Several speakers, including Asian executives, highlighted the continuing globalization of the PET resin sector at the annual Nova-Pack conference, held Feb. 11-13 in Orlando.
While China's emergence as an industrial power looms over the global business scene, market analyst Edgar Acosta with DeWitt & Co. Inc., a Houston-based consulting firm, said research shows Chinese resin production is behind mega-scale plants elsewhere in terms of cost.
Acosta said that reflects China's state-planned economy, which has limited construction of megaplants because of concerns over borrowing to finance them.
``Until [Chinese officials] come to terms with the fact they need a financing structure, their level of competitive threat is limited,'' he said.
Acosta said South Korean plastics companies could gain a stronger foothold in North America if the proposed U.S.-South Korean trade agreement is approved by Congress.
He said all Asian plastics companies have a long-term advantage over their competitors, because Asian planners look further ahead than the typical five- to 10-year business cycles of American and European producers.
``Their hunger for turning a profit could see them go as far out as 30 years,'' Acosta said.
In his presentation, Tian Xiaogai, purchasing manager for Pet All Manufacturing Inc. of Markham, Ontario, said opportunities for Chinese PET converters are unlimited.
He said China's 1.4 billion people consume 14 billion bottles annually of carbonated soft drinks alone.
According to Tian, Chinese manufacturers produce about 200,000 plastics machines per year, with total sales of $4 billion. But only about 10 percent of those machines are exported, for sales of $400 million. Tian said exports break down as follows:
* 60 percent injection molding machines.
* 8 percent extrusion machinery.
* 12 percent blow molding equipment.
* 20 percent other plastics processing equipment.
China exports about 1,000 PET machines, Tian said, but imports an estimated 20,000 machines annually.
He said Chinese equipment generally is not up to Western safety and reliability standards and is fairly labor-intensive to operate - thus, most exports are to developing countries.
``To reach the quality standards of America or Europe, there's a lot of work that has to be done,'' he said.
Tian said Pet All works with Taiwanese manufacturers to bridge the gap, because its machines are five years more advanced than those made in China, while being price-competitive because of Taiwan's labor costs, which are lower than U.S. or European competitors.
Pet All also combines Canadian engineering with Chinese molds and equipment, to bring imported Chinese machines up to North American producers' expectations, he said.
``Exports of Chinese PET equipment can only continue to grow,'' Tian said.
Business consultant Gautam Mahajan, president of New Delhi-based Inter-Link India, emphasized the rivalry between China and India in his presentation.
Mahajan's numbers show India moving from the world's 12th-largest economy to third by 2032, with a PET packaging market valued at $22 billion in 2006 and growing at about 15 percent annually. He said PET now outstrips glass in Indian packaging by 30 percent. Mahajan said India's packaging market is growing 15 percent annually.
Indian PET consumption is 4 pounds per capita. Unlike China, India has more consolidated end markets, and has a youthful population and significant investment by companies such as Anheuser-Busch Cos., Asia Pacific Breweries Ltd. and CobraUK Ltd., Mahajan said.
In machinery, he said India has a competitive advantage because it has both a large pool of low-cost labor and English-speaking engineers, though there's a shortage of highly skilled workers.
Indian resin compounding and packaging design will become more innovative, with specialty polyesters, engineered thermoplastics, film and fiber and multilayer taking the lead, Mahajan said.
He said the recent revaluation of the rupee at about 40 to $1 makes India an enticing export and import market.
``You can leverage your [U.S] dollar five to 10 times,'' Mahajan said. ``To sum up: India is both an opportunity and a threat.''
On the research and development side of PET, an executive of Mumbai, India-based conglomerate Reliance Industries Ltd. said there's work to be done to enhance the range of the material's food and beverage applications.
``[PET] has to get into a different form, so it can handle higher heat at the molecular level,'' said Anup Bagchi, senior vice president of Reliance's PET division.