CHICAGO (Aug. 17, 6:05 p.m. EDT) — The fact that 127 Chinese companies flew executives more than halfway around the globe to exhibit at NPE 2006 made a strong statement in the international plastics arena.
But their mission was greater than just to have a presence at the Chicago trade show. Besides competitive prices, they offered meaningful evidence of the plastics industry's growth in China.
Speaking of growth, nearly a dozen mold makers interviewed at NPE reported 20-40 percent annual growth in the past few years. Injection press makers said they also maintained growth in 2005, even though the overall Chinese machinery market shank 5.6 percent.
“We are increasing the percentage of exports in our sales structure,” said Dai Guangyuan of Changzhou Hengli Machinery Co. Ltd., which makes stretch film lines, circular looms and coating machines.
Fostering or expanding overseas markets was a major goal for many Chinese exhibitors at NPE, especially those that started exporting not long ago.
Hengli began to export its own branded machines directly five years ago, Dai said. “Before, we didn't have permits for exports, so since the early 1990s, we had to sell machines to governmental agencies and Taiwan firms. They exported our machines using their own brands,” he said.
Dai said that currently the Chang-zhou-based firm's major export market is Southeast Asia. “New markets are of great interest to us. We are ready to expand to higher-end regions,” he added.
The trend seems true to many Chinese firms. With established exports into Southeast Asia and the Middle East, they are now eyeing North America and Europe, among other regions.
Hangzhou Shuanglin Plastic Machinery Co. Ltd. wants to supply the U.S. plumbing industry with production lines for cross-linked polyethelene pipe. For now, the Hangzhou firm sells 40 percent of its lines to Eastern Europe, the Middle East and Southeast Asia.
Shantou-based Jinming Plastics Equipment Co. Ltd. has sold seven extrusion lines into North America since launching that business in 2005. The company said many top U.S. film producers visited its NPE booth to express interest, including Alcan Packaging.
A Chinese product not made in China
While foreign firms swarm to China for lower manufacturing costs, Chinese entrepreneurs also are starting to localize abroad for better quality and credibility.
Zhejiang Jingcheng Mold Machinery Co. Ltd. is opening a tooling plant in Japan that will produce high-quality dies for sheet, foil and film extrusion lines, according to Shou Xiao-dong, the company's vice general manager.
“Local production is important to our customers,” he said.
Jingcheng has distributors in Japan, Germany and India and will add a U.S. agent by year's end.
Another mold maker, Taizhou Huangyan Mega Machinery Mold Co. Ltd., of Huangyan, is working on opening a joint venture assembly plant in Canada for PET bottle blow molding equipment.
“We will send parts from China and assemble the machines locally,” sales manager Simon Cai said. “It is more about quality assurance than cost-saving.”
“Some clients prefer locally manufactured products, but not all of them,” said Davey Xin. He is general manager of Shanghai Jari Extrusion Technology Co. Ltd., which claims it is one of world's five largest producers — in number of units — of profile extrusion tooling and dies.
Jari runs two factories, in Shanghai and Lianyungang. The 320-person company makes 1,000 sets of tooling a year, exporting 80 percent to customers such as Royal Group Technologies Ltd. of Woodbridge, Ontario; Deceuninck Group, with U.S. operations based in Monroe, Ohio; and Milgard Vinyl Extrusion of Tacoma, Wash.
Jari records about $20 million in sales.
Compared to their baby steps in manufacturing abroad, Chinese companies are making large strides in expansions back home.
Better process, better product
Accompanying brisk sales, expansion is on the agendas of Chinese companies.
Shuanglin Plastic is boosting manufacturing space and capacity by 50 percent. Jingcheng Mold is adding a new, 1 million-square-foot site. Extruder maker Jinming is doubling manufacturing space. Hong Kong mold maker and molder TK Group Ltd. is building a 2 million-square-foot production base in Shenzhen. Mega is quadrupling its plant in Huangyan.
“Products are just the final results. We are more focused than ever on the actual production process,” Hen-g-li Machinery's Dai said.
Automation, better-trained workers and more-advanced equipment help Chinese companies improve efficiency and quality and do more than make margins out of sweatshops in the Pearl River Delta and Changjiang River Delta.
Changzhou Hengli plans to double capacity without adding jobs. “Increasing use of automation reduces the need for workers. We also want to improve the quality and appearance of our machines, sharpen our competitive edge and catch up with Western standards,” Dai said.
While tripling its production site, Jingcheng plans to add 100 jobs to its current workforce of 350. But it will cut that head count after 2008. Shou said, “We cannot rely on cheap labor forever; automation is the trend, not just in the West but also in China.”
Jingcheng also bought some testing equipment at NPE. “We are not buying competitors' products [to] take home and copy. We are buying new technology.” Shou said the company holds more than 50 patents in China.
Unlike 100 percent export-oriented firms, Jingcheng expects to repeat its home-market success abroad. “We sell the most expensive dies in China. With this high-end market position, we have grabbed 85 percent of the market share.”
Jincheng's preparation for expanding overseas is in full swing, including its new trademarked JC Times — which is easier for English speakers to pronounce and remember — a new overseas department in Beijing, a U.S. distributor and a plant in Japan.