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China's booming development produces pipe industry on steroids

By: Steve Toloken

September 13, 2013

Here's a plastics-related fact about China's industrialization that grabbed me: The country now produces and uses about half the plastic pipe in the world.

China's 1.3 billion people make up about 20 percent of the world's population, but the sheer scale of the urbanization and development there has given it a pipe industry on steroids.

That point was brought home to me earlier this month at a conference I attended in Xi'an, China, where more than 300 pipe industry businesspeople and academics from China and around the world met to compare notes on the latest research and market trends.

China makes about 24 billion pounds of plastic pipe per year, compared with a global total in the neighborhood of 44 billion pounds.

The Chinese figures come from the China Plastics Piping Association, while the global figures come from a study by U.S. research firm Freedonia Group Inc., which projects that pipe demand worldwide will grow 6.2 percent a year to 51 billion pounds by 2017.

Global pipe industry execs I spoke with at the 2013 International Plastic Pipe Exchange Conference, held Sept. 5-6 in Xi'an, said the data captures the big picture correctly. Even if China's official figures are on the high side, it's still a huge and outsized part of the world total.

But it's not the size of China's industry that interests me, specifically. It's what it could mean for innovation.

Economic development agencies like to talk about a "cluster effect," where related companies are in proximity, and the new ideas and innovation that comes from those connections. Think California's Silicon Valley.

If the Chinese plastic pipe sector is now half the world's total, it seems natural that the cluster will be producing real innovation.

As for the state of innovation at the conference, it's not in my expertise to say. There were a lot of papers from China, on topics like using liquid crystal polymers in making pipe, and using polypropylene block copolymers.

I asked the main foreign organizer of this year's conference, Zoran Davidovski, what he thought. Davidovski is vice president of innovation and marketing for Pipelife International GmbH in Neudorf, Austria, and chairman of last year's global plastics pipe conference in Barcelona, Spain.

"What we have seen is there is quite a lot of development and they have been improving standards and quality," he said. "In plastic pipe and fittings, they have leaped ahead."

Some Chinese leaders, however, were critical of their pace of innovation. Wang Zhan Jie, the secretary general of the China Plastics Piping Association, said it is "necessary to speed up innovation" in the country's PVC pipe sector.

Too many commodity products, too many small players and not enough high-value applications are holding it back, he said.

Still, the story of how the Chinese conference got started also sheds light on China's ambitions and needs.

A lot of Chinese engineers had been traveling to the plastic pipe industry's main global conference, held every two years in either North America or Europe. But it's a long and expensive trip, with the added challenge of visa problems for some of the Chinese, Davidovski said.

So, with a suggestion from CPPA in 2008, the world's pipe industry trade groups have been organizing the China event every two years, starting in 2009, in the off years between the main global conferences. This year was China's third conference.

Organizers said they had 370 registrations, the vast majority from China, but comparable in total numbers to the 400 expected at next year's global plastic pipe conference in Chicago.

It's obvious there's a lot of interest in technical development in China. And some companies have resources for research. The largest pipe maker in China, China Lesso Group Holding Ltd. (formerly Liansu), rivals the largest in North America in size, JM Eagle.

So far, China's pipe industry has developed more independently than other sectors in China's plastics industry like, for example, automobiles.

There, foreign brands dominate. VW, GM, Toyota and others have better quality and technical skills than competitors in the young Chinese car industry. That's brought a huge amount of Chinese investment from foreign plastic auto parts makers.

Not so in pipe. It's mostly Chinese. Maybe that's because pipe is a simpler technology, or maybe the industry's connection with the massive government infrastructure spending offers local firms an advantage.

In theory, that could limit the relevance of Chinese innovations outside the country. But with a domestic market equal to half the world, and companies battling each other for advantage, it will definitely be worth watching to see what comes out of a place making one of every two plastic pipes on the planet.

Toloken is Plastics News' Guangzhou, China-based Asia bureau chief.