06.01.05
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| Photo courtesy of Willi Eichbauer. |
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discussion of growth in the nonwovens industry may exclude the increasing
trend toward globalization. With a more equitable labor pool and developing
customer base, the Asian nonwovens market, notably China, has led
the way for international players. A study of the region, conducted by INDA, the Association of the Nonwoven Fabrics Industry, Cary, NC, further shows that although Japan has historically been a significant economic power in the region, the country has experienced an economic slump for more than a decade, with its economy in a period of deflation for several years. The Japanese nonwovens industry has had minor growth during the past several years due to a peak in development, prompting the move of some Japanese domestic nonwovens production to lower-cost neighboring nations, most notably China. With a population of more than 1.2 billion, potential for domestic demand has driven much of Chinas own nonwovens expansion. Unfortunately, Chinese nonwovens producers and converters have faced challenges sating the increasingly savvy domestic consumers who are demanding more sophisticated products as their disposable income increases. Segment Growth
In a recent industry address, Wang Yanxi, chairman of CNTA, China Nonwovens Technical Association, asserted that spunbonding is the most rapidly developing segment in Chinas nonwovens industry. In 2002, said Mr. Yanxi, there were 76 spunbonding lines in the country, of which 65 were producing polypropylene-based nonwovens and 10 producing polyester. The remaining line produced a composite spunmelt nonwoven. Nearly half of these lines were built by Chinese companies. Also highlighting the sharp increase in Chinese spunbond production is Guo Hexin, honorary chairman of the Spunbond Division of CNITA, China Nonwovens & Industrial Textiles Association, who reported a 56% rise in technology last year. Chinese spunbond capacity is now estimated at 267,396 tons. These fabrics are used primarily in medical and hygiene, construction, packaging, furniture, filtration and agriculture applications. Chinese customers consume only 30% of these goods, Mr. Hexin stated. Admittedly, Chinese nonwovens producers find their product not up to par with Western standards of quality and cite the gap in domestic consumption as a motivator for Chinese nonwovens producers to increase the quality of their products and tap the tremendous market within their own borders. This lag in manufacturing capability has influenced foreign investors to target Chinese consumers with higher-quality nonwovens usually associated with Western standards. Sunrise Business In sync with the countrys geographic development, Chinese nonwovens experts expect Eastern coastal regions including Liaoning, Shangdong, Jiangsu, Zhejiang, Fujian and Guandong provinces to be the center for industry growth in the near future. Regionally, (Chinese) coastal areas grow the most quickly and inner cities are also developing at a slower pace, said Wang Xuanrong, vice president of Kingsafe Group, a Chinese manufacturer of nonwoven fabrics. The western provinces have only a few nonwovens manufacturers. The key to true economic development in China is to bridge the gap between the highly developed eastern coastal region and the largely agricultural western provinces. Tapping this region, said those in the industry, is the key to maximizing access to a population of nearly 1.3 billion. Attributing the countrys explosion of roll goods manufacturers to inexpensive raw materials, producers say they once called that segment the money printer because of its potential for high profits. From 1995 to 1998, some report, growth of nearly 300% could be expected on roll goods sales, especially once domestic machine manufacturers developed converting machines that were affordable and reliable. As demand for nonwovens goods increased within the country, said Dai Yajun, director of Shanghai Jinguang Nonwovens Co., Ltd, an increased willingness by customers to pay for those goods had those in the industry dubbing it the sunrise business. Shanghai Jinguang Nonwovens is focused on spunbond nonwovens, hygiene items and home furnishing products. A recent rise in raw materials costs has those same producers predicting a profit squeeze. In 2002, said Mr. Yajun, the price of a ton of polypropylene rose more than 30%, while the price for a ton of polyethylene rose nearly 15%. If this trend continues, the cost advantages we used to have would be greatly diminished, he added. Like any country with accelerated development potential, Chinese consumers are quickly becoming more educated and demanding newer, more sophisticated products. This fact was driven home in China during its recent battle with SARS. The epidemic increased the countrys need for nonwoven disposable products such as face masks, protective clothing and wet tissues and resulted in a shortage of lightweight, nonwoven materials. It is reported that at the end of April and in early May 2003, several of Chinas converters started to urgently import some nonwoven roll goods from the U.S., Japan and Korea. This actually increased Chinese governments and the publics awareness of nonwovens products, prompting experts to predict a rapid increase in the production of medical and hygiene products using nonwovens. Foreign Investment As wages and global awareness increase, Chinese consumers will demand products from outside the nations borders. Savvy foreign investors with an understanding of this potential are scrambling to gain a foothold there, betting that Chinese buying power will increase. Triggered by its entry into the World Trade Organization, China has recently become a world leader in textiles production, and the country has persistently increased its exports. Foreign nonwovens companies wishing to continue global market leadership are transferring operations to new manufacturing facilities in partnerships with established Chinese companies. Unlike other industries where such a shift has reaped significant labor savings, the nonwovens industry is not labor intensive and therefore cannot benefit from Chinas labor pool. Moving to China, said some expatriate businessmen, is instead a method of pursuing a new customer base for nonwovens makers. If customers move their converting operations (to China) for the obvious reasons of cheaper production costs, it only makes sense to pass on added value to them and operate there, as opposed to shipping the goods from the U.S., said Mark Snider, technical marketing manager for fiber systems, Nordson Company. Nordson recently sold two spunmelt lines to Chinese companies, the companys fourth and fifth line sales in China. In response to a shift of some of its customers to Shanghai, roll goods producer PGI Nonwovens has announced plans to build a new plant there to serve the medical and hygiene markets. The site will house a state-of-the-art Reifenhauser spunmelt line and will double the Charleston, SC-based companys presence in China. PGI first came to China in 1999, following a large movement of customers in need of quality product. PGI has an 80% interest in the operation which is 100% run by Asian nationals. Nationalistic Success Currently, there are two ways to categorize Chinese nonwovens companies size and strategy. There are smaller companies that utilize the lowest possible production costs to offer the cheapest possible products to gain the fastest possible market share. Paulmann Yu, managing director of Gordian Nonwovens Technology Co., and director of the Hong Kong Nonwovens Association, said the larger companies are pursuing technology advancement to offer higher quality products with the aim of gaining a significant marketshare. Gordian Nonwovens, located in Shiyan, Shenzen, Guandong Province, manufactures both roll goods and end-use products. Nearly 90% of the companys products are exported to North America and Europe. While companies such as Gordian enjoy success in exports, some large Chinese companies are successful domestically. Riding the boom in domestic hygiene demand, Fujian Hengan Holding Co., Ltd., has become a nonwovens success story by targeting Chinese consumers. According to reports, the company has become the largest sanitary napkins manufacturer, the second largest disposable diapers manufacturer, the main adult diaper manufacturer within its own borders. With the brand names including Anerle sanitary napkins and baby diapers, Elderjoy adult diapers and MissMay tend-and-protect products, the company has total assets of $240 million, operates a nationwide sales and distribution network and owns 23 Chinese subsidiaries in 14 provinces. The Future While those in the Chinese nonwovens industry remain optimistic that growth will continue, many cite rising raw material costs, a lag in infrastructure development, and foreign competition that comes with WTO privileg es as possible hindrances to progress. We are confident in the foreseeable future, said Gordians Mr. Yu. Chinas nonwovens industry should continue to grow fast, however, l, if economic overheating occurs the industry could see damage. Mr. Yu also points out that as foreign companies such as DuPont, BBA and PGI have greater access to China through WTO, their advantages in capital and technology give them an edge their Chinese counterparts. To become true global players, the Chinese believe, certain changes must occur within the industry. Chinese businessmen laud their governments efforts to open the economy and bridge the development gap between eastern and western regions in China, but they said there is some fine tuning to be done. To be truly successful, said Mr. Yu, resources should be consolidated by joining the smaller companies with the large ones. The strategy would unite the industry and ensure that all of the players are on the same page. And, he could not stress enough the importance of pouring resources into research and development. Without that, he said, China cannot offer the quality of its Western competitors. Editors note: For more information, a complete version of this article is available at www.nonwovens-industry.com. |
