New Hope of Plastic Enterprises in China Automobile Industry

data：2009/6/10

Guangzhou News (May 26, 2009) For plastic manufacturers around the world, the huge shadow cast by the financial crisis has not faded. Export markets around the world are declining, and demand for consumer goods and construction is declining.

However, at the current China International Rubber and Plastics Exhibition (Chinaplas 2009), many enterprises began to see a glimmer of light from the Chinese local market, and the recovery of the Chinese automobile market made their prospects brighter.

In recent months, China's auto sales have surged, driven by tax rebates and subsidies provided by the government.

Rainer Rettig, senior vice president of Bayer Material Science's Asia-Pacific Polycarbonate and High Performance Resin Branch, said: "This is the first sign that government subsidies are beginning to work. And the automotive industry is the first to suffer.

After the Chinese government introduced a set of tax incentives and subsidies for small-displacement motor vehicles and provided additional subsidies for rural car purchases, domestic car sales in China began to rise steadily. At the end of last year, the government halved the sales tax on cars with engine emissions below 1.6 litres. In addition, a new car for clunker program was launched for rural areas, with a total subsidy of 5 billion yuan (US $730 million) provided by the government to encourage people to replace old tricycles or trucks with new small displacement vehicles.

After these stimulus measures were formally implemented, China's car sales surpassed those of the United States for the first time. According to data from the China Association of Automobile Manufacturers, in April this year, China's domestic car sales reached 1.15 million vehicles. With sales rising, GM and Volkswagen and other auto companies have increased their expected sales for 2009.

The whole plastic industry in China has also felt this upward trend.

Juergen Heise, general manager and head of Greater China of Clariant Chemical (Guangzhou) Co., Ltd., said: "We are amazed by the situation here. Looking at the current European and American markets, what we see every day is the news that automobile manufacturers are going bankrupt.

Heise said the rise in car sales has brought great comfort to many companies operating in China. "In Asia, this is the first time that China has been really affected by the economic crisis," he said. The past Asian financial crisis has not had a substantial impact on China, but this time, if you are in China, you can clearly see and feel the existence of the crisis.

With the appearance of the good omen of automobile sales growth, some enterprises began to re-focus on the automobile industry. Rhodia Polyamide, vice president of Engineering Plastics SBU, Francois Hinker, says that one of the company's main priorities now is to support local automobile manufacturers and moulders in China.

For those looking to the automotive industry, they are likely to continue to gain sales growth. Recently, the Chinese government has extended subsidies for rural car purchases to some cities, including Beijing, Shanghai, Tianjin and some coastal provinces.

"The key question now is how fast consumers can get enough money to buy cars," Heise said. And the Chinese government itself has to allocate a large amount of money for subsidies.