ORLANDO, FLA. — For the first time in my 10 years covering the Chinese plastics industry, I found capacity expansion news scarce among Chinese exhibitors at a major global trade show.
More than 400 exhibitors came all the way from China to Orlando for NPE 2015, representing more than a fifth of total exhibitors. But the unprecedented shortage of capacity expansion was evident.
“There's a lot of uncertainty with the markets in China, the U.S. and Europe,” said marketing manager Bruce Wong with Suzhou Jotylong Tooling Co. Ltd.
The first-time NPE exhibitor came to the show mostly for the Central and South American markets.
The automotive toolmaker previously focused on export markets in Europe, especially Germany. But the sliding euro has made Chinese molds less price-competitive.
“Our products have lost cost advantages because of the depreciating euro, but we can't afford to lower the price because RMB-based costs back home have only been growing,” Wong said. He added that, pricing-wise, Chinese molds are now at a similar level as molds made in some European countries such as Portugal.
Commenting on the current state of Chinese industry, Wong said companies in general hold a “wait-and-see” attitude. “The industry has been growing too fast in the past,” he said, referring to the constant capacity expansions.
When the global economy was hit by the Great Recession, Chinese exporters were directed by Beijing to switch their focus to the domestic market. But China's domestic economy has also been losing momentum and recorded the lowest GDP growth in more than two decades.
Emmy Zeng, overseas sales manager with Shenzhen Well-king Precision Mold Co. Ltd., is seeing similar trends.
“I haven't heard of any companies expanding in this market condition,” she said.
She was upfront about the root cause of the impediment facing Chinese mold makers. “Most companies make lower end products and compete on price. High-tech, high-value products are definitely in the minority.”
The only way to move forward is to move up, according to Zeng, “we need invest in better technology and equipment.”
That was echoed, in a way, by Shi Jinheng, president of Taizhou-based Zhejiang East Zhouqiang Plastic & Mould Industry Co. Ltd., a supplier of blow molding machinery, injection molds, injection molding press and auxiliary equipment.
The company said it sells 2,000 machines annually in a wide price range, from five-digit price tags to seven-digit, in Chinese yuan.
Nearly 80 percent of its products are exported, to countries including Mexico, Brazil, the United States, Chile and Colombia.
The 25-year-old company reports annual sales of 300 million yuan (close to $50 million).
The exciting news from East Zhouqiang is that it's actually expanding, but not simply increasing production scale, but rather carving out a new business that the company believes fits the sustainable trend.
The company is developing stone paper machinery — using mostly calcium carbonate and a small amount of high density polyethylene (10-20 percent) to make paper.