While some believe the global recession is coming to an end, Chinese exporters of Christmas products report a sizable drop of orders from Western Europe and North America. But it may not be a bad thing, depending on where you stand.

Huida Christmas Decoration Products Factory in Shenzhen, Guangdong province, told China Central Television (CCTV) that the total value of this year's orders is 40 percent less than 2008. Owner Lin Zhanpeng said the family business started in 1969 in Hong Kong and moved to Shenzhen in 1982. It's the worse situation in many years, he said.

Meantime, Hatfield, UK-based International Greetings plc's Shenzhen factory is busy with Christmas production. General Manager Xu Zhaoren told CCTV, thanks to sales efforts of the company's European headquarters, orders have maintained last year's level. However, average prices are down 20 percent, squeezing the profit to near zero.

A trade group official in Shenzhen estimated that a third of the factories have shut down. Compared to manufacturers, the hundreds of small and midsize trading companies in Shenzhen are having an even more difficult time.

In addition to the major impact of the recession on Western consumers' purchasing preferences, and the fact that China still has a relatively small share of the premium market (which is supposed to be more immune to a recession), analysts point out more internal factors. First, China's export tax rebate for Christmas items was cut from 17 percent to 11 percent on July 1, 2007. Second, the healthy domestic market has convinced many Chinese manufacturers to turn away from export.

I'm wondering though, as the economy turns around, if the 2009 Christmas market might turn out better than expected. Some last-minute orders may become necessary, and production is likely to stay in or come back to North America for the geographical proximity to consumers. This could be good news for U.S. manufacturers, right?

Beijing-based China Petroleum & Chemical Corp. (Sinopec) has overtaken Houston-based Kraton Polymers LLC as the world's largest producer of styrenic block copolymer (SBC), according to Chinese state media.

Sinopec's SBC annual capacity reached 410,000 metric tons by mid-August, exceeding Kraton's capacity of 405,000 metric tons. The news also said Sinopec's market share in China's SBC market reached 61 percent in the first seven months.

Sinopec's SBC capacity consists of 220,000 metric tons at its Baling branch in Yuyang, Hunan province, 100,000 metric tons at its Beijing Yanshan branch, and 90,000 metric tons at its Maoming branch in Maoming, Guangdong province.

China has about 10 SBC manufacturers with combined annual capacity of 710,000 metric tons, the reports say.

A team of workers in China's Zhejiang province collapsed after handling two metric tons of plastic scrap on September 13. At least 21 have since been hospitalized and three of them have died.

According to the initial investigative conclusions just released by the local authorities, the victims were in contact with highly toxic chemical dinitrophenol, which was found on the two tons of plastic scrap. It is believed that a chemical factory in Dongyang city illegally sold used plastic packaging with dinitrophenol residue to a dealer, who then sold the scrap to a recycling shop.

Workers at the recycling shop were unaware of the hazard of the material and had no protection during the unloading.

Four people at the chemical factory have been detained.

This particular tragedy is only the tip of the iceberg. China's plastics recycling industry is poorly regulated, with scandals such as biohazard plastic waste being melted and reprocessed into consumer goods. Domestic channels, rather than imports, are oftentimes the source of hazardous scrap materials.

What do the top three Chinese ethylene producers - China Petroleum & Chemical Corp. (Sinopec), China National Petroleum Corp. (CNPC) and China National Offshore Oil Corp. (CNOOC) - have in common? Two things: state ownership/control and integrated business of oil drilling, refining and petrochemical production. Now, they are going to be joined by a new player with similar background: China North Industries Group Corp. (CNGG).

CNGG's subsidiary Liaoning Huajin Tongda Chemicals Co. Ltd. (Liaotong) is going to test its new 450,000-metric-ton ethylene project at the end of this month, which, depending on the test results, will be followed by an official launch.

While the project is smaller than the big three's facilities (up to 1-million-metric-ton each), it signifies CNGG's entry into the ethylene market and the completion of the oil drilling, refinery and resin production line. CNGG's subsidiary Zhenhua Oil Co. Ltd. will supply crude oil through a 140-kilometer pipe from the Yingkou port to Liaotong's base.

China's domestic ethylene industry touts a total production capacity of 10 million metric tons by 2008, 64 percent of which belongs to market leader Sinopec. CNPC claims another third of the total capacity, and CNOOC is ranked the third with its joint venture with Shell Petrochemical Co.

Unlike the big three, CNGG's main business is supplying to the Chinese military, but the company is gradually transitioning to high-tech civilian machinery and chemical products. With 99 subsidiary companies, it's also the fourth largest Chinese firm that's permitted to own overseas oil operations.

Publicly traded Liaotong expects the ethylene project to turn in up to 7.7 billion yuan (US$1.1 billion) of annual sales and 975 million yuan (US$143 million) of after-tax profit.
China still relies on export for more than 40 percent of its ethylene consumption.