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Certainly China's auto slowdown is not anywhere near as drastic as the U.S. market's nosedive. Measured by year-to-date sales, the market still grew 16.7 percent in the first seven months, according to the China Automotive Industry Association. Commercial vehicles grew 18.8 percent, slightly better than passenger cars at 15.8 percent. But given that more than 100 companies manufacture finished vehicles in China, plus imported cars, competition is fierce. Therefore, the overall market shift may take a bigger toll on some car makers than others. Ford's affiliated firm, Mazda Motor Corp.. has cut its sales forecast in the country for the fiscal year ending March 2009 from 110,000 to below 60,000. The Wall Street Journal quoted Mazda as saying that a delay of sales network expansion is one of the reasons. Toyota's Shanghai joint venture FAW Toyota Motor Co. remains positive about reaching its 420,000-unit sales goal in China in 2008. That's according to Shanghai Securities. With another joint-venture factory in Guangzhou, Toyota expected to sell 700,000 cars in China this year. But the Japanese maker scaled back its global sales target last month.
I'm not just alluding to the across-the-board decline in sales for General Motors (20.3 percent), Ford (26.5 percent), and Chrysler (34.5 percent) in the U.S. in August -- and in fact, count in Honda (down 7.3 percent) and Toyota (9.4 percent). What also raised a red flag in my head was the Chinese auto market's performance. According to portal site Sina.com, China's National Passenger Vehicle Information Exchange Association pointed out that August is the first month of the year when car sales in China fell compared to a year ago. Year-ago comparisons are the usual measure of success or failure. But industry insiders argue that the Olympics pretty much froze auto sales in Beijing. The China Automotive Industry Association hasn't announced official data for August sales yet. But it noted that passenger car sales dropped on a month-to-month comparison basis for five consecutive months from March through July. That's a record in Chinese auto history, according to the China Securities News. The Shanghai auto industry saw its "production value" decline 18 percent in July, and "dragged [down] the overall industry output growth in Shanghai by 2.4 percent," the municipal government commented with disappointment. Analysts at CBI (Shanghai) Ltd. said auto suppliers are bound to face a domino effect. Resin markets are expected to reflect the changes as well.
The single largest acquisition of a Chinese company by a foreign firm in Chinese history is likely to be pulled off by the world's largest beverage company. Coca-Cola Co. is offering to buy the China Huiyuan Juice Group, for $2.5 billion, about three times the current value of the firm based on its Hong Kong-listed share price. Regulatory approval pending, Coke will buy all the outstanding shares, bonds and options of Huiyuan and take the company private. The French food company Groupe Danone owns about 23 percent of Huiyuan and American private equity firm Warburg Pincus 6.8 percent. It's worth noting that Danone's journey in the Chinese beverage market has been marked with dozens of lawsuits with its Chinese partner Wahaha. Danone may still be trying to cope with the denial ruling by a Swedish arbitration tribunal in July. Beijing-based Huiyuan said it dominates the pure juice market in China with 46 percent of market share. In addition to pure juice, the company also makes diluted juice, fruit vinegar, bottled water, nectar, etc. Huiyuan's packaging solutions include 1-liter and 1.5-liter PET bottles. The company told Chinese press earlier this year that it runs 15 PET aseptic cold-filling lines. And I found from the company Web site that Huiyuan makes PET bottles in-house with Sipa blow molding equipment. It looks like that Huiyuan, with more than 30 factories nationwide, is stronger in northern China than the southern regions. But the company currently is setting up production in Guangdong province. It's also interesting that Huiyuan's listed entity doesn't represent Huiyuan's entire portofolio. The concentrated juice business, for example, is directly owned by Huiyuan Beijing.
Links:
www.coca-cola.com
www.huiyuan.com.cn/en
www.danone.com
Courtesy of Huiyuan
The economic slowdown in the U.S. is weighing on China. Wenzhou, Zhejiang, one of the busiest export bases in China, reported a surge of contract breaches since last year.
Beijing-based China Export & Credit Insurance Corp. (Sinosure) told Digital Business Time that the dollar value of contract breach cases filed with the agency's Wenzhou branch reached $8.79 million in the period from March 2007 to February 2008. That's a 639 percent increase over the previous year. American buyers account for 75 percent of the total. A very common trick buyers use is decline of shipment, Sinosure said. Consumer products are more likely to encounter failure of payment than other categories. The new trend is definitely shaking the image of export businesses. In the meantime, Chinese exporters also suffer from the depreciating dollar. Measured in U.S. dollars, Wenzhou's exports of footwear to the U.S. grew a mere 0.3 percent in the first half, but when converted to Chinese yuan, exports are shrinking. These problems are not unique to Wenzhou. Rather, the entire export-led Chinese economy is facing challenges. Will China be able to weather the storm this time? As we say, don't put all your eggs in the same basket. Although no other single country will demand as many goods as the U.S. did [and still does] in any time soon [perhaps China or India will catch up one day], there are still under-tapped markets for the Chinese to explore. And don't forget about China's domestic market. I wouldn't call it under-tapped, but it certainly presents potential, especially on the higher end.
Like in many other developing countries, waste scavengers play an essential part in China's recycling industry. In fact, they are called "Kings of waste" in China. However, we all know they don't look as glamorous as their nickname implies. In fact, in the plastics boomtown of Ningbo in China's Zhejiang province, scavengers may be asked to live only in designated areas. The city is considering a bill aimed to better mange the recycling industry, Modern Jin News reported. One clause suggests local jurisdictions make migrant waste scavengers "live in the same areas when applicable." The concern is that these migrant scrap collectors set up collection points without permission, which can harm the city's image, as well as causing traffic and community safety problems. And, the truth is, there are so many of them! Ningbo alone has 32,000 people involved in the recycling sector. Ningbo's neighboring city Yuyao is believed to be China's largest distribution center of plastic resin, both virgin and regrind. I don't think the city government can just order people to live in certain areas. But local communities may voluntarily intervene by limiting real estate rentals. Some already are doing it. As sketchy as the bill is, it reveals many thought-provoking issues: Which government agencies and departments should be responsible of regulating the recycling industry? What are the practical ways of controlling migrant waste collectors? How can municipalities prevent pollution from recycled materials? No one has the answers yet. Some cities tried to encourage waste scavengers to pass tests and get certificates, but that did not work out. Cixi, another city in the industrial province Zhejiang, has recently passed a plan to set up a recycling base with sufficient infrastructure, such as sewage treatment plants. The complex will be 41 acres. A good start, I say, both the attention and the actions.
The opening ceremony of the Beijing Olympics was a spectacle, but it also generated 107.9 metric tons of waste, the Beijing government said. Thanks to more than 3,000 workers and 300 vehicles involved in the collection and initial processing, more than 80 percent of the waste was recycled. A total of 1,122 recyclable waste bins were placed in the Olympic Green in Beijing, in addition to 1,422 non-recyclable waste bins. Workers used electric cars to transfer waste from bins to the four "Waste Compressing Points" around the Green. The points were equipped with compressing containers that measure 17 cubic meters and each fit nearly 10,000 bottles. The next stop was the Xiaowuji Waste Management Station, where China's only NIR automatic sorting line processed the waste. Baled bottles were then delivered to recycling plants. Manual sorting was used to process waste collected from 11 stadiums located in the Haidian, Fengtai and Shijing Shan districts. It is reported that the audience of the U.S.-China men's basketball game left 26,614 plastic bottles and 223 aluminum cans. Previous reports suggested that Coca-Cola and Beijing Incom Resources Recovery Co. were going to handle the recycling part of all PET bottles collected from Olympics stadiums. [Sources: China Environment News, Fazhi Evening, Beijing Evening, Coca-Cola]
In a family chat about China's bag ban, my parents all of the sudden asked me: "Who invented plastic bags? Did he/she have any idea that plastic bags would turn out to be such a controversy?" I guess they assume that I must be a plastics expert since I work for Plastics News. Too bad, I didn't have a clue. I found some relevant info from the Internet but can't verify the validity. I asked around in the office and still don't have an affirmative answer. I am going to call up some real experts to find out more. In the mean time, can anybody shed some light on this interesting question?
Tokyo-based Mitsui Chemicals Inc. told the Nikken Business Daily that the company is expanding the compounding capacity of its subsidiary in Zhongshan, Guangdong province, in China. The company plans to invest 1 billion yen on compounding equipment and raise the capacity of polypropylene compounds in Zhongshan by 25 percent, bringing the site capacity to 50,000 metric tons annually. The compounds are mainly used for automotive bumpers and interior trim. The expansion will be completed by summer 2009. Mitsui Chemicals announced in April its plans to increase the compounding capacity in Zhongshan to 42,000 metric tons by the end of 2009. It seems like the plan has been revised, with a larger investment and an earlier deadline set for China. In the same announcement, the company mentioned a series of PP compounding capacity increases around the globe. By the end of 2009, it will add:
6,000 metric tons of capacity in Sydney, Ohio;
17,000 metric tons in Nashville, Tennessee;
5,000 metric tons in Aguascalientes, Mexico;
27,000 metric tons in Bangkok, Thailand;
and 15,000 metric tons in New Delhi, India.The Nikken report also said that Mitsui is investigating the possibility of adding a plant in Europe. The company currently has manufacturing sites in Stirlingshire, Scotland, and Bad Sobernheim, Germany.
The answer is Nanjing Jinling Plastic & Petrochemical Co. Ltd., located in Nanjing, the capital city of Eastern China's Jiangsu province. Nanjing Jinling was founded in 1955, became a subsidiary of Sinopec, China's largest petrochemical company, in 1982 and was merged into Jiangsu GPRO Group Co. Ltd. in 2004. It appears that Nanjing Jinling still has close ties with Sinopec -- the official sponsor of the seats. The seats were blow molded out of polypropylene and feature two colors -- "China Red" and "Great Wall Grey," Sinopec said in a release. Engineers at Nanjing Jinling said the color names were coined by "national leaders in Beijing" with no detailed description, and it took the company months to develop the specific shades, hues and tints. The PP material is highly flame-retardant with an SDR below 50 and is UV-resistant -- the color will not fade for at least three years. What will happen when the color starts to fade? The manufacturer noted that the seats can be easily recycled. Nanjing Jinling recently revealed the timeline of the project to a regional newspaper, Jiangsu Fazhi: December 2005: Nanjing Jinling received product requirements from the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCGO) and started the product development process, with an emphasis on ergonomic design.August 2007: The BOCGO approved the design and prototype.October 1, 2007: The company completed the molding of 80,000 seats in less than two months and started installing.January 26, 2008: All 80,000 seats were installed, and the project was completed.
Photo courtesy of Nanjing Jinling
I've been real busy these days. Besides watching the Olympic Games on TV for hours and hours, I've had a good taste of the Western world's criticism of China. From radio shows to the Internet, China is the biggest controversy. The Beijing Olympics is, without a doubt, an extremely emotional moment for China. For Americans, it's not easy to sympathize with a country that's geographically and ideologically half a globe away. But, take a moment to read what an American consultant living in Shanghai had to say. Kent Kedl, the author and general manager of Technomic Asia, watched the opening ceremony at two bars -- one local, the other expat-oriented. Find the original article in the China Business Blog. During the singing of the Chinese national anthem at the opening ceremonies, many people had tears in their eyes, as if they had just won a gold medal after many long years of training. Well, in a sense, they have. Even if much of post-Liberation history has been erased from the books here, the shame of the Opium wars and Japanese colonial occupation is learned by wrote. So, to see 80 world leaders gathered with 91,000 others in a stadium to be watched by -- probably -- nearly a billion more on television, all to recount 5,000 years of Chinese history and contribution to world culture and commerce ... well, that should be emotional.So I say, let China have its moment. Are there still problems? Of course there are. But I believe that the way out of these problems is through the pride and (yes) abject nationalism of the Chinese people themselves. Pride in building a nation into the fourth largest economy in the world over the past 20 years is child's play compared to the challenges of building one that represents justice for every one of its citizens. Given that, over the past 200 years, we Americans have not been able to do this ourselves -- and, in fact, have slipped drastically backwards in recent years -- should give us all pause.But give it time and the Chinese people will stop comparing themselves to where they have come from and will start measuring themselves against where they could be. Then -- and only then -- will change happen in China.Twenty years ago when I was teaching in a Teacher's Institute in rural China, where the average wage was barely $40 a year, I never thought I would see this day. So I am going to gather with my friends and neighbors at the local pub and will lend my voice to the shouts of "Zhong Guo Jia You!!" ("Go China!!"). I, too, get misty when I see a Chinese gold medal winner on the stands and hear their national anthem. I am not Chinese and I will never claim to know what it is like to be Chinese, but I am honored to be here among them as they are discovering just what that is. It makes me sad that the Chinese people are unaware of and unprepared for the criticism, and, undeniably, some hostility from outside the country. Three in four Chinese believe the world loves China, partly because the government blocks foreign media [details in a Washington Post article]. It's time for China to face the music, take it gracefully and strive to improve itself -- all aspects of the society. In the end, action speaks louder than rhetoric.
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Since the launch of our Plastics News China eWeekly newsletter and related Web site in June 2005, I've been receiving e-mails and phone calls from readers who would like to discuss news events and industry trends with me. This blog is to provide a platform to facilitate such communication. I invite you to come here often, read about the latest happenings and discuss them with me as well as with industry friends all across the globe. I welcome your comments and opinions.
Nina Ying Sun
Plastics News
Assistant Managing Editor
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