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China's trade surplus in molding machines grows four-fold in 2013

By: Steve Toloken

May 22, 2014

China’s trade surplus in injection molding machines increased substantially in 2013 — topping $200 million, a four-fold jump from 2012 — mainly because of a sizable drop in imports.

China is the world’s largest market for plastics equipment, and it’s historically been a sizable importer of machinery from Germany, Japan and elsewhere, fueling a solid export business for those countries.

But 2012 and 2013 marked a shift. They were the first two years that China carried a trade surplus in molding machines, which executives said reflected two broad trends: more global equipment makers building factories and machines in China, and the local industry getting more technically sophisticated.

The country exported $951 million worth of injection molding machines in 2013, while imports were $735 million, for a surplus of $216 million, according to figures from the Beijing-based China Plastics Machinery Industry Association.

That compares with a 2012 surplus of $49 million, on exports of $921 million and imports of $872 million, according to CPMIA figures. The statistics were disclosed by Haitian International Holdings Ltd., the country’s largest press maker, in a presentation to stock analysts.

In 2010, by comparison, China ran an injection molding machine trade deficit of more than $350 million.

 A Haitian executive said the China factories of international companies are increasingly purchasing Chinese-made equipment when they make capital investments.

“The international companies operating in China, they more and more buy local equipment,” said Helmar Franz, chief strategy officer for the Ningbo-based company. “Normally before they always brought their equipment [from abroad] and it was considered to be an import. There is a lot of change which I observe.”

Those companies are increasingly manufacturing in China for the local markets, rather than mainly to export, and are more willing there to buy Chinese-made equipment than in their homes countries, said Franz, who had a long career at Germany’s Demag Plastics Group before joining Haitian in 2005.

“To buy a Chinese machine in Germany is a crime. OK, not a crime but a catastrophe,” Franz said. “But in China, nobody asks.”

The drop in imports could also reflect sizable growth in the Chinese market last year.

Domestic sales by Chinese-owned plastics machinery makers of all types of equipment rose 12 percent in 2013 to $6.75 billion, CPMIA said, although officials with the association said they expect growth to slow to about 5 percent this year.

The trend of global plastics equipment companies increasing their investments in China was on display at the Chinaplas trade show, held in late April in Shanghai, with several firms announcing new investments.

Engel Holdings GmbH gave new details of its announcement from early April that it was setting up factory in Changzhou to launch lower-priced, standard machines for Asian buyers under a new brand.

The U.S. machinery maker Milacron LLC said it’s doubling capacity at its facility in Jiangyin, Jiangsu province, and Japan’s Nissei Plastic Industrial Co. Ltd. plans to open a new facility in Taicang, Jiangsu province, in December, its second in China.

Nissei President Hozumi Yoda said his company’s expansion is mainly for the Chinese market, although he said the company may ship some injection units and other components from Taicang to its headquarters factory in Nagano.

The Japanese injection machinery sector has been steadily increasing production outside its home country, mainly in China and Southeast Asia, although figures from the Association of Japan Plastics Machinery show some leveling of that trend.

Japan’s industry made about 11,900 injection machines domestically and 2,500 in other countries in 2013, numbers that are expected in 2014 to remain roughly the same or grow by about 100 machines in each category, said Yoda, who is also chairman of the Tokyo-based AJPM.