China's exports of plastic products are expected to fall by about 20 percent this year. Exports to the United States, Europe and Japan fell the most, but companies focused on the domestic market were not affected much.

China's exports of plastic products have fallen by about 20% this year, as a number of economic analysts recently predicted at the China Plastics Industry Development (International) Forum in Yuyao, Zhejiang Province.

Exporters are pessimistic

Overall, the added value of China's plastics industry will increase by at least 15% this year, which should be gratifying. But because China's plastics industry has maintained an annual growth rate of more than 20% for many years, there is a mixture of optimism and apprehension in the market.

The pessimistic attitude is mainly concentrated on export-oriented enterprises. Exports have long been the main growth engine of China's plastics processing industry.

According to statistics released by the Economic and Technical Research Institute under Sinopec, China's plastics exports to traditional markets such as the United States, Western Europe and Japan plummeted by more than 30 percent in the first seven months of this year, affected by the European debt crisis, the earthquake in Japan and the economic downturn in the United States.

However, China's exports of plastic products to Asia and other emerging markets have remained stable, partially offsetting the decline in exports from traditional markets. Sinopec Group predicts that exports of plastic products will fall by about 20% this year to about 11 million tons.

Shu Zhaoxia, deputy chief engineer of Sinopec Economic and Technical Research Institute, believes that there are major risks in industry investment and exports.

However, if we look at the export slowdown this year from another angle, the export of plastic products actually remains at a historically high level. Sinopec predicts that exports are likely to rebound to 12 million tonnes next year, the second-highest export figure in history.

In response to the export recession, Shu said China's economic policy will focus on how to maintain economic stability, such as proposing solutions to the current situation of large number of small and medium-sized enterprises bankruptcing, and finding a balance between promoting growth and controlling inflation.

But Shu Zhaoxia believes that finding new sources of growth will not be easy. "The reform of state-owned enterprises, a booming real estate market and large exports, which were the main engines of growth in the past, are no longer able to significantly boost economic growth," she said. And emerging things like the low-carbon economy don't have the scale to drive a new wave of growth at this stage. ”

Sinopec's forecast for plastics exports coincided with unofficial estimates made by other industry players at the meeting.

According to the survey results of 40 plastic processing enterprises conducted by the Internet business platform sc199.com, export-oriented enterprises generally report that the output has shrunk by 10%~20%, while the factories dedicated to the domestic market have shown "limited" growth in output.

Pang Xiongying, China's chief executive of CMAIInc., a Houston-based consulting firm, said that some parts of the plastics industry have declined by 60 percent in recent months due to the lack of improvement in North American and European markets.

He said that after entering September, the export of plastic products has not improved much, and this period is usually the time when foreign Christmas orders are the most, and the coastal provinces of Zhejiang Province have been the most affected.

But he also said plastics processors that rely heavily on domestic markets, such as those in central and northern China, "are likely to be in a much better position...... Although it can't be said that the performance is very good, at least it is passable. ”

Demand remains on the rise

According to several analysts, the plastics industry is currently facing serious problems with low profit margins and overcapacity. At present, the average profit margin of this industry is 4.9%, which is lower than the average profit margin of 5.45% of the other 17 light industries in the country. Guo Yongxin, deputy director of the China Light Industry Information Center, blames overcapacity and lack of innovation as the cause of low profit margins. "There are too many SMEs in this sector. They have no characteristics to speak of, they follow the trend in products, and they lack innovation. This leads to low profit margins. Guo Yongxin said.

If this development continues, it will eventually form industry mergers and acquisitions and consolidation. Guo Yongxin predicts: "Our industry will enter a transformation phase in the next five years. ”

Despite the gloomy clouds, analysts also believe that there is still an element of optimism.

China's economy is still expected to grow at 9 percent this year, while the industrialization of Chinese mainland's inland provinces is expected to accelerate further. Sinopec said that although the growth pace of coastal areas is slowing down, the economic growth rate of inland provinces has reached 11%~13%.

Shu Zhaoxia said: "There is a lot of potential to stimulate plastic consumption. She added that China's per capita plastic use is now only at the level of South Korea's 1990 level. "Over the next five years, demand for plastics will continue to rise, but at a more stable rate. ”