Despite the major slowdown of China's gross domestic product growth rate, which dropped to 6.8 percent in the fourth quarter of 2008, foreign investors continues to expand in the world's third largest economy, including German conglomerates Evonik Degussa GmbH and Siemens AG.

Chemicals giant Evonik Degussa was reported by Chinese state media to have reached an agreement with officials of Hangzhou, capital city of the Zhejiang province, on issues regarding investment policies, investment scale, environmental protection requirements, etc.

During a business visit to Hangzhou in January, Evonik Degussa (China) Investment Co. Ltd. Vice President Tuo Jianliang told the press that he was very optimistic about the industrial policies in Hangzhou and planned to invest 24 million euros. The investment will aim to supply a number of sectors including construction, automotive, food and agriculture. The company said it will add 100 million euros of investment per year in the next four years.

Evonik Degussa currently has established legal entities in 13 cities on mainland China, including Beijing, Shanghai, Guangzhou, Changchun, Dalian, Liaoyang, Yingkou, Qingdao, Rizhao, Anqiu, Nanping, Nanning and Chongqing.

Siemens AG is in talks with the local government in Foshan, Guangdong province, regarding potential further investment. According to a report from Zhujiang Business, Siemens China's Executive Vice President He Weike told city officials that the company is confident about increasing its investment in Foshan and hopes for strong support from the government. Among other industries, He said Siemens hopes to help upgrade the plastics machinery industry in Foshan, where Siemens currently runs a sales office.

It appears that the Siemens expansion deal is still in a very early stage.

In response to a ban the Indian government slapped on Chinese toys for the next six months, an unnamed Chinese official from the Ministry of Commerce told media that China will actively pursue the issue.

New Delhi said on January 23 that the reason for the ban is a concern for public health, as Chinese toys were found to contain higher levels of lead than Indian-made toys in tests. Ironically, India doesn't actually have any official safety standard for toys, regardless of their origin.

Critics in Asia have pointed out that the ban is a means to protect domestic manufacturers against cheap competition.

Raj Kumar, president of the 13-year-old Toy Association of India (TAI), which represents 600 toy industry members, told the Asia Times that "We don't know the reason for the ban, and our trade association is having various meetings to decide on the issue. ... We cannot say right now whether we are happy or unhappy about the ban on Chinese toy imports."

However, Indian toy makers' stock shares soared after the ban was announced; while Chinese toy exporters reported that their shipments to India that left China before the ban have been declined.

The official from China's Ministry of Commerce stated that Beijing may turn to the Dispute Settlement Body of the World Trade Organization.

Chinese critics warned that as the global recession deepens, protectionism and trade barriers may make a comeback in some countries.

The vice president of Beijing-based China Toys Association noted: "Although India is not a major export destination for Chinese toys, the ban will cause some impact, especially negative impact on the industry's morale."

China's appliances rebate program is not exclusive to domestic brand owners. In fact, there are 122 global manufacturers -- including Whirlpool -- participating in the current phase of the program.

Benton Harbor, Michigan-based Whirlpool has had a roller-coaster journey in China. In the 1990s, it had one failed joint venture after another and lost millions of dollars. Besides strategic and managerial mistakes, the company also had a messy time positioning its products.

Chinese magazine Global Entrepreneur described the back-and-forth swings in a recent report: "Whirlpool initially appeared in the Chinese market as a high-end brand. In 2003, the company still didn't establish a solid foothold. But it decided to target Tier 3 and Tier4 markets [small cities] as well. Whirlpool rolled out three series and 30-plus products, opened hundreds of retail outlets across the country and its sales force neared 3,000. Whirlpool lost its high-end image during this process. In 2007, the company decided to exit low-end markets and adjust brand positioning. It was aimed to 'grab 10-15 percent of the high-end washer market.' However, Whirlpool is now selling washers in the rural-focused rebate program."

The rebate program set price ceilings for products: 2,000 yuan (US$292) for a TV set, 2,500 yuan (US$366) for a refrigerator/freezer, 1,000 yuan (US$146) for a cell phone, and 2,000 yuan (US$292) for a washing machine. Sony claimed that none of its products meets the price criteria and therefore is not participating.

Is Whirlpool giving the rural market another try because of slow sales in urban areas? How will the rebate program affect Whirlpool's 2009 sales in China? Unfortunately, like many U.S. firms, Whirlpool doesn't provide country-specific sales data.

What we do know is that Fitch Ratings recently lowered Whirlpool's ratings to one notch above "junk" status and Standard & Poor's and Moody's Investors Service cut credit ratings on Whirlpool to one notch above speculative status.

"We won't comment on the specific action taken by Fitch, although it's not terribly surprising given the current state of the industry," Whirlpool spokeswoman Jill Saletta said in an email to Reuters.

It is with mixed feelings that I hail Liu Chuanzhi's return as chairman of Lenovo Group Ltd., the world's fourth largest personal-computer maker that just posted its first quarterly loss in almost three years.

Liu Chuanzhi, 65, replaces 45-year-old Yang Yuanqing, who is now chief executive officer of the maker of the ThinkPad laptops. Chief Executive Officer William Amelio -- who, like his fellow American predecessor Steve Ward, was part of Lenovo's ambition to become a truly global company -- resigned.

Although Rory Read, formerly the senior vice president, has been promoted to the new role of chief operating officer and president, the media and analysts still believe the changes mark the return of Lenovo's top management to Chinese control and a renewed focus on the Chinese home market.

In the last quarter, Lenovo's sales fell 22 percent in the Americas and 6.5 percent in the Greater China region, including the mainland, Hong Kong and Taiwan.

Liu founded Lenovo -- then known as Legend -- with a group of engineers back in 1984 in Beijing. The Liu-Yang team formed in 1994, when Liu appointed Yang to take charge of the personal computer business. They were determined to change the fact that foreign brands controlled nearly 80 percent of the Chinese personal computer market. In just four years, sales genius Yang made Lenovo the best-selling personal computer brand in China and has kept the status ever since.

When I interviewed Liu in 2002 at a political event in Beijing, he spoke very little about his company. But he did mention a few times his vision of "going abroad, going global."

That global expansion became reality in 2004, when Lenovo acquired IBM's personal computer business with US$1.75 billion. Under criticism and pressure, Liu tried to justify the move at a press conference: "It's not an option to go risk-free and just stay in China."

But a global company is not necessarily a successful one.

My two cents on Lenovo's case is: It lost focus on both the product front and customer service. It didn't move fast enough to grow the classic ThinkPad brand or establish its own brands in America. The laptops may be cheaper, but they haven't stayed ahead of trends. Lenovo's flawed ordering system also causes delays and frustrates North American customers, including myself. Meantime, it put too much weight and hope on marketing, particularly the sponsorship to the Beijing Olympics.

The economy is bad, competition fierce and customers more sophisticated. The message for Liu is that it's not a time to be slow or sloppy.

This week, Whirlpool posted an operating loss in North America, its largest market, and said that it was in talks with banks regarding renewal of credit lines. Unfortunately, since its debt ratings have been slashed, the company may find itself facing tighter and more expensive credit.

If, just in case, the world's largest appliance maker ends up in deeper financial trouble, what help could it expect from the government? Presumably, Washington might grant it a bridge loan, similar to what the Big Three received, in order to protect jobs and its brands. Such aid to appliance makers wouldn't be the first among developed countries, as Italy is planning aid packages for the auto, auto parts and household appliance sectors.

Italy's intervention to the appliance industry will have a lot in common with China's, as the measures will include incentives for buyers worth about 300 million euros, as well as further tax breaks and financing.

At this point in time, the need for government intervention worldwide is indisputable; it's the intervention's effectiveness that remains the key issue. China's buyer subsidy program is generating strong sales for both Chinese and foreign manufacturers. The government estimates the amount averages US$22 billion annually. Chinese brand owners and retailers that are overwhelmed by demand are contracting business out to suppliers in places like Taiwan, spreading the surplus to other regions.

Here in America, Washington has taken limited measures to aid manufacturing. The format of government aid in general has also been limited to injecting cash instead of more transparent and effective ways of raising industry performance/sales.

Well, yes, we've seen the whirlwind of new green initiatives emanating from the Oval Office, including the president's order for higher energy efficiency standards. The White House said the standards should deliver energy savings of $500 billion for consumers. How wonderful, if only the government can make sure consumers are able and willing to afford new appliances. A $600 washer that can save you $60 a year in utility bills sounds attractive, but it's all pointless if the consumer can't fork out $600 to buy the machine.

Washington should focus its nearly trillion dollar stimulus package more on the buyer/consumer end by tying the incentive to actual sales transaction, which can directly stimulate the seller/manufacturer end.

Last but not the least, the manufacturing industry, including brand owners and parts makers, deserves more benefit from the government aid packages. Like I always say, this nation will not sustain itself by diminishing manufacturing.

China's state broadcaster China Central Television (CCTV) organized illegal firework display that set fire to a new, vacant luxury hotel building the TV network built next to its headquarters. While public anger simmers over CCTV's spending and selective news coverage, some are questioning the quality of the plastic building products used in the tower.

"The fire started around the 30th floor and quickly gutted the entire building. If the builder had used flame-retardant plastic insulation boards, the blaze wouldn't have spread so fast," a B2B Web site commented. Others blame the plastic building products for generating huge amounts of toxic fumes that killed a firefighter and injured a handful of others.

After I posted the news in the Chinese-language version of the PN China Blog, a reader replied: "There's no industry standard or inspection system in place for plastic foam boards in China. Most plastic boards in the market used sub-par, recycled material. They either contain no flame-retardant additives what-so-ever, or use too little or low quality flame-retardant additives. ...The market is still focused on just the price point. We hope the authorities will establish and enforce standards. Don't leave fire hazards in homes and modern high-rises. ... This could become the 'melamine in construction materials.' (the reader was comparing the fire hazard to the melamine found in milk powder and baby formula products in China)"

Actually, China does have a "mandatory national standard for flame-retardant products in public buildings (GB20286)." But either there's no enforcement or people found loopholes. For example, the standard probably doesn't apply when the owner/builder opted for building materials without flame-retardant claims.

Last month, a bar fire caused by fireworks killed 15 and injured 22 in eastern China's Fujian province. Flammable decoration materials (plastic ceiling boards) caught fire and emitted heavy smoke and poisonous fumes, which knocked out the victims before they could escape.

Since the debate is so heated among economists, politicians and business people around the world, I'm not going to dive into propositions like whether this provision of the stimulus package will benefit or hurt the U.S. economy and/or the world economy.

I'm simply here to hear from you, our readers, about how this provision relates to and can possibly impact the plastics industry.

A fair amount of the construction materials to be purchased under the stimulus plan will be plastic products, right? Can anyone give some examples?

What quantity of plastic building products does America import every year? Mostly from which countries and regions? How much of imported plastic building products goes into governmental projects?

And, if we look into the details of the provision, waivers are allowed in cases where American-made products necessary for a project are not readily available. Are there any such plastic products?

Waivers are also allowed where total project cost is 25 percent more expensive than it would be if imports were used. This one looks tricky to me. How big of a price advantage do imported plastic pipes have over U.S.-made ones? Will American manufacturers be willing to lower their prices in order to beat the 25 percent qualifier?

Also, we know that countries like China, Russia, Brazil and India have not signed the World Trade Organization's 1995 agreement on governmental procurement and, therefore, do not enjoy the rights to the U.S. procurement purchases. But what about the 38 countries that have signed the WTO procurement code and have been exempted from the buy-American clause? Is it OK to buy from these countries? Doesn't it defy the whole purpose?

Taiwanese resin maker Chi Mei Corp. has finished the construction and equipment installation of its 100,000-metric-ton ABS production facility in Zhenjiang, Jiangsu province. The project started in August 2007 with a total investment of US$40 million.

According to the Economic and Trade Commission of Jiangsu, Chi Mei was hit hard in the global financial crisis and held off on the launch of the new project. Thanks to China's appliance purchase rebate program, the company has seen strong growth in demand for January. Production has since started.

Chi Mei acquired Grand Pacific Petrochemical Corp.'s 250,000-metric-ton ABS plant in Zhenjiang in early 2008.

As most automakers in China report healthy sales growth amid the global downturn, Paris-based Inergy Automotive Systems is building a plastic fuel system plant in suburban Beijing.

According to a media report from Qianlong, the company is investing a total of 300 million yuan (US$43.9 million) in the plant located in the Beijing Auto parts Industrial Base in Shunyi district, a suburb northeast of Beijing. The first phase of the project will cost 120 million yuan (US$17.5 million), cover a factory complex of 21 mu (150,685 square feet), and is expected to start production by the end of this year, creating more than 100 jobs and generating annual sales of 300 million yuan (US$43.9 million). The company has secured contracts from Hyundai's Beijing operation.

Inergy is a joint venture between Cie. Plastic Omnium of France and Solvay SA of Belgium. Its first manufacturing facility in China went on stream last summer, with reported annual capacity of 400,000 parts.

The overall Chinese real estate market is sluggish, but post-quake reconstruction investment in Sichuan province is boosting the need for plastic building materials as well as household items. In fact, Guangzhou, Sichuan officials will hold a procurement conference at the Plastic Building Materials Pavilion during the 2009 Chinaplas trade show, slated for May 18-21.

The Sichuan chapter of the China Council for the Promotion of International Trade will present detailed procurement information to attendees and companies. The council will also display a show house featuring typical post-quake construction in Sichuan, including building materials and household plastic products.

At a February 18 Chinaplas press conference, Guangdong Liansu Technology Industrial Co. Ltd. said the company is planning to establish a manufacturing base in Sichuan, according to a report from West China City Daily. Foshan, Guangdong-based Liansu makes plastic pipes, profiles, wood-plastic composite building materials as well as plastic machinery such as extruders.

Sichuan has rolled out 898 post-quake reconstruction projects, with investment totaling 18 billion yuan (US$2.6 billion). Authorities have indicated that 80 percent of the projects are due to finish by the end of 2009. Quality control agencies in the province have launched a monthly random inspection of building materials.

China's Guangdong Plastics Exchange (GDPE) announced Monday that it has sealed a cooperation agreement with Shanghai-based SPD Bank that will provide its trading companies with up to 1 billion yuan (US$146 million) in physical commodity-based financing.

In an interview with Guangzhou Daily, GDPE Vice President Liang Hongbing said the move is intended to alleviate cash flow pressure among trading companies. Small and midsize plastics firms in China have been facing a shortage of cash flow since last year, he said. Combing Chinese and foreign markets, there are nearly 10,000 different grades of plastic resins. Under the pressure of soft export demand and limited capital, a good number of plastic resin makers, processors and trading companies are faced with operational difficulties.

GDPE will continue to provide financing for its members. The amount of physical commodity-based financing credit is expected to reach 10 billion yuan (US$1.5 billion) in the next three years and benefit thousands of small and midsize enterprises, Liang said.