EXPLORING OPPORTUNITIES FOR THE EUROPEAN AND UNITED STATES FOAM AND ADHESIVES SUPPLY CHAINS IN CHINA’S DOMESTIC MARKETS
WRITTEN BY CALLUM GIBSON - CONFERENCE PRODUCER
FOAM EXPO AND ADHESIVES & BONDING EXPO EUROPE
On Tuesday 24 August, experts from Milcut, JSP, Erlenbach Machines, Kurtz Ersa and Zotefoams came together in a live webinar to discuss opportunities for the European and United States foam and adhesives supply chains in China’s domestic markets. Foam Expo China will launch in December 2022, and to mark the occasion we are exploring the valuable contributions made by the experts earlier this year.
The discussion was centred around two key pieces of information. The first came from a feature article, published in June 2021, in which each of the panellists provided insights on China’s domestic market. The second source was an anonymous poll posed to the audience during the August webinar.
The feature article shed light on developing opportunities in China’s burgeoning economy, as well as examining potential challenges for foreign companies looking to get involved. The answers from the poll provided insight into how a cross section of the foam supply chain viewed business opportunities in China’s domestic markets, and the extent to which they had already become involved.
Does your organization already do business with China’s domestic markets?
The first poll question explored the audience’s current level of involvement in China’s domestic markets. The majority (69%) of the audience were already in business with China, whilst only 31% answered that they were not currently involved. The experts suggested that these companies had simply not yet taken the steps to enter the market rather than actively objecting to joining, which could also explain their interest in attending the webinar.
“China now has high quality standards and are willing to pay for it” Michael Chan, Managing Director at Kurtz Ersa
As well as examining the results of the poll, the speakers were able to provide some background on their successes in participating in the global marketplace. One of the key advantages to operating globally and supplying to markets such as China is the “flexibility of having a global platform,” explained Steve Sopher, VP Technology at JSP. Steve went on to say that for JSP it made sense to be operating globally, and by supplying to all markets it was easier to find solutions which met international specifications. He explained the assumption that standards would differ greatly from region to region was not the case. Michael Chan, Managing Director of Kurtz Ersa agreed with Steve’s sentiment and went on to say that “China now has high quality standards and are willing to pay for it”. Michael was alluding to a preconception held that China’s markets tend to focus on quantity over quality. However, if this was ever the case, he is asserting it no longer fits the demands of the domestic market.
What do you see as the biggest area for market growth opportunities in China?
“There’s far more going on in China when it comes to automotive which I think is more diverse than anywhere else” James Bridges, Director of HPP Business Units at Zotefoams plc
Question two of the poll delved into key end user markets for the foam industry and evaluated audience opinions on the biggest opportunities for growth. The results seemed to meet the experts’ expectations, especially when it came to the automotive market. According to James Bridges, Director of HPP Business Units at Zotefoams plc said, “there’s far more going on in China when it comes to automotive, which I think is more diverse than anywhere else”. James was referring to the sheer size of the market and the range of vehicles needed to meet the nation’s needs. Sales & Business Development Director at Erlenbach Machines, Vahid Salamat, agreed with James and pointed out that one reliable Expanded Polypropene (EPP) growth area was the “boost in that market of electric cars. We are seeing it in Europe as well, the need for lighter cars to improve the mileage of the electric vehicle.” Lightweighting of petrochemical and electric vehicles require light and durable materials, and Vahid is keen to make the most of this.
“We are seeing it in Europe as well, the need for lighter cars to improve the mileage of the electric vehicle.” Vahid Salamat, Sales & Business Development Director at Erlenbach Machines
An area the speakers had expected to see more interest in was the aviation industry, as this has been a continuous growth area for China. It is entirely possible that the results reflected a lack of aviation-based attendees in the webinar itself. Curt Huettner, Director of Sales at Milcut Inc., was keen to point out his interest in expanding markets, “one of the larger areas that we would like to see is some of the [electric] enclosure markets, such as power conversion technologies.” Curt is referring to the growth of China’s economy and the increased demand for power conversion technology which accompanies said growth. This could certainly present an opportunity for members of the foam supply chain.
“One of the larger areas that we would like to see is some of the [electric] enclosure markets such as power conversion technologies.” Curt Huettner, Director of Sales at Milcut Inc
What do you see as the biggest challenge to participating in China’s domestic markets?
In the final poll it became clear that there were two key challenges which the attendees foresaw in entering Chinas domestic markets. These were intellectual property protection and import/export procedure, formality and restriction. The speakers were quick to point out that whilst there were certainly challenges to be overcome, it was in no way an indication that success would not be possible for international companies. Steve explained that “when it comes to intellectual property as we develop and perfect these designs, they become universal, so I think we become less concerned about property protection for design and more with formulation. Everyone can have their own formulation.” He was alluding to the need for products to become universally accepted for them to become truly profitable, which will inevitably be made by other producers. What remains important is the quality standards and reputation of the company supplying the product.
“When it comes to intellectual property as we develop and perfect these designs, they become universal, so I think we become less concerned about property protection for design and more with formulation. Everyone can have their own formulation” Steve Sopher, VP Technology at JSP
None of the concerns mentioned were seen by the experts to prevent companies from making progress in China, and whilst there are always hurdles to overcome in any market the benefits far outweighed the risks. It is also key to note that the limitation of this poll question was whether attendees saw these challenges as hurdles to overcome or as substantial enough to holt efforts to enter China’s domestic markets. The webinar was able to shed light on a great number of opportunities available for the international foam supply chain. James summed up China’s domestic markets best when he said, “it’s a competitive place with a lot of opportunity.”
Missed the webinar? Don’t worry, we have you covered! Watch the on-demand recording here. You can download the feature article that inspired this webinar here. To find out more about Foam Expo China 30 November – 2 December 2022 in Shenzhen you can visit our website.