities" to mainland China.
James Zhang, deputy general manager at press maker Guangdong Yizumi Precision Machinery Co. Ltd. in Foshan, China, said exports are increasing because Chinese companies have made steady progress in improving their technology, quality, customer response time and brand recognition.
"We think this situation will continue [for] five to 10 years," he said.
China's supply chain
Haitian's Franz said the increasing number of foreign companies making equipment in China will improve the country's domestic supply chain for injection presses. He particularly singled out the impact of the Japanese machinery companies, which began investing much more heavily in China in the last five years.
"If the Japanese manufacture in China, our suppliers will get better," he said. "We all buy the same motors and spindles and components. If the Japanese manufacture in Japan, we have no access to this."
"It's a good message that the Japanese, who are very respected by us, choose to manufacture in China," he said.
Franz said some of the increased exports, such as to Thailand and Indonesia, are not from Chinese-owned companies. Rather, it's equipment from Japanese brands that used to be made in Japan and exported, but are now made in China.
"They used to sell the Japanese-made machine to Indonesia, but now they sell the Shanghai-made machine, so it becomes a Chinese export," he said.
Those same Japanese manufacturers are now starting to set up plastics equipment factories in Thailand, however. It's not clear what impact that will have on these Chinese export figures in future years.
Still, Haitian said CPMIA data for the last several years has shown that Chinese-made plastics equipment is taking a larger portion of the country's domestic market, which in 2012 was about 49.3 billion Chinese yuan ($7.8 billion, at 2012 average currency exchange rate), a decline of about 3.5 percent from 2011's record high.
Those figures include all plastic machinery and are not limited to injection molding machines.
Chinese-made plastics processing equipment, including that manufacured by foreign-owned factories in China, accounted for 73 percent of the domestic market in 2012, up significantly from 49 percent in 2008.
Franz said the 2008 global financial crisis partly caused the shift, as companies in China looked much harder for bargains and were willing to take a look at locally made equipment when they had not in the past.
In 2008, foreign-made equipment accounted for 51 percent of China's 34.8 billion yuan plastic machinery market, but it has fallen below 50 percent every year since.
CPMIA has a goal of having 80 percent of China's plastics machinery being made domestically, Franz said, although CPMIA officials said there's no specific time frame to meet that target.
"The percentage of equipment made in China will obviously continue to improve, however it's a little hard to say the exact time when it'll increase from 73 percent to 80 percent," CPMIA said in a statement.
Among all types of plastics equipment, Thailand and Indonesia ranked first and second as export markets for machinery made in China.
China sent $137 million worth of plastics equipment to Thailand last year, and $123 million to Indonesia, steadily increasing from $39 million and $36 million to the two countries in 2009, respectively.
Brazil, Turkey, Vietnam and Russia were the next largest markets, with sales to Brazil and Turkey dropping in 2012. Russia appeared in the top six for the first time, with $77 million.
Haitian said data from other countries also indicates the growing importance of China as a base for plastics and rubber machinery manufacturing.
According to data from Germany's machinery manufacturing trade group VDMA — which Haitian included in its 2011 annual report — China produced 30.5 percent of the world's plastics and rubber machinery, ranking it the largest manufacturer of such equipment, trailed by second-place Germany, which had 22 percent of the global market.
In 2007, by comparison, Germany ranked No. 1 with a 24.7 percent global market share, while China ranked No. 2 with a 15.9 percent share.
As with some of the other data, it does not necessarily mean that Chinese companies are supplanting German ones, however. Several German producers built or expanded factories in China in that time, and a German-machine made in China would count as Chinese equipment, not German, in those figures.