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China's plastic pipe makers eye global growth

By Kent Miller | PLASTICS NEWS CHINA

  Alina Chen

Guangzhou, China -- Chinese manufacturers of the humble plastic pipe -- used to carry drinking water, irrigation water, sewage, electricity and gas -- are increasingly looking globally.

While China's domestic market is growing as Beijing focuses on building infrastructure, some companies in China's large domestic industry were using this fall's Canton Fair in Guangzhou to cast about for overseas business.

The rush is fueled by projections of continued growth in global plastics pipe markets. A July report from research firm Persistence Market Research Pvt. Ltd., for example, estimates that worldwide plastic pipe sales will grow from about $30 billion this year to $44 billion by 2024.

However, a hodgepodge of standards worldwide is spurring Chinese processors to follow contrasting strategies.

Different regions and countries favor slightly different internal diameters and different materials, said Alina Chen, manager at Taizhou Zhuoxin Plastics Co. Ltd.

"Some countries like [chlorinated] CPVC. Other countries like PVC," Chen said.

Under its Sam-UK brand, Taizhou Zhuoxin manufactures both pipes and pipe fittings. Unusually for a Chinese manufacturer, it sells nothing domestically.

"We do all exports," Chen said.

The 11-year-old company focuses on South America and Africa, with sales offices throughout Africa. Last year, it opened a sales office and warehouse in Peru.

Sales for 2016 totaled 70 million yuan, up 20 percent from the previous year, Chen said. The company, which has 100 staff, has already bought land to build a 7,200-square-meter factory, double the size of its present one, Chen said.

"Business is good," Chen said.

Taizhou, Zhejiang province-based Yonggao Co. Ltd., the country's second-biggest pipe maker, has a factory near company headquarters dedicated to serving the international market, said Esther Tao, vice international sales director.

"Because products are different for international and domestic markets. Not just the size and standards, but the also the popular items are quite different," Tao said.

Yonggao is publicly listed on the Shenzhen stock exchange. Sales for the six months ending June 30 were 1.85 billion yuan ($280 million), up 24.4 percent from the year-before period.

But profit edged down 8.8 percent on the rising resin costs and competition, the company reported.

The company produced 452 million pounds of pipe, up 22.3 percent from the year-before period. Yonggao has seven factories across China, and claims to be China's largest exporter of plastic pipe.

Currently, the company's biggest challenge is from aggressive price-cutting from Chinese rivals, Tao said.

Exhibitors at the three-week, three-phase Canton Fair, one of the world's biggest trade shows, offer everything from clocks to industrial-strength juicers. The mega-fair typically draws about 200,000 buyers and 25,000 exhibitors.

On the equipment side, extrusion specialist Foshan City Kebeln Plastic Machinery Co. Ltd. plans to double its production capacity by building a new 17,000-square-meter factory near its current one, General Manager Conghua Gao said in a telephone interview after the fair.

The 12-year-old company will double its headcount from the current 70 when the new factory opens, Gao said.

After a moderate 5 percent increase last year, sales are up a sharp 30 percent this year due to one big order for 30 production lines, Gao reported.

One player struggling in the current environment is Shenyang-based Ginde Plastic Pipe Industry Group. Founded in 1999, Ginde has more than 10,000 workers and nine factories in China. Exports comprise about 30 percent of Ginde's sales, said Shi Haifeng, manager of overseas sales.

Key markets are Cyprus, New Zealand and Australia, Shi said. "Mongolia is our largest overseas client," he said.

But with sales off in recent years, Ginde is now in the midst of reorganizing its overseas sales effort to focus on Southeast Asia and Africa, Shi said.

China Lesso Group Holdings Ltd. the country's largest plastic pipe maker, is also eager to crack the overseas market, although exports accounted for only 3.5 percent of its first half 2017 sales of 8.977 billion yuan ($1.237 billion).

In recent years, Lesso has richly benefited from Beijing's push to upgrade infrastructure for water supplies, sewage, drainage and flood control, but its big Canton Fair booth highlighted an effort to go global. The company has a plant in Los Angeles to make pipe fittings.

 

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