Slowing growth in China’s plastics industry is forcing processors to switch their focus from export markets to domestic customers to secure the future growth of their businesses. The main export markets of the EU, US, Japan, and ASEAN countries, which had been the primary drivers of China’s fast growth, have weakened as a result of the global economic slump, the China Plastic & Rubber Journal (CPRJ; www.adsalecprj.com) said in its July issue. The pace of China’s annual growth has now faltered – after reaching above 7.1% in 2011 and 2012, it has slipped to 5.6% in the first five months of 2013. These numbers are a significant fall from the double-digit rates the plastics industry had been achieving since 1996.

According to CPRJ, rising material and labour costs in China have also prompted some overseas customers to move their orders to other, cheaper manufacturing countries such as India, Indonesia and Vietnam. However, China’s increasing prosperity has meant that local people are now demanding better quality products which were formerly destined for export. This shift in consumer behaviour is stimulating new growth for China’s plastics industry with many companies realigning their development strategies as a result.

This is a turnaround from the years when Chinese producers relentlessly pursued profits in a sector characterised by burgeoning demand and rapid development, the CPRJ experts said. A period of extensive production expansion has also resulted in over-capacity. Inevitably, the race to financial reward over sustainability has led to commoditisation which has resulted in lower margins. Now, China’s downstream sectors are demanding new and different plastics with regards to properties, processing and disposal; the traditional products no longer meet their specific requirements.

Environmentally-friendly materials and low carbon emissions have become a hot topic in China’s construction industry. The government is driving development of low-carbon technologies in a bid to promote energy efficiency. Beijing and local governments have established green building standards and the country’s first green and sustainable construction has been built in Qingdao, Shandong province. The building, part of the "EcoCommercial Building Programme" developed by Bayer MaterialScience (BMS, Leverkusen / Germany; www.materialscience.bayer.com) – see Plasteurope.com of 26.06.2012, uses photovoltaic panels to provide solar power, high-performance PU in roofing, floor insulation and water-borne PU in the wall coating and flooring system.

According to CPRJ, China has intensified its efforts in recent years to consolidate a fragmented plastics industry, though progress has been slow because of failures at the local government level. As consolidation gathers pace, there will be a rise in merger and acquisition activity and more small companies will disappear or be taken over in the next ten years.