The emphasis on energy efficiency and boosting domestic demand in China's new five-year plan plays to the strengths of plastics, according to executives at materials suppliers, with many stepping up investments in research and development to handle increasingly sophisticated local demands.
The country's latest five-year plan, launched in March, targets several areas where plastics have significant opportunities, including energy efficiency, water conservation, infrastructure growth like housing and rail, and a shift toward more domestic-led economic growth, according to interviews with industry executives at the Chinaplas show, held May 17-20 in Guangzhou.
“We're well-positioned as an industry and we should be very encouraged by it,” said Charlie Crew, president and CEO of Sabic Innovative Plastics in Pittsfield, Mass. “All those trends in the five-year plan are playing very well to our industry capability and skill set.”
Sabic is among several global resin makers intensifying development work in China. The firm announced at Chinaplas it will open a new 646,000-square-foot technology and innovation center in Shanghai in 2013, and build a polycarbonate factory in a joint venture with China's Sinopec.
Others, like ExxonMobil Chemical Co. and Ticona Engineering Polymers, recently opened or expanded technical centers in China. ExxonMobil's new center in Shanghai, which opened in March, is its third-largest worldwide.
Materials firms say they want to take advantage of increasing research and development work being done there.
DuPont Co. noted that the five-year plan, which sets development trends in the world's second-largest economy through 2015, includes the most detailed targets yet for carbon dioxide emissions and energy efficiency per unit of economic growth.
That translates into more use of engineering plastics in areas such as reducing the weight of cars to make them more fuel efficient, the company said.
“It fits in with our investments in China, particularly the China R&D center, where we want to collaborate on lightweighting and collaborate on renewable-source materials,” said James Hay, regional Asia-Pacific director for DuPont Performance Polymers. “We are very encouraged by the direction of the five-year plan because it further encourages us to come to China with our value proposition.”
Hay said there is more product development happening locally as China gets wealthier and customers, such as those in the domestic car industry in China, have the resources for more-sophisticated engineering and development work from DuPont and other suppliers.
“It's not just our global customers wanting to buy in China, it's the domestic automakers who want to create applications in China,” he said. “We try to bring more than just the pellet. We create that value and they are willing to pay for that value beyond just buying the pellet.”
ExxonMobil, as well, said its sales of plastics into China's car industry — now the world's largest by number of vehicles sold — is growing faster than the overall auto market.
“Our products are penetrating faster than the auto market is growing here,” said Olivier Van de Voorde, ExxonMobil's global products manager for specialty elastomers. “Our whole story is about going to lighter weight. The same thing we've seen in the regions will happen here.”
China's car market is very price-sensitive. One estimate delivered by Ford Motor Co. at a Plastics News conference connected with Chinaplas said the majority of cars there still sell for less than $14,500. That sensitivity is actually an “accelerator” for plastics use because it encourages lightweighting, redesign and more use of polymers to reduce overall part cost, Van de Voorde said.
ExxonMobil's polymer films for solar-power panels will be another growth area from the five-year plan, as will infrastructure spending from general building projects, Van de Voorde said.
Ticona, which opened a technical center in Shanghai earlier this year, believes the five-year plan's increased spending on water infrastructure — from improving irrigation for farmers to water filtration and treatment — is an opportunity.
“Water is becoming critical,” said Stuart Yelland, Ticona's product management marketing manager in Shanghai. “I think China is a bit accelerated compared to the rest of Asia. It seems like it's a focus of the government.”
The government is doing a lot of research on cost-effective and sustainable technologies for water filtration, an area with opportunities in thermoplastic materials and fibers, he said.
The five-year plan will continue the country's push away from strictly a manufacturing center toward technology development, the executives said.
Sabic's Crew said China does not do as much fundamental chemistry as some other research spots and its development efforts focus more on customer applications. But the trend is clear, he said. “China has moved from a world manufacturing center to a world manufacturing and technology center — there's a lot of technology going on here,” he said. “That's been the evolution over the last 10 years.”