2010 has become a year of growth for global manufacturers -- large and small -- of injection molding machines. Here is a case study of a Chinese firm that's probably less than well-known to many of their Western peers.

Ningbo Haixing Plastic Machinery Manufacturing Co. Ltd., featured in a recent article in the Zhejiang Merchant magazine, is seeing its best days in history. General manager Chen Xingliang put it this way: "I've been making a living in the plastic machinery industry for 41 years, to be honest, the company has never been doing as well as this year, better than anytime in the past."

Orders have accumulated to 300 million yuan (US$45 million), and the company expects the per-capita-revenue to reach 1.5 million yuan (US$225,225). The factory is running 24/7, and overtime work has become a routine for employees - probably not to their dismay.

In fact, the biggest concern for Chen is the lack of workers.

"We could have picked up 500 million yuan (US$75 million) worth of orders, but I didn't dare to," he said.

During the financial crisis, the company laid off many apprentices who were in the middle of three- or five-year training programs.

Then, the market rebounded with such rapid speed that the company couldn't adjust fast enough, in terms of workforce and supply chain.

It has hired 70 workers this year and has a total of 250. The enforcement of labor laws has made the management of overtime more difficult, Chen said. "If one person refuses to work overtime, the other 249 won't be able to work either."

In addition to having employees sign "voluntary overtime agreements", Haixing has raised its overtime pay rate and offers one day off per week.
On top of the labor shortage, Chen's concern with the uncertainty future prevents him from launching a sizable expansion.

Haixing reported 170 million yuan (US$26 million) of sales last year. The per-capita-revenue - a pretty telling measure - was 800,000 yuan (US$120,120).

Another major change undergone at Haixing is the switch to domestic customers. The company said the strengthing yuan cost it nearly one million yuan (US$150,150) in the first half. Combined with lessons learned from the global crisis, Chen said they realized that export markets are not as reliable as domestic. The domestic-export ratio currently sits at 2:1.

Foshan Plastics Group Co. Ltd. is buying out one of its subsidiaries, but the payments to its two JV partners differ dramatically: US$25 for the 25 percent share held by Sumitomo versus 17 million yuan (US$2.6 million) for the 25 percent share held by Wuxi Packing.

Publicly traded Foshan Plastics said the subsidiary - BOPP film maker Wuxi Huanyu Packing Materials Co. Ltd. - has been in the red since 2008.

Sumitomo offered to give up its shares in October 2009, in exchange for the removal of its suretyship for Wuxi Huanyu's loans, according to Foshan Plastics officials quoted by multiple Chinese media. Wuxi Huanyu's liability topped 110 million yuan (US$ 16.6 million) as of June 30.

The 17 million yuan payment to Wuxi Packing, however, was calculated based on audited financial results, the company said.
Foshan Plastics expressed optimism for Wuxi Huanyu - which posted a loss of 13.4 million yuan (US$2 million) in the first half of 2010 - to return to profit by 2012.

Wuxi Huanyu is located in Jiangsu province in East China, a region that represents more than half of China's demand for BOPP film.

Foshan Plastics saw its stock price drop 4 percent on the day of the announcement. Shareholders and the financial community questioned about the move on the different payments, and also pointed out that Foshan Plastics decided to sell its 51 percent share of a similar BOPP film subsidiary for 41 million yuan (US$6.2 million) just four months ago.
China's BOPP industry at large stands in loss, financial analyst Xiao Hui with Shenzhen-based Huatai United Securities was quoted as saying in the 21 Century Economic Herald.

But the industry is expected to recover in the next one or two years, as market demand catches up with capacity, he added.