Last year marked a real milestone in the global plastics machinery market, with China overtaking Germany to become the leading manufacturer of production equipment. According to figures from the German machinery manufacturers association, VDMA, China secured 23.5 percent of an estimated global market of around 16 billion euros ($20.5 billion), compared with Germany's share of 22.5 percent.
It is not a milestone the German machinery sector will wish to mark as it moves closer to the autumn K fair in Düsseldorf, traditionally its global showcase. The question, however, is whether China will be able to hold onto that leading position.
Few will be surprised to hear that the Chinese economy fared well during the economic downturn. China's stimulus measures ensured that its gross domestic product growth remained above 8 percent for every quarter in 2008 and 2009. Chinese manufacturing has continued to invest in new equipment and its plastics machinery producers have benefited accordingly.
Figures from the China Plastics Machinery Association show that country's domestic sales of plastics machinery were down by 14 percent in 2009 to around 3.5 billion euros. However, those figures mask a shift to local producers: Sales of domestically made equipment were up by 20 percent to around 2.5 billion euros. It seems that, squeezed by recession, Chinese processors cut costs by buying locally.
However, while German machinery makers are export-oriented, China's machine producers are, with only a few exceptions, focused locally. As the global economy improves, the country's machine suppliers may struggle to deliver the high levels of productivity and support that customers in China and beyond will need to compete internationally.
To be a world leader you have to have world-leading production capabilities — even in China. Last year, Chinese companies imported German plastics and rubber machinery to the value of 357 million euros — equivalent to around 10 percent of the total Chinese market.
After seeing a value decline of 30 percent in 2009, the German plastics machinery sector is reporting some recovery this year — it predicts an 11 percent improvement for 2010. And as global markets continue to strengthen, plastics processors in China and the rest of the world will want to invest in equipment that gives them the highest levels of productivity. That is likely to mean they will be buying from Germany for some time to come.
Smith is editor of European Plastics News, a sister publication of Plastics News.