Chinese Nonwovens Investment Continues

By Karen McIntyre, senior editor | October 9, 2013

Companies continue to announce new lines to follow growth in the hygiene market.

Even as investment has slowed down in North America and other parts of the western world, China continues to be a hotbed of nonwovens activity. Particularly in the spunmelt market new investment is being driven by growth in the hygiene and medical markets.

While the level of investment in 2011 and 2012 was extremely stellar, leaving one to think the pipeline would surely dry up soon, 2013 has proven to be just as active on the investment front. Not only have new lines come onstream from multinationals like First Quality Nonwovens, Avgol and Toray Advanced Materials Korea, new lines have also been announced by Polymer Group Inc. and Toray, to name a few.

“Our spunbond business in China is one of the most successful overseas businesses for Toray Group,” says deputy general manager of TAK’s fiber marketing team. “We started the third Chinese line in August 2012 and it is nearly fully operational with strong partnerships. Through this investment, we are continuing to hold a leading position as the most advanced polypropylene spunbond maker in China.”

In as little as six years, Toray, which is based in Korea, has brought its Chinese output from zero to 58,000 tons due to a three-line site in Nantong, which was built in 2006 and expanded in 2010 and again in 2012.

This capacity will increase to 78,000 tons in the next 18 months due to a new spunbond line, announced in June 2013, which will be able to make 20,000 tons of polypropylene-based SSS material per year.

“We have proceeded with the continuous and planned investment in the Asian market with full consideration before the decision,” Lee says. “But, we worry about the current oversupply situation due to over investments in a short period in certain areas even though the market is growing. There is not much difference between nonwovens suppliers because of similar machines used and manufacturing processes utilized.”

Toray also operates a 20,000-ton line in Indonesia.

Also expanding in China is PGI Nonwovens. The Charlotte, NC-based company, which has been present in China for 15 years with sites in Suzhou and Nanhai, completed work on a large-scale spunmelt line in Suzhou last year and in August said it would construct a new site in Nanhai to expand its manufacturing capacity in the global hygiene and healthcare markets. The investment will allow PGI to expand production of chemical bonded products for hygiene applications and better meet the needs of customers in the region.

“We see Nanhai has a great spot to target growth in China as well as throughout Southeast Asia,” says PGI officer Mike Modak. “Adding a new plant will really give us the footprint to capitalize on our growth.”

The new Nanhai location is expected to be completed by the first half of 2016 with no disruptions to customers.

Consumer products giants ramp up

Investment has also been strong on the end product side of things with Kimberly-Clark (K-C), Procter & Gamble (P&G) and Japan’s Pigeon, Daio and Kao all in the process of building new diaper manufacturing plants in China. 

In May, Daio Paper, the Japanese maker of disposable diapers and other hygiene products, announced plans to establish a subsidiary in Nantong City, Jiangsu Province, China. The new site, which will make baby and adult diapers, will allow Daio to increase its market share in the fastest growing region for diapers in China while making its production more cost competitive with other Chinese-made brands.

Kao Corporation recently completed construction on its new diaper plant in Anhui Province, a new manufacturing base that represents an investment worth more than $100 million, according to reports.

This new manufacturing base and product development center, integrating product manufacturing, quality control, product innovation, engineering project management and logistics management will chase growth in China where sales are increasing rapidly. According to the Chinese National Household Paper Industry Association (CNHPIA), total output reached 19.55 billion pieces in 2011, representing 26% growth. Meanwhile, sales grew 27.7% to reach 18.46 billion yuan or about $3 billion.

Also looking to capitalize on this growth is P&G, the maker of Pampers and Luvs diapers, which has started stage one of a three-stage investment in Luogang, Guangzhou, China, that will ultimately be one of the largest manufacturing sites in Asia. The first stage of the plant will reportedly make a number of consumer goods, including Pampers, and is part of the company’s goal of investing as much as $1 billion in China by 2015.

The plant is expected to add as much as $490 million worth of production value to the Cincinnati, OH-based company annually.
Meanwhile, K-C, Dallas, TX, is currently building a new diaper manufacturing base in the Jiangning Development Zone, according to China Sourcing News. The company will reportedly invest more than $100 million in this new manufacturing base and product development center, integrating product manufacturing, quality control, product innovation, engineering project management and logistics management.

In March 2012, Japan’s Pigeon Corporation voted to increase investment in its Changzhou-based Chinese operation, which was completed in late 2011. According to company documents, this site currently makes breast pads, baby wipes and other baby items, and the new investment will add baby diaper production to the site. When construction is complete, which is forecasted for 2013, the site will be able to make about 85 million diapers per year. Pigeon also operates a manufacturing site in Shanghai.

According to those familiar with the market, growth in the baby diaper market is being driven by increased income, allowing Chinese parents to spend more on their children. In 2011, market penetration reached 39.1%, which allowed sales for many medium-sized companies to surge.

As foreign companies increase their footprint in the country, local manufacturers like Hengan, Guangdong Baisun, Fujian AAG and Fujian Angel are also increasing their investment in the baby diaper market. In 2011, the Vinda Group launched Babyfit diapers and Dongshun Group began producing the Habby Baby brand. Therefore, despite the huge potential of the Chinese baby diaper market, all of this investment has intensified competition as companies like Hangen Group continuously launch upgraded versions of products like Q-MO, a premium product expected to be on sale nationwide by the end of this year.

According to those familiar with the market, the disposable baby diaper market is more dominated by multinational, well-known brands than other nonwovens-related businesses like feminine hygiene, however, this area is not reporting the same staggering growth levels as baby diapers.

According to statistics from the CNHPIA, the market for feminine hygiene products, including napkins and panty liners, grew about 7.9% to reach 26.2 billion yuan or $4.2 billion. This level of growth, while significantly lower than other areas of disposable goods, is still significantly higher than the global growth rate, which is around 2-3%. Like in diapers, growth has been caused by increased incomes. The average per capita usage of sanitary napkins has increased because women use more products per cycle. At the same time, consumer demands in this market have become more sophisticated, paving the way for more premium products featuring wings or other innovations.

Even though the feminine hygiene market is largely dominated by local manufacturers, higher end products tend to be offered by multinational brands, including Whisper from Procter & Gamble, Stayfree from Johnson & Johnson, Kao’s Laurier and Kotex from Kimberly-Clark.

In 2011, P&G launched its Pinkcess series of sanitary napkins designed especially for girls in the global market and in 2012 it launched its Cuican series of napkins that can satisfy the need for soft, dry, breathable and protective products.

In early summer of 2011, Kotex introduced a limited edition of iron box small Q packet and odor-protected panty liners with weak acid surfaces, and in December, Hengan launched its Space 7 Princess series in seven provinces. These are just some of the many product improvements this category has seen recently.

The big difference between the Chinese market and Western markets is that tampon usage continues to be very low compared to a 30% market share in North America and Europe. This has traditionally been caused by concerns over bacterial infections but this is changing as consumers abandon these concerns and pay more attention to fashion trends.

Hengan Group is the largest manufacturer of feminine hygiene products and its sanitary napkin business has continued to grow rapidly despite foreign competition. Sanitary napkin and panty liner sales increased 29%, occupying a 24% market share. Other leaders include Kingdom, Hengli, Foliage and Credible. Foreign companies like P&G and Unicharm have also seen investments in the country pay off. In 2011, sales revenue of the top 15 feminine hygiene manufacturers, including a sampling of foreign and local producers, comprised about 76.8% of sales.

Durables report

Even outside of hygiene, investment remains strong in China. Earlier this year, Ahlstrom inaugurated its new production facility in Longkou, Shandong Province, in eastern China. The plant is a joint venture together with Longkou Yulong Paper Co. Ltd, and produces medical papers used for sterilization wraps and masking tape base papers for the building industry in the Asian market.  
“This joint venture in Longkou supports Ahlstrom’s growth strategy and strengthens our presence in Asia. Crepe paper used in the medical and building industries in Asia provides us interesting opportunities for growth in the area,” says Jan Lang, president and CEO.  

The new plant in China is the outcome of a €21.9 million investment, of which €13.1 million was contributed by Ahlstrom, and employs approximately 140 people. Located in the Zhu You Guan Industrial Park in Longkou, the plant is conveniently positioned near a large commercial port with access to China and Asia by road and sea, ensuring easy logistics for both incoming raw materials and shipment of products.

Another Chinese market riding the bulls is wallcoverings. Ahstrom recently added a new production line in Binzhou, China where the market is expected to reach 300 million rolls by 2015.

“The Chinese wallcovering market is changing from one of imports to one of domestic production,” says Ahlstrom director of communications Bethany Schivley.

The filtration market is also experiencing rapid growth in China. Andrew Industries, the owner of Southern Felt, established a subsidiary, China Felt, three years ago and since then has differentiated itself through innovative products, high quality felts and good customer service initiatives.. “Our high technical and commercial integrity also separates us from some of our domestic competitors and is required by multinational and large OEM and end user customers in China,” president John Lewis says. “Yes, there is still growth potential in China as tighter environmental standards are put in action, thus creating more demand for industrial filter felts. We project growth being 5-6% annually for the next few years.”

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