Authorities on China, India and Vietnam overviewed those countries' plastics sectors and investing environments for attendees of the Plastics News Executive Forum, held Feb 25-28 in San Diego.
Their talks sparked comparisons of these three Asian markets that continue to attract North American firms and investors.
China consumes 17 percent of the world's plastic products, second only to the U.S., with a 27 percent share, according to Helmar Franz, executive vice president of China's largest injection molding machine maker, Ningbo Haitian Group of Ningbo, China.
Driven by a growing demand for plastic products, the global demand for injection presses has increased at a compound annual growth rate of about 6.5 percent, from $9.8 billion in 2001 to $12.6 billion in 2005. That market is expected to rise to about $15 billion by 2010, Franz said.
Other factors driving growth in China's plastic machinery market include a growing domestic plastics processing industry, the continuing trend of foreign outsourcing to China, technological upgrades, increasing exports of Chinese plastics machinery and the trend of replacing other materials with plastics.
The Chinese market is not immune to fluctuation. After years of brisk growth, demand slumped in 2005 to below the 2003 level, because of government policies that reined in a then-overheated economy.
However, the market has picked up again since last year.
China also is the fastest-growing market for injection molding presses in the world, Franz said. Both production and consumption have increased at a compound annual growth rate of more than 13 percent for each of the past five years, he said.
While China's domestic market recovers and regains its energy, exports are taking off.
As a result of what Franz called the high ``price-performance ratio'' and the continuous improvement in product quality, China's injection press exports have been increasing at a compound growth rate of about 22 percent annually for the past five years.
However, Franz said, revenues and the share of exports in total production are still low compared with developed countries. That implies substantial growth potential, he said.
Ashok Goel drew on his recent experience as president of the major trade group for plastics processors in India to share data about that burgeoning market.
Goel, vice president and managing director of Essel Propack Ltd. of Mumbai and former head of the Organization of Plastics Processors of India, said Indian companies operate 33,000 injection presses, 5,000 blow molding and 18,000 extrusion machines. In the past six years alone, the country has added 3,300 presses, 400 blow molding machines and 2,200 extruders, he said.
Goel said investment in plastics machinery in the country will leap to $6 billion in 2010 from $2 billion recorded in 2000.
India resin consumption has tripled every decade since the 1970s, he said. ``Virgin and recycled resin consumption reached 4.8 million [metric] tons in 2000 and is expected to top 15 million by 2010,'' he said.
Resin production capacity also rose from less than 0.5 million metric tons, or more than 1 billion pounds, in 1990 to 4.5 million tonnes [9.9 billion pounds] in 2005. There are currently 15 resin producers in India, producing about 9.3 billion pounds of raw material annually.
Meanwhile, India has become a resin importer with a trade deficit of 6.2 billion pounds in 2005, a number expected to rise to 21 billion pounds by 2011. India's resin needs come from a rapidly growing processing industry. About 25,000 plastics processors nationwide generate sales totaling $5.6 billion, of which $1.2 billion is exports.
In particular, the packaging sector has seen sales grow, on average, by 12 percent a year since 2000. Demand for plastic films, for instance, is expected to increase from 1.3 billion pounds in 2000 to 6.6 billion pounds in 2010. Fueled by that demand, material consumption in packaging will rise to 46 billion pounds in 2010 from 22 billion pounds in 2005 and will account for close to half of India's total plastic consumption, said Goel. His own firm, Essel Propack, is a huge provider of laminated tubes and operates 26 factories in 15 countries.
U.S. investments, along with indirect investments it makes through third-party countries, total $4.4 billion, making the U.S. Vietnam's fifth-largest foreign investor, said Chris Runckel, chairman of the U.S.-Vietnam Chamber of Commerce.
The low costs of labor, land and utilities have attracted an influx of foreign investment from all over the world, including the U.S., said Runckel, who also promoted Vietnam as the youngest population in Asia.
About 60 percent of the country's people are under 30 years old, he said. Vietnam also has access to a market of 800 milion people through the Association of Southeast Asian Nations and benefits from a Vietnam-U.S. bilateral trade agreement, he said.
``Vietnam can help diversify and protect your investment,'' said Runckel, who is also president of his own consultanting firm, Runckel & Associates in Portland, Ore.
The nation's plastics industry, representing 2,700 processors, expects to grow quickly, at an average of 18 percent a year between now and 2010. About 80 percent of those processors are small and midsize private firms, each employing between 10 and 50 people. State-owned operations account for 6 percent of the total, but represent 20 percent of all capital invested in the industry. Another 14 percent are foreign invested, accounting for 35 percent of the overall capital investment.
The industry has been established for only about 30 years, Runckel said, and is still in its infancy vs. other countries in the region such as Malaysia, Singapore, Thailand and China.
A 2004 survey revealed that 70 percent of the Vietnamese workforce in plastics is unskilled, seven times higher than the combined average of other sectors. Also, most small and midsize processors use outdated technologies that can hurt the environment.
The industry also is highly dependent on imported resin, making Vietnam Asia's second-largest importer of plastic materials, he said.
In China, at least two dozen processors recorded 2005 sales greater than $125 million.
The country's plastics processing industry is concentrated in the Pearl River and Yangtze River delta areas - a region of east China that includes the city of Shanghai; and the provinces of Jiangsu, Zhejiang, Shandong, Anhui, Fujian and Jiangxi. It produces about half of the nation's resin and 53 percent of its plastic products, according to Liao Zhengpin, president of the Beijing-based China Plastics Processing Industry Association.
Ho Chi Minh City is similarly the hub of plastics activity in Vietnam, as are the surrounding provinces and cities of Binh Duong, Dong Nai, Long An and Ba Ria Vung Tau. The area has attracted 80 percent of total plastics investment and accounts for 80 percent of total plastic product manufacturing, Runckel said.
Unlike in China and Vietnam, plastics processors in India are scattered across the country, Goel said in an interview. ``We don't see particular patterns for the geographic location,'' he said.
Most Indian processors are small, because of industrial policies that reserve certain sectors for small players, and because of certain labor laws and practices.
Indian packaging maker Essel reported 2006 sales of about $200 million, but Goel did not disclose how much is plastics related.
Different than their Chinese counterparts, the plastics industries in India and Vietnam are small-scale, domestically oriented and focus strongly on packaging.
Though Asian countries, like emerging economies in general, compete with each other for foreign money, they are beginning to see each other as the newest opportunities for investment.