Plastics industry leaders in India and China are pushing increased bilateral trade and partnerships as a way to combat the global economic slowdown and give a lift to their economies.
Meeting one day ahead of India's largest plastics industry show, PlastIndia, the heads of plastic trade groups in both countries gathered Feb. 3 in New Delhi to look at how they can tap into growing India-China bilateral trade, which last year surged 30 percent to more than US$51.7 billion.
There was much talk of cooperation at the India-China Plastics Summit, although few clear examples emerged of how exactly companies had done that.
Still, officials suggested it was a good strategy for firms to look at, considering that both countries are projecting gross domestic product growth of more than 6 percent in 2009, at a time when some developed economies are contracting.
``Industries are taking various steps to recover from the damage caused by the meltdown, and the summit at this juncture has special significance and may help in evolving strategy to overcome the crisis,'' said Swapan Bhowmik, managing director of Haldia Petrochemicals Ltd., and a member of the National Committee on Petrochemicals at the Confederation of Indian Industry.
At the moment, trade between the petrochemicals industries in the two countries is relatively small, about US$1 billion a year, Bhowmik told the conference.
Chinese firms, at least, seem to have a lot of interest in India.
China brought the second-largest contingent of overseas exhibitors to PlastIndia this year, with 96 exhibitors, said Arvin Mehta, president of the Mumbai-based PlastIndia Foundation, one of the summit organizers and an umbrella trade organization for the country's plastics industry.
Liao Zhengpin, head of the China Plastics Processing Industry Association in Beijing, told the conference that exploring the Indian market is becoming more important for his country because the global slowdown has significantly hurt China's export-oriented plastics processors.
He said China's plastics industry is growing by more than 10 percent, but that growth has slowed in the last 18 months.
Liao said a CCPIA survey of companies predicted further slowing in the first half of the year, with a recovery in the second half in 2009, driven by strength in domestic-oriented Chinese firms like pipe and packaging, which could benefit from Chinese government stimulus measures.
He said the toy industry has been the most affected segment of the plastics industry, but noted that the CPPIA statistics do not include information on the toy industry. CPPIA also co-organized the event.
Organizers ran through a list of possible areas of business tie-ups, including Indian resin makers selling surplus plastic to China, which is a net importer of raw materials, and Chinese firms selling India machinery to make up an estimated 58,000 pieces of processing equipment India will need by 2015, including 34,000 injection presses and 10,700 blow molding machines.
Countries at odds
But other speakers noted areas of tension. Indian processors worry about lower-cost Chinese plastic products flooding their domestic market, said Ashok Goel, vice chairman and managing director of Mumbai-based plastic packaging firm Essel Propack Ltd. The company is one of the largest toothpaste tube makers in the world, operating plants around the globe, with two in China.
Also, tensions flared last summer when India's government announced it was investigating complaints that Chinese injection presses were being dumped on the Indian market.
Imports, many from China, now account for about 37 percent of the Indian press market, up from just 11 percent six years ago, according to Pune, India-based press maker Electronica Machine Tools Ltd., which imports Chinese machines.
Another area of trade tension is in the hard-hit toy sector. The Indian government on Jan. 23 banned Chinese toy imports into the country for the next six months, citing public health concerns over allegedly high lead levels. That happened despite the fact that India does not have any official safety standards for toys.
Critics in Asia suggest the ban is a means to protect Indian manufacturers against cheap competition. An official from China's commerce ministry said Beijing may turn to the Dispute Settlement Body of the World Trade Organization to try to resolve the issue. (For more on the dispute, see Nina Ying Sun's Feb. 3 posting in Plastics News' China Blog at www.plasticsnews.com/ china/english/china blog).
Several speakers from India said their country needs to learn from Chinese successes in building roads, ports and other infrastructure, which lags well behind in India.
``We must plead with our government about the rate of growth of infrastructure,'' said Mahendra Sanghvi, managing director of injection molder Shaily Engineering Plastics Ltd. in Baroda, India.
Chinese industry is much larger than India's, and per-capita consumption of plastic in China is much higher, although Indian officials said they believe domestic consumption of plastics will double by 2012.
Several speakers said they thought Indian companies had seen minimal impact from the global slowdown, because the country is much less export-dependent than China, but an Indian economist told the conference there were troubling signs of a slowdown in India's industrial growth.
From 2006-07, industrial growth was 12.5 percent, but it dropped to about 2 percent by November 2008 and is likely to remain slow through October before recovering, said Sunil Sinha, senior economist with New Delhi-based Crisil Ltd., a unit of Standard & Poor's.
He said India is being hurt by the global slowdown, contrary to what some business leaders feel, but added that the long-term trends for the economy are good.
Essel's Goel said that Chinese firms generally are much larger, with greater economies of scale, and ahead of Indian firms on the ``learning curve in manufacturing excellence.'' But he said in an interview after his speech that Indian companies could have more advantages than Chinese companies, such as more familiarity with brand building in world markets.