China, China, China

July 18, 2006

You can't pick up a newspaper, listen to the radio or watch television these days without hearing about China's rapid development. Just this week, I heard a news story about challenges to China's water supply, which, per capita, is about a quarter of the global average. If something isn't done about the water supply situation, it could put in peril the same rapid development that created this crisis in the first place.

The nonwovens industry has wagered a lot on the future expansion of China's economy. Just this month, two large companies—Italy's Pantex and New Jersey-based Precision Custom Coatings—have formed joint venture agreements to expand their customer base in China. The fact that these two companies vary greatly in their contribution to nonwovens—Pantex is a hygiene supplier, PCC an industrial textile and apparel company—demonstrates just how diverse this investment is.

And, these two recent announcements are only the latest in a steady stream of business initiatives made by the nonwovens industry. The fact is simple. Nonwovens makers are looking for growth, and China's low penetration rates combined with its growing disposable income levels could make it just the spot for this growth. Unfortunately, "could" is the operative word here.

Beyond water supply, there are a number of issues that could come between China and economic growth. We are seeing bureaucratic issues, intellectual property concerns, currency fluctuations and drains on natural resources. The list is long, and more often than not underdeveloped countries hit a number of bumps along their way to industrialization.

Herein lies the conundrum facing nonwovens companies. They need to be present in China to take advantage of growth opportunities but don't want to be too heavily invested in case of economic collapse.     

How is your company handling the China issue? Do you think it makes sense to invest or is a wait-and-see attitude more prudent? Nonwovens Industry would like to know your thoughts.

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