Despite its reputation for price-competitive machines in the global market, China runs a nearly US$1 billion trade deficit in plastic machinery.

The truth is that China exports a significantly larger number of machines than it imports. However, the advantage in quantity is outweighed by the factor of low prices.

During the past year, China imported 15,000 units of plastic machinery, worth US$2 billion. Exports reached 44,000 units valued at US$1.1 billion.

Japan, Germany and Taiwan are ranked the top three countries/regions that China buys plastic machinery from, representing 80 percent of China's imports.

China's major export destinations include Brazil, Iran, India, Turkey, Indonesia, Vietnam and Thailand.

While India continued to impose anti-dumping duties on Chinese injection molding machines in 2010, China still managed to grow its global export of injection presses by more than 70 percent to 19,000 units valued at US$600 million.

Injection presses account for about half of China's plastic machinery import and export.

(Source: China Customs)

China now represents nearly two thirds of the world's solar equipment production, a growing industry that's known for attracting entrepreneurs and new investment from other fields. Take China Era Group, a Taizhou, Zhejiang-based manufacturer of pipes and fittings.

The 30-year-old company started its solar business five years ago, when the market was just starting to boom, according to a Jiefang Daily report from the recent SNEC 2011 exhibition.

The decision was intuitive, general manager Mr. Su Chengfeng said, as Era noticed the soaring electricity cost with more than 2,000 injection molding presses that he called "power guzzlers." The company made the move to invest in the future of alternative energy.

Another important reason to add the solar division was that Era was able to sell these high value-added products to its pipe business' established customers -- real estate developers and government buyers.

The solar business helped Era stay active during the financial crisis, when demand for building products declined.

Era owes its success partly to government support. Last year, it received 10 million yuan of subsidy -- which covered a third of the cost -- to install 1 trillion watts of solar panels on the roof of its factory buildings.

The SNEC show organizer told the Jiefang Daily that a large portion of the 1,838 exhibitors had previously worked in other sectors, including toys, footwear, and building products.

Latest reports and analysis of the impact of Japan's earthquake, tsunami and nuclear leak on the Chinese manufacturing industry point to the following three areas.

1. Supply chain

Chinese manufacturers that reply on raw materials and components from Japan are issuing low inventory warnings. They are scrambling to search for alternative suppliers in other regions.

A case in point is Tianjin Yoshida Co. Ltd, which, according to a Xinhua report, makes plastic packaging products for leading cosmetic brands such as Shiseido, SK II, and Chanel. The company said half of its resin supply came from Japan and current raw materials inventory will last about a month. Yoshida has started contacting resin suppliers in China, but said it remains uncertainty whether it will be able to find materials that match its high standards.

Guangdong Xinhui Meida Nylon, a producer of nylon, nylon filaments and related products, said in a company filing that the earthquake affected its purchase of caprolactam, a chemical which is used to make nylon, affecting its production.

Furthermore, the undersupply of certain commodities and products are driving up global prices, inflating material cost for manufacturers that don't have direct ties with Japanese supplies.

2. Export

Chinese companies that export to Japan may be experiencing disrupted flow of products, due to transportation and business shutdowns on the receiving end in Japan.

3. Opportunities

Some Chinese firms are taking extra production orders that have been transferred from Japan. Other companies benefit from price hikes of their products.

Nippon Polyurethane Industry Co. Ltd., for instance, reported its 400,000-ton MDI plant and 25,000-ton TDI plant in Shunan-Shi are being affected by the earthquake and power outages, according to China's Economic Information. Chinese suppliers such as Yantai Wanhua are expected to see stronger demand and higher prices.

Also see PN's report Japan earthquake and tsunami disrupts materials production.

Shanghai Chlor-Alkali Chemical Co. Ltd., a subsidiary of state-owned chemical giant Shanghai Huayi (Group) Co., said its 10,000-metric-ton CPVC project will go on stream by the end of June.

The company said it has successfully developed its own CPVC technology after five years of research and development, a breakthrough in the Chinese chemical industry' effort to produce high-end CPVC resins domestically.

Trial production of the material has been running smoothly, according to a Mar-28 report from China Chemical Industry News. A number of end users - mainly pipe and fitting manufacturers - have tested the resins with positive feedback.
Shanghai Chlor-Alkali formed a CPVC business division last Sep.

The company announced 5.7 billion yuan of 2010 revenue and141 million yuan of net profit in its Mar 14 annual report.

The growth path of the Chinese economy in the last half-century has been guided by a series of detailed economic development initiatives called the five-year plans. The 12th five-plan, covering 2011-2015, was approved by the PRC National People's Congress on Mar 14.

The upcoming series of blog posts aims to examine the impact and implications of the general plan on the plastics industry as well as specific objectives, directions and policies.

Stay tuned.

Beijing-based China Plastics Machinery Industry Association outlined industry growth targets as well as areas of focus in its 12th five-year development report.

CPMIA expects the industry to grow at least 12 percent annually and reach 50 billion yuan (US$7.6 billion) in total sales by 2015, reported the Shanghai Securities.

In the meantime, CPMIA hopes to raise domestic machinery makers' share in the Chinese market from 72 percent to around 80 percent.

The trade group also aims to help industry players develop higher-value-added products and achieve 10 billion yuan (US$1.5 billion) in exports by 2015.

CPMIA said it would lobby for more government support to grow and upgrade the plastics machinery industry, specifically in areas including high-precision machinery, energy-efficient machinery, etc.

Earlier this week, China's top political advisor Jia Qinglin called for more efforts to push forward the development of the country's machinery industry. According to a Xinhua report, he gave a number of highlights, including:

1. Raise quality and efficiency;
2. Accelerate mergers and acquisitions to forge conglomerates;
3. Enhance the industry's ability to withstand risk;
4. Improve technological innovation and expand scientific research input;
5. Eliminate outdated production capacity;
6. Increase energy-saving and emission-reduction activities; and
7. Strengthen international competitiveness, among others.

China's plastics machinery industry is a grassroots industry, consisting of mostly privately owned companies, CPMIA official Su Dongping told the China Industry News. She said the industry has a strong leverage effect with China's plastics processing industry, which makes 1.5 trillion yuan (US$229 billion) in annual output.

In 2010, China's market demand for plastics machinery rose to 47.9 billion yuan, nearly 40 percent higher than in 2008.

CPMIA's survey shows a total of 564 plastics machinery manufacturers with 2010 sales of 5 million yuan (USD$764,059) or higher. Among them, 10 firms topped 500 million yuan (US$76.4 million) in sales. Haitian, the industry leader, recorded a historic high of 7 billion yuan (US$1.1 billion) in 2010 sales.

The industry as a whole manufactured more than 300,000 units of machines last year.