By the numbers, China's wood-plastic composites industry is making strides, growing between 15-30 percent a year. By some estimates, Chinese production could soon overtake Europe as the world's second-largest producer, behind the United States.
Chinese firms are marketing their wood-composite products overseas in greater numbers, while Western executives are headed to China, trying to figure out whether it's a potential market, a growing competitor or a manufacturing partner.
More than 150 industry officials from China, and a smattering from overseas, gathered Nov. 10-11 for the International Symposium of Wood-Plastic Composites in China: Development and Prospects, outside the city of Xi'an, hoping to get a better sense of where the industry is headed.
Beyond the obvious market growth, however, it was hard to discern firm answers.
As in other manufacturing sectors, one analysis said Chinese companies could enjoy significant price advantages in world markets.
Herb Hutchison, international development director at equipment maker Milacron Inc. in Cincinnati, said Chinese wood composite makers pay production costs equal to about 25 percent that of U.S. factories, in part because their agricultural feedstocks, such as rice hulls, are much cheaper than the wood-based feedstocks widely used by U.S. firms.
Hutchison and other speakers presented figures claiming that U.S. wood composite firms pay the equivalent of about 1,600 yuan ($216) per ton for wood, while Chinese firms can pay 800 yuan ($108) per ton for agricultural fiber, and just 500 yuan ($67) for rice hulls.
The Chinese do not seem to have any advantage in wood, however, since its cost in China has escalated and is roughly in line with U.S. costs, conference speakers said.
North American companies, including some of the largest, have been coming to China to scout the market and explore Chinese manufacturing partners, according to Hutchison and conference organizer Wayne Song. Song is also chief executive officer at wood composite processor and machinery maker Qinchuan Future Plastic Machinery Co. Ltd. (QC Future) in Baoji.
But one Western executive who attended the conference, John Polidan, president and CEO of vinyl fence maker Enduris in Jacksonville, Fla., said it is not clear if Chinese-manufactured products ultimately would be more competitive after factoring in a rising Chinese currency and questions about how made-in-China products handle warranty or legal issues.
North American wood composite makers, for example, have faced expensive lawsuits and product recalls when consumers felt products did not perform to specifications.
While China has a raw material cost advantage, its industry does seem to lag in efficiency, according to conference figures.
In North America, which makes two-thirds of the world's wood composites, companies are capable of production rates of 2,640 pounds an hour, while European firms produce about 1,540 pounds an hour, and Chinese firms 550 pounds per hour, Hutchison said.
Song believes Chinese companies can catch Western firms in technology within eight years. China possesses original technology and research, including in processing agricultural fibers, he said. Along with the CEO post at QC Future, Song is president of Futuresoft Technologies Inc., a wood composite maker in Millburn, N.J.; as well as a vice president of the Wood-Plastic Composite Council of the Beijing-based China Plastic Processing Industry Association - sponsor of the symposium.
In an interview after his speech, Song said that one reason for organizing the event was to show Chinese firms that they still have a ways to go to catch up with world wood composite markets.
``What I think is, definitely China is behind right now,'' Song said. ``Inside China, you don't know this but I know this, there's a little bit of arrogance. [People say] `Oh, [wood composites], we are the same level as abroad.' It's not. They don't know what is happening abroad. I know.''
While figures on wood composites in China can be hard to pin down, conference speakers and WPCC officers said the country produces between 165 million and 330 million pounds of wood-plastic composite materials a year.
Europe, by comparison, makes about 242 million pounds a year; while the North American market is, by far, the most developed at nearly 1.5 billion pounds annually, driven by the popularity of decking, according to figures from Milacron.
The company has set up a wood composite demonstration line at its Shanghai office and is actively marketing there.
Chinese officials at the symposium said they expect strong demand because their products, by using waste materials, can help reduce pollution and improve the environment. A paper from the Xi'an University of Technology said that China's growing in demand for wood is leading to excessive cutting of forests and that using more cotton stalks in wood composites could help preserve woodlands.
Chinese firms also are looking at boosting exports, and a few have won contracts with big-box home improvement retailers in the U.S.
But cracking the North American market is likely to be difficult, according to Steve Van Kouteren, a principal with consulting firm Principia Partners in Exton, Pa. That market has been growing 30 percent annually since 1998, but because distribution channels are already full it can be difficult getting products into stores, he said. Even large new entrants like Dow Building & Construction have had problems, he said.
``Unless there is a new product that has a compelling value proposition, it is very difficult to get access to the U.S. and Canadian markets,'' Van Kouteren said.
Success in North America will be increasingly tied to product innovation, in particular decks and fencing and other goods that feel like wood, he said.
Europe's less mature market could be more open to imports from China and other places, said Asta Eder, market research team leader with Vienna, Austria-based Wood K Plus - part of the Austrian government's Competence Center for Wood Composites and Wood Chemistry.
Wood composites are much newer in Europe, she told the symposium, and in markets such as decking, they hold only a 6 percent share. But the overall decking market is projected to double by 2010, she added.
European wood composites are used in wider applications than those in North America, from auto parts to toys to furniture, according to Eder. Provided imports are of good quality, the European market could be relatively open to them, she said.
``It will be very easy,'' Eder said in an interview after her speech. ``If some Chinese producers come, people will be quite interested in this.''