It is estimated that China's exports of plastic products will drop by about 20% this year. Exports to the US, Europe and Japan declined the most, but the companies that focused on the domestic market were not affected too much. China's export volume of plastic products has dropped by about 20% this year - in the recent forum on the development of China's plastics industry (International), held in Yuyao, Zhejiang, many economic analysts have predicted this.
Pessimistic export enterprises
Overall, the added value of China's plastics industry will reach an increase of at least 15% this year. This figure should be gratifying. But since China's plastics industry has maintained an annual growth rate of over 20% for many years, optimism and anxiety exist on the market.
Pessimism is mainly concentrated on export oriented enterprises. Exports have long been the main engine of growth in China's plastics processing industry.
According to the statistics released by the Sinopec group's Institute of economic and technological research, the Chinese plastics industry's exports to the traditional markets in the United States, Western Europe and Japan have plummeted by more than 30% in the first 7 months of this year, affected by the European debt crisis, the earthquake in Japan and the recession of the US economy.
However, China's plastics exports to Asia and other emerging markets remained stable, offsetting some of the recession in traditional markets. Sinopec predicts that the export volume of plastic products will fall by about 20% this year, about 11 million tons.
Shu Zhaoxia, deputy chief engineer of Sinopec economic and Technological Research Institute, believes that there are significant risks in industry investment and export.
However, if we look at this year's export slowdown from another perspective, the export of plastic products actually remains at a historically high level. Sinopec predicted that next year's exports could rise to 12 million tons, becoming the second highest export figure in history.
To cope with the decline in exports, Shu Zhaoxia said China's economic policy will focus on how to maintain economic stability, such as a solution to the current situation of large numbers of small and medium-sized enterprises, and to find a balance between promoting growth and controlling inflation.
But Shu Zhaoxia believes that finding new sources of growth is by no means an easy task. She said: "the real estate market and large exports of the state-owned enterprises' reform, prosperity and development, these three elements in the past as the main engine of growth have now been unable to substantially boost the growth of the economy. New things such as low carbon economy do not yet have enough scale to push forward the new round of growth at this stage.
Sinopec's forecast of plastic exports coincides with the informal forecasts made by other industries at the conference.
According to the survey results from the Internet business platform sc199.com to 40 plastic processing enterprises, export oriented enterprises generally reflect the contraction of 10%~20%, while the factories specializing in the domestic market have a "limited" increase in production.
Pang Xiongying, CEO of CMAIInc., a consulting firm based in Houston, the United States, said that in recent months, some of the plastics industry has fallen by 60% as the North American and European markets are not rising.
He said that since September, the export of plastic products has not been much better after entering the September, and usually this time is the most foreign Christmas order, which is the most affected by the coastal provinces in Zhejiang province.
But he also said that plastic processing companies that rely mainly on domestic markets such as central China and North China "may be much better off... Although it can't be said that it is very good, it can at least get through. "
Demand is still on the rise
Many analysts said that the plastics industry is currently facing a serious problem of low profit margins and overcapacity. At present, the average profit rate of this industry is 4.9%, which is less than the average profit margin of 5.45% other 17 light industry sectors. Guo Yongxin, deputy director of the China Light Industry Information Center, said that excess capacity and lack of innovation were the reasons for low profit margins. "The number of small and medium-sized enterprises in this industry is too large. They have no special features, and they follow suit in their products and lack innovation. This leads to a low profit margin. " Guo Yongxin said.
In this way, mergers and acquisitions will eventually take place. Guo Yongxin predicted: "our industry will enter the transformation stage in the next five years."
Despite gloom, analysts believe there are still optimistic factors.
The growth rate of China's economy is expected to reach 9% this year, and the industrialization of inland provinces in China is expected to further accelerate. Sinopec said that although the growth rate of coastal areas is slowing down, the economic growth rate of inland provinces has reached 12%~13%.