Keep up with China's rapid changes

By Nina Ying Sun
Assistant Managing Editor

Published: July 31, 2014 10:33 am ET
Updated: August 1, 2014 2:34 pm ET

Related to this story

Topics China

In many ways, 1989 was a very special year in history.

Plastics News was launched in Akron. Half a world away, China was trying to carry on economic reforms while clamping down political unrest.

In that year, China produced 3.5 million tons of plastics products, according to archived data. That number grew more than 17 times over the next 25 years, reaching 61.8 million tons in 2013. That translates to an average annual growth rate of 12 percent, slightly higher than China’s GDP growth of the same period.

It took China less than four decades to transition itself from an isolated, Cultural Revolution-wracked state to the world’s second largest economy only behind the U.S. As an important part of the nation’s manufacturing sector, its plastics industry has become the world’s number one producer of plastics products as well as plastics machinery. It’s also the world’s largest consumer of plastic resin and processed plastic products.

Back in 1989, molders in China made basic plastic consumer products. Today, they produce plastic parts that go into everything from iPhones to spaceships.

Riding the economic boom, many companies and entrepreneurs quickly built up business empires in a relative short period of time.

China’s leading domestic plastic pipe manufacturer Lesso Group (China Liansu) was founded in 1996 in Shunde, Guangdong province. They expanded the company over the years to 13 billion yuan ($2.09 billion) in sales, with more than two dozen productions bases in China and North America. Its founder, 52-year-old Wong Luen Hei, and his family, have accumulated 7.4 billion yuan ($1.19 billion) in personal wealth and are ranked 121st in China’s latest Rich List.

The rise of China in the global manufacturing arena has created both opportunities and challenges for Western companies.

During the first decade of this century, American businesses increasingly leveraged China’s low costs by moving manufacturing to or sourcing products from there. It helped them reduce cost and grow bottom line. Suppliers followed their customers to open offices and build factories in China.

Foreign direct investment fueled China’s assurgency as the world’s manufacturing powerhouse. But outsourcing certainly had side effects — the reduction of labor-intensive manufacturing in the U.S.

The world kept evolving. As China’s costs rose, some manufacturers shifted production away from China, either to lower cost regions or closer to where the end customers are.

Other companies repositioned themselves to focus on selling into the Chinese market and to domestic customers, as China’s rapid socioeconomic shifts created a growing appetite for better products.

Image By: Plastics News Sun

China is not just a growing market, but also a rising competitor. With the nation’s endeavors to transition from a low-cost producer to a high value economy, Chinese companies are becoming more sophisticated and more active in developed markets through direct investments and acquisitions.

Flipping the pages back to 1989, in Wenling, Zhejiang province, 16 families took the lead and ventured into the plastics business, as described in the book “Zhejiang Phenomenon: Industrial Clusters and Regional Economic Growth.” These entrepreneurs each purchased one to four injection molding machines from Ningbo and started making simple plastic items such as cutting boards and colanders from their house. Fellow villagers followed suit and the trend spread to nearby towns.

By 1993, half of the local residents were engaged in plastics molding. Wenling became the second largest production hub of plastics consumer products in China. One of the companies there was Taizhou Fuling Plastics Co. Ltd.

Some 22 years later, Fuling is investing more than $21 million to set up a highly automated factory in the U.S. and creating 75 jobs in Lehigh County, Pa. Interestingly enough, back in China, Fuling has reduced its headcount by 400 over the past five years by deploying more automation equipment. During the same period, the company managed to double three key parameters; total output value, per capita output value and average worker salary, according to Chinese media reports.

Fuling’s story shows that the world really is flattening. It’s also becoming more connected and interdependent than ever.

In another 25 years, will China become the world’s largest economy as some economists forecast? How will you fit China into your 2039 global business strategy? No matter what you do, keep up with China’s fast changes.


Comments

Keep up with China's rapid changes

By Nina Ying Sun
Assistant Managing Editor

Published: July 31, 2014 10:33 am ET
Updated: August 1, 2014 2:34 pm ET

Post Your Comments


Back to story


More stories

Image

Toy supplier sues maker in reshoring fight

September 15, 2014 3:18 pm ET

An Arkansas toy supplier is suing a Taiwan-based manufacturer for breach of contract and other civil allegations in a legal dispute that not only...    More

Image

ZF finalizes deal to buy TRW, creating another global auto supply giant

September 15, 2014 1:09 pm ET

TRW Automotive Holdings, in a supply chain megadeal that has been in the works since mid-July, said Sept. 15 it has agreed to be acquired by German...    More

Image

Sabic, Chinese Academy of Sciences sign five-year development agreement

September 15, 2014 11:54 am ET

Ties between one of the world's biggest oil producers and one of its biggest consumers grew tighter Sept. 12 with the announcement of a five-year...    More

Image

China's Zhongtai Chemical calls off large-scale PVC project

September 12, 2014 2:16 pm ET

Accepting the gloomy reality of the PVC market, Xinjiang Zhongtai Chemical Co. Ltd. has officially canceled a 800,000-ton PVC resin project and...    More

Image

China's top plastics processors named

September 10, 2014 5:46 pm ET

China National Light Industry Council has released its annual rankings of plastic processors.    More

Market Reports

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events