Like many Chinese plastics firms, PVC roof tile maker Foshan City Shunde Xinli Plastic Packing Co. Ltd. has seen business slow this year. Its export sales are down at least 30 percent, as the housing and financial crisis smacked the U.S. and Europe and orders dried up.
``I think it will get worse in the next two to four months,'' said Jenny Chen, sales and marketing director for the Foshan-based company. ``Customers don't want to buy. They like our product, but they are waiting.''
That belief is echoed by Hong Kong-based injection molder Wah Tat Plastics Works Ltd., where export markets that feed the houseware maker's 75 presses in its normally busy Dongguan factory have slowed dramatically.
``Over the last few months, when the crisis skyrocketed, orders died,'' said company official Eric Ching, in an Oct. 30 interview at the Hong Kong Gifts, Decor and Home show. ``I can say it in three letters: B-A-D.''
Those two firms are not alone, judging by interviews at several late October trade shows in Hong Kong, where Chinese firms reported exports falling and nervous customers holding back on purchases because no one knows which way the world economy will turn. China's economy is still growing, but it's significantly off the pace of 11.9 percent growth last year, with estimates of less 10 percent this year.
While 8 or 9 percent would be welcome news most anywhere else, in China it reflects a slowdown and is forcing firms to adjust with greater efficiency or better marketing, which in the go-go economy of the past may not have been as much of a priority.
Ching said Wah Tat's employment is under 300 half of what it was at its peak two years ago, before the rising value of the yuan and climbing raw material prices boosted costs for Chinese factories and bit into business.
But, he said, the sudden downturn of the past few months has had one positive effect: Plastic prices dropped very quickly back to 2003 levels, making his products cheaper. That is now starting to attract interest from buyers, he said.
Chen's firm, Shunde Xinli Plastic Packing which makes roofing tiles and PVC shrink film has avoided layoffs and worked harder to develop new products, she said. The company fears that if it lets workers go, it will spend more money in the future to train new employees than it would save now, Chen said.
The Chinese government has tried to help exporters by reinstating some export-tax rebates that it suspended last year when it attempted to rein in growth and lower its trade surplus. But several executives said they doubt the move will help much if business in general is down.
Nonetheless, some companies say they are adjusting.
Ningbo Auspicious Plastic Co., which targets high-end markets for its injection molded acrylic housewares, has seen fewer orders from the U.S. and Europe; but, so far at least, Japan and South Korea have held steady.
The company now employs industrial designers to make its products more attractive and attends more trade fairs. It also purchased Taiwanese injection presses to upgrade manufacturing, making it more efficient and allowing it to eliminate some workers, said Eden Wang, spokeswoman for Ningbo-based Auspicious Plastic.
Though the firm's workforce of 150 is one-third smaller than it was two years ago, Auspicious has been able to keep sales at the same level through efficiencies.
Some companies are seeking new, environmental markets. Several firms at the Eco Expo Asia trade fair, held Oct. 28-31 in Hong Kong, said they are making investments for making bio-based or biodegradable products.
Hong Kong-based GreenGood Eco-Tech Co. Ltd., for example, set up a thermoforming plant to use polylactic acid to make food packaging in Dongguan three years ago. Now the company is preparing to open a factory next year to make packaging materials from sugar cane, according to marketing manager Patrick Lo.
But high-end green products are not necessarily a money maker for Chinese firms either, given the higher material costs and stringent requirements for performance and testing, said Steven Wong, managing director of Hong Kong-based Fukutomi Co. Ltd.
Fukutomi injection molds cutlery and flower pots from corn-based PLA at its plant in Shantou.
``I don't really know who makes really good money out of PLA, because this is a developing market, and also there are still lots of processes not yet mature,'' he said.