Green trend boosts plastic building materials business in China

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Rebecca Kanthor Irene Lee with Nanjing Dayuan WPC Material Co. Ltd

SHANGHAI — The greening of China’s domestic building materials market is giving the plastics industry a boost. At the Green Building Material Exhibition, the trend for “green” was apparent, even if one had to search hard for companies for whom “eco” was not just an advertising gimmick.

One company showcasing its sustainable products says that the market for green building materials has huge potential for plastics processors. Nanjing Dayuan WPC Material Co, Ltd. has been producing wood-plastic composite flooring for the past 8 years, but recently began putting its efforts into a new product range, attractive noise barriers and green plant walls made from PVC and composites.

Trading Manager Irene Lee said in an interview with Plastics News that there was an obvious jump in interest in eco-products around 2006. Before, she said, people looked down on the idea of using recycled materials.

“Society is changing,” she said. Last year, the company produced 20,000 tons of wood-plastic composites.

There’s a bright future, Lee said, but added, “it really depends on government attitudes.” Since the company’s biggest customer base is government clients, she is banking on increased interest in and regulations that promote green building.

 Another company at the show, Shandong Huifeng Wood-Plastic Profile Co., Ltd. was just established last year, but sales associate Theresa Sun says business is great.

“Our CEO was in the construction business but he saw the need and opened this business,” she said. She added, “We’ve got customers all over China and are working on the foreign market.”

The company, which produces replacement wood made of PVC foam board for use in advertising, furniture and home décor, is planning more investment, including buying new equipment to outfit a second workshop. The first workshop has 16 production lines, and the second workshop will almost double that total.

The company has produced more than 2,000 tons of product to date. Last year the company did $8.1 million (RMB 50 million) of business and this year they are aiming for $35.7 million (RMB 220 million) in sales. The company is also preparing the paperwork to go public on a local stock exchange.

“Even though we’re new, we’ve caught the wave of this trend,” she said.

Components makers also are experiencing a boost. Jinhua Plastic Products Co. started producing a range of vents for air exchange systems three years ago. The trend is looking up for them as well.

“Last year they [fresh air exchange machine manufacturers] wanted samples. This year the orders are coming in,” said a representative who did not give her name. “We’re optimistic.”

While heavy monsoon-like weather kept the attendee numbers down the first day, many did choose to brave the rain. “Even though there aren’t a lot of people here, we’ve had many visitors to our booth. People are interested.”

A company manufacturing tools used by extruders of decorative molding says the wood replacement market is one with good potential. He’s experiencing a 20 percent annual increase in sales to the sector. Two years ago the company did $1.6 million (RMB 10 million) in business, but last year it reached $3.2 million (RMB 20 million).

“Starting from two years ago, our customers are getting government incentives for using new technology” he said. The result is that more companies are getting into the sector.

Still the boom is most likely going to be felt most by manufacturers. Hebei Zenovo Recycling Resources Co. Ltd. is enjoying real success through the green building materials boom. With more people renovating, there is a high demand for products, said general manager Zheng Jian. The company makes realistic-looking marble, wood, and ceramic moldings from recycled polystyrene foam. “We’re a replacement business. The development of this industry is really fast.”

Still it may not be developing as fast as they had hoped. So far their sales are up 30 percent from last year, but their original goal was to double sales. The company still has plans to expand its factory in Hebei in the next one or two years, which will double the number of production lines.

Optimism is high, as companies look to increasing numbers of wealthy Chinese to support their business’ growth. A manufacturer of imitation grass and turf with clients such as Carrefour, Wal-Mart, and Ikea said that although their foreign market is highly developed, the China market is small.

“[The] China market is just opening,” said Shi Jin, a foreign sales associate with Forest Grass. People don’t really know what our product is. Once they learn about it, I believe the market has huge potential.” She said her company was actively seeking more domestic clients to simplify shipping. “The Chinese population is growing, there are more rich people and more villas,” she said. The company is already thinking about moving into a new factory within the next two years.

Even so, companies at the show acknowledged that the production costs sometimes cause problems for businesses in the market, especially the domestic market.

“The orders are increasing, from last year onwards, but in China this is a new product,” said Qu Xue Song, general manager of Shanghai Haixing Plastic Industry Co. Ltd., which produces PVC flooring for a mostly foreign market with two factories. Orders are increasing from the domestic market, but the problem remains the price. It’s more expensive than wood flooring, although he claimed that it would last substantially longer than traditional wood. As a result he said, “we don’t want to expand. Labor costs are high and we are already highly automated.”

Rebecca Kanthor Paul Chen, CEO of YW Systems.

Another flooring manufacturer said he has to educate his customers who always want the cheapest price. Speaking frankly, Paul Chen, CEO of YW Systems held up one of his products and said, “The problem is everyone wants cheap,” including European and American clients, he said, not just his Chinese clients.

“I tell them everything that is made in China has a range from good quality to bad quality.” Some flooring is poor quality because it is made from unsorted Chinese recycled plastic, he said.

His efforts at education seem to be paying off. Since making a special trip to visit his European clients last year to talk to them about quality differences, his orders have changed. Before, 80 percent of his clients were buying flooring made from unsorted Chinese scrap, but now orders for higher quality flooring are up 10 percent.

Next year the company will buy land for a larger factory and triple the number of production lines.

Another problem for Chinese companies is undercutting by copycat competitors. Sentai WPC Integrated House Co. Ltd. manager Bao Guangyi, one of the biggest prefab wood-plastic composite manufacturers in China, said the company is doing extremely well, but faces the challenge of smaller companies using its name to sell lower-quality goods.

The company is seeing a 20 percent yearly increase in sales and last year it produced 80,000 tons. Next year the company will go on the Shenzhen market and hope to compete on an international level.

But perhaps most telling was that Bao had no business cards to give out. He’d already handed them all out to eager potential clients before the end of the first day.