| In recent years, the real estate and infrastructure | | | | rise. |
| boom in China has stimulated a rapid development | | | | Secondly, in recent years, international crude oil |
| in the plastic doors and windows sector. The | | | | prices has been climbing and pushing up raw |
| sector has now become an important pillar in | | | | materials prices, causing a big blow to the plastic |
| China's plastics industry and significantly lifted its | | | | processing industry. On one hand, companies have |
| market share. But at the same time, the sector is | | | | to absorb cost pressure from upstream suppliers. |
| also facing issues such as varied quality, lack of | | | | On the other hand, the market for major plastic |
| uniform industry standards and vicious | | | | products are highly competitive, so it will be hard |
| competition. | | | | for plastic producers to pass on costs, hence |
| Plastics industry overview | | | | searching for new profit growth points. |
| China's plastics industry has experienced rapid | | | | China's plastic doors and windows sector is big, |
| growth in recent years. According to China | | | | but compared to other countries, their market |
| Plastics Processing Industry Association, during the | | | | shares are still relatively low in their home market. |
| "10th Five-Year Plan" period (2000-2005), total | | | | Their production output level is still low, while |
| domestic supply of plastic construction pipes and | | | | energy consumption is high. China's per unit |
| plastic doors and windows to the Chinese market | | | | energy consumption of residential constructions is |
| amounted to 1 million tonnes per year, achieving | | | | currently 3 times of developed countries', while |
| 45% and 20% market shares respectively. Due | | | | doors and windows energy consumption and air |
| to their superior energy saving feature, plastic | | | | leakage of doors and windows are 1.5-2.2 times |
| construction materials have now become the | | | | and 3-6 times of developed countries' |
| second largest pillar in China's plastics industry, | | | | respectively. |
| with annual growth rate exceeding 15%. In | | | | And home buyers' doors and windows |
| North-eastern provinces and Inner Mongolia, 40% | | | | consumption is still insufficient in China. Chinese |
| of the new buildings have installed plastic doors | | | | home buyers normally focus on construction |
| and windows, while the installation rates in Qingdao | | | | quality of the property, but pay much less |
| City and Dalian City are above 80%. | | | | attention to doors and windows. This is because |
| Positive factors for the sector | | | | most people don't have enough knowledge about |
| | | | doors and windows. And many people also |
| The following factors have contributed the rapid | | | | consider doors and windows as supplementary |
| development of China's plastic doors and windows | | | | products to the property, hence indifference to |
| sector in recent years. First of all, the newly | | | | their quality. For an apartment valued at 10,000 |
| announced Catalogue Guidance for Foreign | | | | yuan per square metre, the equivalent |
| Investment Industries last year encourages | | | | expenditure on doors and windows in developed |
| foreign investments in plastic construction | | | | countries would be 1,000 yuan, while it is only 300 |
| materials projects, such steel replacement and | | | | yuan in China. |
| timber replacement materials. This has brought | | | | There is also a lack of uniform plastic industry |
| about an excellent opportunity for the plastic | | | | standards in China. Currently China has not yet |
| doors and windows sector, hence fast | | | | had a housing price-related doors and windows |
| developments. | | | | standard. The 5 major performance criteria for |
| Also, the continued real estate boom and | | | | doors and windows, namely wind-pressure proof, |
| infrastructure investment surge have provided a | | | | air leakage, rain leakage, thermal insulation and |
| huge demand market for plastic doors and | | | | sound insulation, are normally tested on individual |
| windows. China currently has building construction | | | | samples, while the pass rates after being installed |
| projects of approximately 2.1 billion square metres | | | | on properties are usually low. This is because |
| per year, equivalent to the sum of European and | | | | most home buyers don't have the capability and |
| American volume. There are about 500 million | | | | means to test the 5 criteria on finished properties, |
| square metres doors and windows construction | | | | and there are little regulatory restraints on the |
| pipeline per year in China, four times of the | | | | products. Therefore, many developers and |
| European annual volume. | | | | builders may play tricks on doors and windows in |
| Third, according to the "11th Five-Year Plan" | | | | order to save costs. |
| (2006-2010), in the next five years, China has to | | | | Finally, price competition within the sector is |
| achieve construction energy saving target of 101 | | | | severe. As China listed plastic doors and windows |
| million tonne coal-equivalent. Therefore, total | | | | as one of the key construction materials to |
| energy saving construction will exceed 2.16 billion | | | | develop, their production and applications have |
| square metres, including new construction and | | | | gained rapid growth in the last 10 years. But the |
| existing building renovation of 1.6 billion and 560 | | | | development surge also created a supply surplus |
| million square metres respectively. The energy | | | | situation. At present, China's annual demand for |
| saving materials and technologies market for | | | | plastic doors and windows is about 1.5 million |
| these projects could amount to several thousand | | | | tonnes, but their annual output already reached 3 |
| billion dollars, providing huge potential for energy | | | | million tonnes, resulting in vicious price-cutting |
| saving and environmentally friendly plastic | | | | competition. There are rampant product |
| construction materials. | | | | substituting and jerry-building practices in the |
| Issues in the plastic doors and windows sector | | | | industry, negatively impacting the reputation of |
| Firstly, the Chinese government has adjusted its | | | | plastic doors and windows. And the price wars |
| foreign trade policy since 2006, and changed from | | | | have also lead to widespread losses among |
| encouraging exporting of plastic products to | | | | China's plastic doors and windows producers. |
| limiting their exports. From September 2006 to | | | | In conclusion, under the continuing real estate and |
| July 2007, China reduced its export rebates for | | | | infrastructure boom, there will be a huge demand |
| plastic products from 13% to 5%. And in July | | | | market for plastic doors and windows in China. |
| 2007 the Ministry of Commerce and China | | | | And the government's energy saving policy could |
| Customs officially included plastic products into the | | | | also provide substantial investment value to this |
| export-restricted category of processing trade | | | | sector. But the sector is also affected by short to |
| products. Since then, many plastics companies | | | | medium term issues, which need to be practically |
| have significantly reduced their export volume, | | | | resolved, in order to improve producers' long |
| while importing of plastic products continues to | | | | term sustainability. |