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Maybe the Indian plastics processors who fasted July 7 in Chennai could find a more healthy way to communicate with the government. The dawn to dusk fast was to press the Indian government to provide better support for thousands of local plastics enterprises, including uninterrupted power supply. "Entrepreneurs have been facing severe hardship, particularly in Mettupalayam indutrial estate for some time now due to frequent power cuts," S. Rajaganapathy, president of the Plastic Traders and Manufacturers Association said in a release, according to The Hindu. It's unclear how many people participated in the fast. But the firms also hope to get reduced duty on imported raw materials -- 5 percent customs duty and 4 percent additional import duty.
Who could have guessed that nearly 700 Chinese workers would lose their jobs overnight in auto molder Progressive Moulded Products Ltd.'s recent layoff? One-third of the 2,000 workers at the Concord, Ontario, factory were of Chinese descent, Chinese newspaper Ming Pao reported. Since the factory didn't have a union, workers joined forces with representatives from the Canadian Auto Workers and held negotiations with the owner, who has agreed to pay wages up to June 2008 and health insurance until the end of July. Progressive also said it will give each laid-off worker C$1,500. "It's difficult to find a job in Canada. Now the factory is closing, where can I get the money to pay bills and support my kid?" Ming Pao quoted one of the former workers, identified as Ms. Zhang, as saying.
Two American business professors lead a survey of Chinese workers and published some of the results in an article headlined Misunderstanding the Chinese Worker in the Wall Street Journal. In a nutshell, the study found that the West's perception that Chinese workers are motivated only by salary may be outdated and wrong. It points out that "Cultural shifts in China have altered social networks, leaving some workers there looking to employers for a sense of affiliation," and "nonmonetary incentives such as training, time off and community building might help multinational companies attract and retain workers in China." I chatted with some friends including a head hunter in Shanghai on the subject. I was told that multinational companies are no longer the only top choice for Chinese talents. When Western companies first set up shops in China in the early 1980s, up until the mid- to late-1990s Chinese local employees at Western companies took pride in their income, which was higher than Chinese state-owned companies and domestic private enterprises by a large margin. That gap has since been shrinking, as Chinese state-owned and private companies catch up on compensation. More importantly, the absence of an efficient social security and health-care system has made people realize that money doesn't bring a sense of security. "The average government employee's base salary is still lower than his/her counterpart with multinational companies," my head hunter friend said, "but you pretty much have zero pressure at work, don't need to work overtime and also enjoy all kinds of benefits and additional income." Typical benefits can be anything from overseas vacations to a monthly garment fee; gym passes to quarterly bonuses for working in summer (called High Temperature Allowance); right down to cash, gift cards and food items. Most importantly, state-run company workers never need to worry about losing their job. Believe it or not, many Chinese are nostalgic of their "iron rice bowls" (an idiom coined for permanent, state jobs) that have been shattered in the three decades of market reform and economic development.
For background information, read PN's fresh report India probes allegation of China injection press dumping.
It's not the first trade dispute between the two of world's fastest-growing economies, but the anti-dumping investigation India's Ministry of Commerce is starting on Chinese injection presses is quite interesting and may have significant fall-out. In the official notification, the Indian government not only mentioned the applicant L&T Demag Plastic Machinery Ltd. of Chennai, but also specifically noted that "there are three other companies which are known to have the capacities to produce the subject goods in India: Ferromatik Milacron India Ltd. of Ahmedabad, Windsor Machines Ltd. of Thane and Electronica Machine Tools Ltd. of Pune." Maybe the government believed that these three companies -- all non-applicants -- are major domestic players in the field. But note the significant foreign ownership in these enterprises. L&T Demag and Ferromatik Milacron India are foreign-invested, and Windsor used to be foreign-invested. The only local company, Electronica, makes just 100 machines of its own per year, and imports 400 presses from China's Haitian Group. Machinery industry sources said that the biggest Chinese brands sold in India appear to be Ningbo Haitian Group Ltd. of Ningbo; Zhejiang Sound Machinery Manufacture Co. Ltd. in Hangzhou, Zhejiang province; and Chen Hsong Group of Hong Kong. At least two of the big three, Haitian and Sound, already have assembly facilities in India. So if penalties were imposed to whole presses, Haitian and Sound could ship parts to India and assemble machines locally. Other companies can certainly follow the suit. Of course, jobs and investment will come with the assembly work from China to India. India wouldn't mind that. The probe could also have an impact on Chinese participation in the big PlastIndia show, coming up Feb. 4-9, 2009, in New Delhi, according to an Indian source who talked to one of our reporters. And the two countries currently plan to organize an India-China Plastics Summit in conjunction with that show. This move could add a new dynamic to those proceedings. I'm having a hard time immediately finding how many Chinese exhibitors participated in the last PlastIndia show, in 2006. But I've not been impressed with the Indian presence at Chinaplas -- Asia's largest plastics show. There were only six Indian exhibitors at Chinaplas earlier this year, down from nine in 2007. We'll watch it closely and keep you updated.
Perhaps inspired by its neighbor China's success in the recycling business, North Korea is seeking supplies of plastic and electronics waste that "can be processed in the port but which other countries and territories are restricted from dealing in," the U.K.'s The Telegraph quoted a North Korea-based Chinese-language Web site as saying. So I asked myself, what advantage does North Korea have in plastic recycling? The first benefit that came to mind was the offset of the country's extremely low labor cost against the labor-intensive sorting involved in recycling. In addition, the country has expressed its willingness to take in waste that other countries refuse to accept. The country's disadvantages include the lack of technology, equipment and experience, but that could be solved through a good foreign partner. Logistics is another issue. North Korea doesn't have much processing capacity, and if the regrinds are destined to other countries, the freight cost will dent the margin, versus China's model of recycling waste and consuming the regrind materials locally. But if North Korea intends to use the reprocessed resins to make goods for its domestic market, that will make sense. That way the country could effectively compete with plastic products imported from countries like China. I suppose that China, Russia and South Korea, which all border North Korea, will watch with caution the environmental impact of waste processing in North Korea.
Not so long ago major U.S. airlines were scrambling for passes to fly to China. Now, some of those airlines that "luckily" obtained China routes from the U.S. Department of Transportation want to halt services. Taking the lead are US Airways Group and Northeast Airlines. Both have received permission from the DOT to suspend some of their China-bound flights without losing their rights to operate to the region in the future, said a Bloomberg report.
Through-the-roof fuel costs are blamed for the step-back. US Airways also plans to delay the launch of its Philadelphia-Beijing service to March 25, 2010. United Airlines said in May that it will delay the launch of service between San Francisco and Guangzhou to June 2009. In my experience over the years, it's become a luxury to sit next to an empty seat in the main cabin on direct flights between the U.S. and China (same thing with domestic U.S. flights). Planes are getting fuller, airfares higher, and meals simpler. Now should we start to worry about securing a seat?
Refiner and petrochemical giant China Petroleum & Chemical Corp. (Sinopec) has made gasoline production a priority over plastic resins in response to the long lines at gas stations across China. The company told Dow Jones Newswire that it plans to cut production of naphtha and petrochemical products in July and at the same time increase diesel production. Sinopec will continue to reduce ethylene production in July, by at least 12 percent. On the flip side, two Sinopec ethylene lines in Maoming, Guangdong province, with combined capacity of 1 million metric tons, have resumed production, after a temporary closedown caused by a lightning strike June 3.
We've seen plenty of press coverage about China's new labor contract law and its attendant rise in wages and improved benefits packages. But it would be naive to believe that Chinese workers now feel happy and secure. In reality, they are vulnerable and often thrown into unusual situations -- such as arriving at work to find that their bosses are no-shows. Such was the case for more than 1,000 workers of Xinyao Techonology Co. Ltd. -- a plastic molder in Shunde, Guangdong province -- who responded with extreme action when company management didn't show up for work last week, according to local media. Rumors spread quickly among the workers, who had not yet received their June paychecks, and they believed that the owner was unable to pay them because of a huge loss in the stock market. To make up for their overdue paycheck, 1,000 day-shift workers scrambled to collect raw materials and equipment from the factory. Local police rushed to the site, stopped the mad scene and retrieved the items that had been removed from the factory. Labor authorities are now on the case and in talks with the owner. You may wonder why workers didn't seek legal protection instead of looting the factory. I see it as a manifestation of people's discontent and lack of faith in the legal system. In order to change that mind-set, the government will need to resolve all labor-relations cases in a consistent, fair and effective manner in the years to come.
A Chinese researcher at a state-owned energy think tank said that in the future the amount of energy it takes to produce a product will be found on product packaging. Mr. Jiang Kejun said the research institute in Beijing is working to analyze the energy consumption of products used in people's daily lives. "For example, the amount of energy used to make an A4 size sheet of paper is about 0.1 kilowatt-hours," he told a Chinese publication. Well, that energy tag may help plastic bags regain some share lost to paper bags, since the production of paper bags uses more energy than plastic bags. But, researchers, especially those who advise governments on policies, should really look at the whole picture rather than one single parameter. What about carbon footprint? What about reusability? What about recyclability? And, how much energy does it cost to produce the energy tag, starting with figuring out the amount of energy in every commodity? Will it be worthwhile?
Plastics News and its partner CBI (Shanghai) Co. Ltd. are bringing global readers the latest resin pricing intelligence in the Chinese market from on the ground. The China Price Monitor is supplied by CBI with up-to-date China market prices of polyolefin resins. It monitors supply/demand trends, imports and exports, plant closures and production outages. Readers will find the report rotate on a weekly basis between 1) high density polyethylene, 2) low density and linear low density polyethylene, and 3) polypropylene. CBI has a professional team dedicated to the report, making about 200 calls to buyers and sellers in China each week for each issue. The CBI China Price Monitor, with brief commentary in both Chinese and English, offers open access to all readers.
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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 with me as well as with industry friends all across the globe. I welcome your comments and opinions.
Nina Ying Sun
Plastics News Asia Specialist
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