In an unusually candid manner, a top official from the China Plastics Processing Industry Association warned about the problems currently facing the industry, giving a special mention to “foreign firms.”
CPPIA Executive Vice President Cao Jian said the plastics industry is plagued by new issues such as market contraction and companies either going out of business or switching to a different industry.
He made the comment at a July 30 industry event in Tianjin, according to a transcript provided by CPPIA.
Chinese trade group officials in the past have referred to industry challenges in a generally more macro-level and abstract way.
Cao said the current difficulties resulted from domestic and international economic conditions. He also specifically pointed out that foreign companies are speeding up their market penetration into China, which significantly impacts China's domestic industry.
“These [issues] require our full attention and active response,” he said.
The Beijing-based group also shared first half industry results. In the first six months of 2015, the 7,140 plastic processors included in the statistics churned out 34.8 million tons of products, up by 1.46 percent from a year ago. Customs data also show mild year-over-year increases of plastic products export. Export volume grew 4.7 percent growth to 8 million metric tons, and the dollar value climbed 3.5 percent to $29.3 billion.
Earlier last month, CPPIA President Qian Guijing revealed some more disconcerting data in a speech at another industry event. According to him, major plastic processing regions witnessed negative production growth in May for the first time, including a 28 percent plunge in Liaoning province, a 1 percent drop in Shandong, a 1.2 percent shrinkage in Zhejiang, and a 0.6 percent decrease in Guangdong.
In comparison, the Chinese plastics processing industry's production growth reached 7.4 percent in 2014, 8 percent in 2013, 9 percent in 2012, and 22.4 percent in 2011.
Qian also noted processors are seeing disappearing margins. Industry-wide margin was just 5.8 percent in 2014, much lower than actual interest rates, he said, which in turn added difficulties for companies to obtain affordable credit and created a vicious cycle.
Both Qian and Cao are calling for technological advancements as the key solution to the industry's malaise.
“We are shifting gears, going through the pains of structural adjustment, and digesting the stimulation policies [from previous years],” Cao said. “We must rely on technological and management innovation as well as efficiency optimization … to embrace a modern and sustainable industry.”