Page 222 - 2017 White Paper
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7 White Paper on the Business Environment in China
domestic demand, and will also offer tax incentives to amounting to nearly 7.5 million tons (roughly 7.4 percent
encourage firms to relocate plants overseas. of the nation’s total production capacity) by the end of
that year (Yue 2011).
The previous approach sought to encourage giant
state-owned firms to merge or swallow up smaller Meanwhile, a Deloitte report shows that local
competitors but it was not successful, with industry producers are actively pursuing mergers and acquisitions
experts complaining that the focus on strengthening in order to expand their operations; the industry is
SOEs had served to raise capacity, rather than reduce so fragmented that the ten largest producers have a
it (Stanway 2013). cumulative market share of only 10 percent, compared to
60-70 percent in North America (Deloitte 2011).
A separate effort by the nation’s environmental
ministry to “raise standards for the production of cement, Plastics
batteries, leather and heavy metals [in order to] to cut
air, water and soil pollution” was launched two months Finally, plastics continue to be both an important
later and stands to make the lives of Chinese cement and fast-growing sector, as well as one with relatively
producers more interesting still should it be effectively high participation by foreign-invested enterprises.
enforced (Reuters 2013). The average growth of the engineering plastic sector
between 2000 and 2005, for example was reported as
Paper Products 30 percent (Dai 2006)—triple the growth of China’s GDP.
Furthermore, as China continues to develop its high-tech
Paper products are another area where China’s and higher-value-added industries, the use of plastics,
growth places it among the top producers in the world. molds and sophisticated manufacturing will certainly
According to some analysts, in fact, it is the largest play an important role.
producer of paper in the world, although their claim that
the industry has “unlimited potential for growth” does The financial slowdown did not spare this resilient
invite some skepticism (OCN 2010). Nonetheless, the industry, although prompt attention from the government
China Paper Association reported that China’s production in the form of the “Opinion of Central Committee and
of paper products fully doubled between 1995 and 2005; State Council on the steady agriculture development
furthermore, this growth has been attributed to the use and continuously increase the yield for farmer,” the “Light
of high-tech manufacturing equipment and techniques industry restructuring and revitalization plan,”VAT reform
rather than the liberal use of cheap labor and energy and export tax rebate adjustments all helped shield
resources associated with other industries. While much Chinese producers from the brunt of the crisis, according
of the financing of these projects has been domestic, to the China National Light Industry Council (CNLIC) (CLII
foreign joint ventures and foreign technology has played 2009).
a large role in the high efficiency and productivity, as has
the widespread reuse of waste paper products (Flynn It was later reported by the Ministry of Industry and
2006). Information Technology that the plastics industry grew
by double-digits on average in 2009 (The Ministry of
According to Ministry of Commerce statistics, in 2009 Industry and Information Technology of the People’s
there were 121 new foreign-invested projects in the paper Republic of China 2010), and in the first half of 2010 total
making industry (compared to 114 in 2008), with total output of plastic products grew by 20 percent year-on-
utilized foreign capital reaching $1.8 billion (an increase year to reach 44.8 million tons (Research in China 2010).
of 17 percent year-on-year) (Invest in China 2010). Meanwhile, output of plastics and synthetic resins arrived
at 21 million tons after growing 23 percent in the same
Similar to actions taken in the cement industry, period (Ibid.) and investment in the sector grew by nearly
500,000 tons of production capacity was eliminated with 27 percent to reach 1.1 billion yuan in roughly the same
the closure of inefficient operations (Xinhua 2010c). period (Invest in China 2010).
In May 2011, the Ministry of Industry and Information Even if the industry grew in total, research conducted
Technology announced its intent for the industry by Thailand’s National Innovation Agency and Nova
to further eliminate outdated production capacity Institute GmbH found that “Chinese PLA resin production
222
domestic demand, and will also offer tax incentives to amounting to nearly 7.5 million tons (roughly 7.4 percent
encourage firms to relocate plants overseas. of the nation’s total production capacity) by the end of
that year (Yue 2011).
The previous approach sought to encourage giant
state-owned firms to merge or swallow up smaller Meanwhile, a Deloitte report shows that local
competitors but it was not successful, with industry producers are actively pursuing mergers and acquisitions
experts complaining that the focus on strengthening in order to expand their operations; the industry is
SOEs had served to raise capacity, rather than reduce so fragmented that the ten largest producers have a
it (Stanway 2013). cumulative market share of only 10 percent, compared to
60-70 percent in North America (Deloitte 2011).
A separate effort by the nation’s environmental
ministry to “raise standards for the production of cement, Plastics
batteries, leather and heavy metals [in order to] to cut
air, water and soil pollution” was launched two months Finally, plastics continue to be both an important
later and stands to make the lives of Chinese cement and fast-growing sector, as well as one with relatively
producers more interesting still should it be effectively high participation by foreign-invested enterprises.
enforced (Reuters 2013). The average growth of the engineering plastic sector
between 2000 and 2005, for example was reported as
Paper Products 30 percent (Dai 2006)—triple the growth of China’s GDP.
Furthermore, as China continues to develop its high-tech
Paper products are another area where China’s and higher-value-added industries, the use of plastics,
growth places it among the top producers in the world. molds and sophisticated manufacturing will certainly
According to some analysts, in fact, it is the largest play an important role.
producer of paper in the world, although their claim that
the industry has “unlimited potential for growth” does The financial slowdown did not spare this resilient
invite some skepticism (OCN 2010). Nonetheless, the industry, although prompt attention from the government
China Paper Association reported that China’s production in the form of the “Opinion of Central Committee and
of paper products fully doubled between 1995 and 2005; State Council on the steady agriculture development
furthermore, this growth has been attributed to the use and continuously increase the yield for farmer,” the “Light
of high-tech manufacturing equipment and techniques industry restructuring and revitalization plan,”VAT reform
rather than the liberal use of cheap labor and energy and export tax rebate adjustments all helped shield
resources associated with other industries. While much Chinese producers from the brunt of the crisis, according
of the financing of these projects has been domestic, to the China National Light Industry Council (CNLIC) (CLII
foreign joint ventures and foreign technology has played 2009).
a large role in the high efficiency and productivity, as has
the widespread reuse of waste paper products (Flynn It was later reported by the Ministry of Industry and
2006). Information Technology that the plastics industry grew
by double-digits on average in 2009 (The Ministry of
According to Ministry of Commerce statistics, in 2009 Industry and Information Technology of the People’s
there were 121 new foreign-invested projects in the paper Republic of China 2010), and in the first half of 2010 total
making industry (compared to 114 in 2008), with total output of plastic products grew by 20 percent year-on-
utilized foreign capital reaching $1.8 billion (an increase year to reach 44.8 million tons (Research in China 2010).
of 17 percent year-on-year) (Invest in China 2010). Meanwhile, output of plastics and synthetic resins arrived
at 21 million tons after growing 23 percent in the same
Similar to actions taken in the cement industry, period (Ibid.) and investment in the sector grew by nearly
500,000 tons of production capacity was eliminated with 27 percent to reach 1.1 billion yuan in roughly the same
the closure of inefficient operations (Xinhua 2010c). period (Invest in China 2010).
In May 2011, the Ministry of Industry and Information Even if the industry grew in total, research conducted
Technology announced its intent for the industry by Thailand’s National Innovation Agency and Nova
to further eliminate outdated production capacity Institute GmbH found that “Chinese PLA resin production
222
